Bencross Pty Ltd v Teasdale

[2003] NSWSC 54

CITATION:	Bencross Pty Ltd v Teasdale [2003] NSWSC 54
HEARING DATE(S):	10/02/03
JUDGMENT DATE:	18 February 2003
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	See paragraphs 13 to 15
CATCHWORDS:	PROCEDURE - whether civil proceedings in Local Court may be removed into Supreme Court for consolidation with existing Supreme Court proceedings
LEGISLATION CITED:	Corporations Act 2001 (Cth) District Court Act 1973 Industrial Arbitration Act 1996 Local Court (Civil Claims) Act 1970 Supreme Court Rules
CASES CITED:	Buzera Pty Ltd v Mezan Enterprises Pty Ltd (1998) NSW ConvR 56,656 Palm Springs Ltd v Darling (2002) 192 ALR 763
PARTIES :	Bencross Pty Limited - Plaintiff Angela Teasdale - Defendant
FILE NUMBER(S):	SC 5612/02
COUNSEL:	Mr C.D. Freeman - Plaintiff Mr M.B. Lee - Defendant
SOLICITORS:	Maurice Harrison & Associates - Plaintiff James A. Moustacas & Co - Defendant

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY, 18 FEBRUARY 2003

5612/02 – BENCROSS PTY LIMITED v ANGELA TEASDALE

JUDGMENT

1 The plaintiff carries on a real estate agency business at Bondi Beach. In June 2001, the defendant became an employee of the plaintiff and began work as a sales executive. The employment ended some seven months later, in January 2002, and the defendant went to work for an estate agency at Bondi Junction. The plaintiff alleges that the defendant thereafter divulged to her new employer certain information obtained in the course of her employment by the plaintiff and took steps which resulted in two properties in respect of which the plaintiff had been appointed selling agent being taken out of its hands and listed instead with the defendant’s new employer as selling agent.

2 On 26 April 2002, the plaintiff sued the defendant in the Local Court at the Downing Centre by way of ordinary statement of claim claiming $40,000 damages plus costs on account of alleged breaches of contract committed by the defendant by reason of the events to which I have referred. On 24 May 2002, the defendant filed in the Local Court notice of grounds of defence denying the entitlement of the plaintiff to the relief sought in the ordinary statement of claim. The defence, as subsequently amended, relies in part on the proposition that the supposed contractual terms upon which the plaintiff sues are inconsistent with provisions of an applicable award made under the Industrial Arbitration Act 1996 and are accordingly unenforceable. The defendant also filed notice of cross-claim in respect of a claim against the plaintiff for $9,291.75 plus interest on account of commissions allegedly due but unpaid for sales arranged by the defendant while an employee of the plaintiff. The plaintiff, as cross-defendant, denies liability.

3 The present application (the nature of which I shall mention presently) results from separate but closely related steps subsequently taken by the plaintiff against the defendant. By an originating process filed in this court on 21 November 2002, the plaintiff claims, as against the defendant, declarations that the defendant breached duties owed to the plaintiff pursuant to ss.182 and 183 of the Corporation Act 2001 (Cth) (concerned with improper use of position or information by officers and employees of corporations) plus orders for the payment of damages under s.1324 or compensation under s.1317H of that Act. There is, in the alternative, a claim for damages corresponding with that articulated in the ordinary statement of claim in the Local Court. The plaintiff has prepared but not yet filed in this court a consolidated statement of claim pleading in full the claims in the originating process (annexure A to the affidavit of Grace Silveira sworn on 25 November 2002 and filed herein on 26 November 2002).

4 On 10 February 2002, I heard an application initiated by the plaintiff’s interlocutory process filed on 26 November 2002. The relief sought is:

1. An order that Local Court proceedings as a whole (that is to say, the claims by the plaintiff and the defendant’s cross-claim) be transferred to this court and consolidated or heard together with the proceedings in this court initiated by the originating process filed on 21 November 2002.

2. An order that, upon the Local Court file being transferred to this court, the plaintiff file a statement of claim in the form already prepared to which I have referred.

5 The plaintiff’s case is, in essence, that it is entitled to pursue both its claims based in contract and its claims founded on the Corporations Act provisions; that the jurisdiction created by ss.1324 and 1317H of the Corporations Act is exercisable only by a “Court”, as defined by s.58AA of that Act; that this court is a s.58AA “Court” but the Local Court is not (nor, I might say, is the District Court); that the facts and circumstances giving rise to the claims under the Corporations Act are identical with those giving rise to the plaintiff’s claims in contract; and that the overall controversy, including the defendant’s cross-claim, will be most efficiently resolved by means of one consolidated proceeding in this court which possesses all necessary jurisdiction.

