Cassaniti v Pala Enterprises Pty Ltd

[2001] NSWSC 241

CITATION:	Cassaniti v Pala Enterprises Pty Ltd [2001] NSWSC 241
CURRENT JURISDICTION:	Civil
FILE NUMBER(S):	SC 12294/00
HEARING DATE(S):	7 February 2001
JUDGMENT DATE:	7 February 2001
PARTIES :	Sam Cassaniti (Plt) Pala Enterprises Pty Ltd (Def)
JUDGMENT OF:	McClellan J

LOWER COURT JURISDICTION :	Local Court
LOWER COURT FILE NUMBER(S) :	587/98
LOWER COURT JUDICIAL OFFICER :	Magistrate Gould

COUNSEL :	T Molomby (Plt) J Castaldi (Def)
SOLICITORS:	Stoikovich Banfield Macri (Plt) Galluzzo Golotta Andriano Simone (Def)
CATCHWORDS:	Stated case - Local Courts - practice - judgments and orders - setting aside - where entered irregularly - illegally or against good faith - Local Court (Civil Claims) Rules Pt 26 r 3
LEGISLATION CITED:	Local Court (Civil Claims) Rules 1988 Pt 26 r 3(i) Local Court (Civil Claims) Act 1970
CASES CITED:	Coles & Ors v Burke & Anor (1987) 10 NSWLR 429 Hoskings v Van den Braak (1998) 43 NSWLR 290 HR Turner & Son Pty Ltd v Rhodes & Anor [1970] 1 NSWLR 305
DECISION:	See para 28

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

McCLELLAN J

WEDNESDAY, 7 FEBRUARY 2001

12294/00 - CASSANITI v PALA ENTERPRISES PTY LIMITED

JUDGMENT

1    HIS HONOUR: In this matter the plaintiff seeks an order setting aside the decision of Magistrate Gould at Blacktown Local Court on 1 August 2000 that the judgment in this matter in the Local Court was entered up irregularly. The summons claims the following orders.

1. An order setting aside the decision of Magistrate Gould at Blacktown Local Court on 1 August 2000 that the judgment in this matter was entered up irregularly.

2. An order setting aside the decision of Magistrate Gould at Blacktown Local Court on 1 August 2000 that the terms of settlement dated 12 November 1998 filed in this matter be set aside.

3. A declaration that the terms of settlement signed on 12 November 1998 in this matter have been complied with by the plaintiff.

2    Order three was not pressed.

3    The defendant has responded to the summons by a notice of contention, which has been amended.

4    The dispute arises from proceedings in the Local Court which came before an arbitrator. The plaintiff before me, an accountant, was sued by the defendant for fees which were said to be unpaid. As I understand the position, the parties reached an agreement before the arbitrator which was embodied in written terms. Those terms were headed "Terms of settlement" and provided that:

"By consent and without admissions
(1) Statement of claim is dismissed conditional upon the following terms:
(a) The defendant is to pay the plaintiff $2,000 within seven days of these orders.
(b) The defendant agrees to return to the plaintiff financial records, working papers and journals or computer records relating to same of the plaintiff, Peter and Ann Beckman, Peter Beckman and Ann Beckman held in his custody. Such documents are to be returned within seven days."
(c) The plaintiff, Peter and Ann Beckman partnership, Peter Beckman and Ann Beckman agree that this settlement finishes all proceeding or potential actions between the above parties against the defendant relating to the preparation of financial records, tax returns and all other work performed by the defendant relating to the 1997 tax return, the memorandum of fees dated 11.10.97 and the itemised account dated 23.1.98 or any matters set out in clause 8 of the Statement of Claim and no further claim or demand will be made regarding same.
(d) The defendant acknowledges and agrees that he will not bring any claim or any other action against the plaintiff, Peter and Ann Beckman partnership Peter Beckman and Ann Beckman relating to any money owed as a result of the 1997 tax return, memorandum of fees dated 11.10.97 and the itemised account dated 23.1.98 and no further claim or demand will be made regarding same.
(e) Interest on the amount referred to in clause 1 (a) not to run until 28 days after these orders made."

5    The arbitrator's award was framed utilizing the standard form. It provided, with respect to the award, that it was an award "made in favour of" and then it is noted "S/C (statement of claim) dismissed upon terms".

6    In the section provided for the reasons for the award, the arbitrator has written:

"As per terms of settlement, orders as per para 1 (a) (1 (e) notes the agreement), paragraphs 1 (b); 1 (c); 1 (d). Terms have been initialled by me."

7    I infer that the parties were present when the award was made by the arbitrator. That award was ultimately, in the manner provided by the rules of the Local Court, entered as a judgment.

8    It is important to appreciate the way in which the arbitrator framed the award. Although the terms of settlement provided for the statement of claim to be dismissed upon terms, he was careful to frame his award so that an order for the payment of money in accordance with term 1 (a) would operate and provision would be made in accordance with term 1 (e) with respect to interest. He otherwise reflected in his award the agreement between the parties, which, with respect to paragraph 1 (b) of the terms, being the paragraph which is at the centre of the present dispute, did not contemplate any order being made by the Court. Rather paragraph 1 (b) provided for an agreement whereby the defendant would return the relevant records to the plaintiff.