6 The defendant does not oppose a course that will see the claims made by the plaintiff in the Local Court proceedings heard and determined in this court as part of the current Corporations Act proceeding that the plaintiff has initiated here, provided that the defendant is appropriately protected as to costs. The defendant says, however, that her cross-claim for commission allegedly due but unpaid should be left to be litigated in the Local Court. In the defendant’s submission, the cross-claim does not have its basis in the same facts and circumstances as the plaintiff’s claims in contract and under statute. That, plus the fact that the claim is for a small amount, means, in the defendant’s submission, that the cross-claim is best dealt with in the Local Court where it was commenced.

7 The subject matter of the defendant’s cross-claim against the plaintiff has an intimate connection with the subject matter of the plaintiff’s claims pleaded in its proposed statement of claim. The claims by both plaintiff and defendant arise from an employment relationship that was of relatively short duration. The terms of the employment contract, the terms and applicability of any industrial award and the consistency of the conduct of either or both of employer and employee with the contractual terms, any applicable award terms and the statutory duties imposed by the particular Corporations Act provisions will arise for consideration in the light of findings of fact that are very likely to be relevant to several of the issues in the overall proceedings. There are, to my mind, strong grounds for thinking that the whole of the controversy covered by the plaintiff’s claims in this court and the Local Court and the defendant’s Local Court cross-claim should, as a matter of practical efficiency and avoidance of duplication, be litigated together. Because this court, unlike the Local Court, possesses all relevant and necessary jurisdiction, all the claims should be litigated here.

8 There is, however, a question whether this court has jurisdiction to cause the whole of the proceedings currently on foot in the Local Court (that is to say, the claims asserted by the plaintiff in its ordinary statement of claim and the claims asserted in by the defendant in its cross-claim) effectively removed from that court so that both the plaintiff’s claims and the defendant’s cross-claim are litigated here. There is no statutory provision allowing removal into the Supreme Court of civil proceedings pending in the Local Court. Under the Local Court (Civil Claims) Act 1970, s.21B, the District Court may order that an action pending in a Local Court be removal into the District Court; and, under the District Court Act 1973, s.145, proceedings in the District Court may, by order of the Supreme Court, be removed into the Supreme Court. This raises the question whether the plaintiff’s desire to see the Local Court proceedings as a whole somehow consolidated with its existing proceedings in this court should be pursued by a two-stage removal process under the two provisions mentioned: in other words, is the correct or desirable procedure one which sees the plaintiff apply to the District Court for an order under s.21B of the Local Court (Civil Claims) Act transferring the whole of the Local Court proceedings into the District Court for the express purpose of providing a basis for a subsequent application to this court for an order under s.145 of the District Court Act?

9 It was held by the Full Federal Court in Palm Springs Ltd v Darling (2002) 192 ALR 763 that it is not an abuse of process to initiate proceedings in the Federal Court with the intention of seeking to have them cross-vested to this court so that they might be heard on a consolidated basis with other proceedings already pending here and proceedings pending in the Industrial Relations Commission in respect of which an application for removal into this court was to be made – provided that it was also the initiating party’s intention to prosecute the proceedings to finality in the Federal Court if the removal application in respect of them proved unsuccessful.

10 Any application by the plaintiff in the present case for an order of the District Court removing into that court the existing Local Court proceedings in their entirety would not be motivated by any desire to have the District Court deal with the proceedings in any substantive way, although there is no reason why the District Court should not or could not do so if the subsequent attempt to obtain removal into this court was for some reason unsuccessful. On that basis, it seems to me that there would be good grounds for the making of a removal order by the District Court. The interests of justice would be served by affording to the plaintiff a position from which it could then seek, by order of this court, further removal from the District Court to this court, failing which the plaintiff’s claims (apart from those arising under the Corporations Act), as well as the defendant’s cross-claim, could be litigated to finality in the District Court. Indeed, it seems to me that the fact that neither the Local Court nor the District Court has jurisdiction in the Corporations Act claims and that, on the face of things, there is very considerable merit in the proposition that the whole of the parties’ controversy arising out of the employment relationship and the events following its conclusion should be litigated together would be strong indicators in favour of the making of successive removal orders by the District Court and this court. Clearly, however, the process I have outlined would be cumbersome, time consuming and costly and would not represent good use of judicial resources if some more streamlined solution were available.

11 The question whether such a statute-based double removal procedure might be short-circuited by an appropriate exercise of the inherent jurisdiction of the Supreme Court has been raised by the plaintiff. In Buzera Pty Ltd v Mezan Enterprises Pty Ltd (1998) NSW Conv R 56,656, Cohen J considered whether the inherent jurisdiction allows the making of an order for removal of proceedings direct from a Local Court to this court in such a way that the Local Court is no longer able to hear and determine proceedings regularly and properly instituted. Although finding it unnecessary to give any definitive answer, his Honour inclined to the view that the inherent jurisdiction has such an aspect. In that case, a landlord suing for rent and outgoings in the Local Court wished to assert the existence of an equitable lease. The jurisdiction of the Local Court did not extend to that subject matter. The landlord’s application to the Supreme Court for orders removing the Local Court proceedings into the Supreme Court was ultimately unsuccessful. Cohen J observed that the District Court had ample jurisdiction to deal with the whole of the subject matter and that removal of the proceedings into the District Court by order of that court under s.21B of the Local Courts (Civil Claims) Act would meet the demands of justice in the particular case.

12 In the course of his judgment, Cohen J examined the inherent jurisdiction of the Supreme Court, particularly the aspects directed towards ensuring convenience and fairness in legal proceedings, preventing steps that would make legal proceedings inefficacious, preventing abuse of process and acting in aid of superior courts and in aid or control of inferior tribunals. His Honour said:

“Considering these general and potentially very extensive powers the question is whether in the circumstances in this case it is for the better administration of justice that the proceedings should be transferred from the Local Court to this court. The fact that there are statutory provisions for the removal into the District Court does not limit the right of this court. In O’Toole v Scott , above, the Justices Act provided that a barrister or solicitor had a right of appearance before a Court of Petty Sessions but the Privy Council said that this did not limit the court in granting leave to others to appear. If this court has power to remove proceedings from lower courts, notwithstanding that there is no provision to do so in a statute or rules, it would be necessary to show that it was essential for the administration of justice in the particular proceedings for that course to be taken.”

13 In the present case, I do not need to decide the question left open by Cohen J. The position sought by the plaintiff and which, as I have indicated, best serves the interests of justice in this case can be achieved by directions and orders operating upon the present parties personally and without any need to attempt or purport to intervene directly in the Local Court proceedings. To the extent that it is needed, leave should be granted to the plaintiff to file in the present proceedings a consolidated statement of claim in the form to which I have referred; and there should be a direction that the plaintiff do so. The defendant does not need leave to cross-claim against the plaintiff (Supreme Court Rules Part 6 rule 13(1)) but it should be directed that she file a defence and cross-claim corresponding with those in the Local Court but dealing, in addition, with the Corporations Act causes of action in the consolidated statement of claim. On the basis that all matters in controversy between the parties can most efficiently be dealt with in the present proceedings and that those proceedings would be impeded or subverted by continuation of the Local Court proceedings (so that the undoubted inherent jurisdiction of this court to protect its own proceedings is enlivened), it should be ordered that neither party take any step in the subsisting Local Court proceedings save by way of discontinuance of the claims and cross-claim or consent to dismissal generally, in either case without any order for costs of the Local Court proceedings being claimed by either party. In addition, the present proceedings should be stayed until such time as the foregoing directions and orders have been complied with (such stay not to prevent, however, compliance with those directions and orders).

14 As to costs, there should be an order that the plaintiff pay the defendant’s costs of the interlocutory process heard by me on 10 February 2003, the defendant’s costs of terminating the Local Court proceedings by discontinuance or dismissal by consent and all costs of the defendant occasioned by the need for the defendant to file in this court a defence to the statement of claim and a cross-claim, in so far as they are in a form substantially corresponding with that filed in the Local Court, and generally of enabling her to achieve in these proceedings a position corresponding with that already achieved by her in the Local Court proceedings, all such costs to be payable forthwith after completion of the steps required by the directions and orders I have outlined. The last aspect of the costs order is appropriate because it should be regarded as unreasonable (as that the concept applies in relation to an application for an order that costs be payable forthwith) for the plaintiff to have brought about, several months after the close of pleadings in the Local Court and by reason of the late assertion of the Corporations Act claims, a situation where the defendant was put to the need to deal with what is effectively a transfer of the proceedings to this court.

15 There may be matters of detail and timetable that the parties would wish to see incorporated into directions and orders in the terms I have outlined. I direct that agreed short minutes (and, in default of agreement, the form for which each party contends) be filed by delivery to my Associate within fourteen days.

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Last Modified: 02/19/2003