9    It must also be appreciated that the agreement is framed in terms of records which the defendant "held in his custody". The agreement did not contemplate that the defendant would return records over which he had no control.

10    As it happens, the money sum contemplated in the agreement has been paid. However, although some records have been provided pursuant to the agreement in paragraph 1 (b), I understand that records of significance for years prior to 1998 in the nature of ledger information have not been provided.

11    I am informed, and there appears to be no dispute in the matter, that this has occurred because the records are simply not available. This arises from a change which was made in the computer equipment of the plaintiff, which has meant that the previous records cannot now be retrieved. In these circumstances, it is said by the defendant, that the agreement between the parties has miscarried and should be set aside in order, I assume, that the matter can be reagitated in the Court below.

12    Following the entry of judgment, the matter came before the Magistrate on two motions brought by the defendant. The motions were supported by evidence. It was claimed in the motions that the judgment had been entered up irregularly and otherwise should be set aside under Pt 26 r 3 (i) of the Local Court (Civil Claims) Rules 1988. The second motion sought an order that the terms of settlement be set aside. The magistrate dealt with both motions.

13    The magistrate was persuaded that because of the terms of the document embodying the terms of settlement before the arbitrator, the Court "has got no power to make the orders if that's the intention on the face of the document". It would appear, although it is not plain, that he may have been concerned that all of the terms of settlement were not embodied in court orders and accordingly he should set the judgment aside. However, he also refers to E, the clause dealing with interest and it is not plain to me from the transcript of the proceedings whether this may have been the cause for his concern.

14    Later in the transcript the magistrate addresses the question of the terms of settlement and it would appear that he was persuaded that, at least insofar as the defendant was concerned, it mistakenly believed that the earlier accounting records could be provided by Mr Cassaniti and when this turned out not to be the case the magistrate determined that that mistake vitiated the agreement between them. Framed in conventional terms, the magistrate found that because of the unilateral mistake by the defendant the agreement should be set aside.

15    Before me the plaintiff submits that the decision of the magistrate was in error. The fundamental submission is that in the circumstances of this case there was no jurisdiction in the magistrate to entertain the application to set aside the judgment which had been entered.

16    Part 26 r 3 of the Local Court (Civil Claims) Rules 1988 provides, in rule 3 (i), that:

"A judgment or order of the Court in any proceedings may, on sufficient cause being shown, be set aside, on terms, by order of the Court, if the judgment was given or entered up, or the order was made, irregularly, illegally or against good faith."

17    It is submitted by the plaintiff that the judgment in the present matter was not affected by any relevant irregularity or illegality, and was not made against good faith.

18 The plaintiff's counsel submits that the meaning of Pt 26 r 3 (i) should be determined in a manner consistent with the decision of the Court of Appeal in Coles & Ors v Burke & Anor (1987) 10 NSWLR 429, where the Court was required to construe the identical provision in the rules of the District Court Act. Kirby P said, at page 437, with respect to this expression:

"The genus which is involved in the phrase 'irregularly, illegally or against good faith' appears to be misconduct or dishonourable conduct of the person who procured the judgment, which it is suggested undermines the authority of that judgment, warranting the exceptional course for which the relevant rule provides."

19    In the present case it is accepted by both parties that there was no dishonest conduct of either party relevant to the agreement which they reached. If a mistake was made, it would appear to have been an honest mistake and the agreement between them and accordingly the arbitrator's award, is not infected by any misconduct or dishonourable conduct in the sense referred to by Kirby P.

20    In his judgment the President indicated that the jurisdiction of the District Court to entertain applications to set aside its judgments or orders are confined to the relevant Act and rules. A submission was made that there was inherent power in the Court to regulate its own affairs, which could support an application not provided for in the statutory regime. His Honour rejected that submission.

21 The defendant accepts the authority of the decision in Coles v Burke, but nevertheless draws attention to a later decision of the Court of Appeal in Hoskings v Van den Braak (1998) 43 NSWLR 290, where judgment had been entered against a person who had not been served with the initiating process. In that case the Court held that there was nothing in the language of the Local Court (Civil Claims) Act 1970 which detracted from the common law right of an individual to relief against denial of natural justice of the relevant type. Accordingly, that decision provides a qualification upon the restriction expressed by the Court of Appeal in Coles v Burke.

22 Attention was also drawn to the decision of the Prothonotary in HR Turner & Son Pty Limited v Rhodes & Anor (1970) 1 NSWLR at 305. In that case judgment was entered for a sum in excess of the actual debt, and the defendant was allowed, in those circumstances, to defend the matter. The Court held that there was a relevant irregularity and, accordingly, exercised its discretion to set aside judgment.

23    In the present case it is plain that the judgment which was entered reflected the agreement embodied in the terms of settlement and the orders made by the arbitrator. As I have indicated, the arbitrator made only two orders and otherwise noted the agreement between the parties. With respect to those orders, which became the judgment of the Court, I am satisfied that the Magistrate did not have jurisdiction to entertain the motion which was brought before him. In my opinion, this case fell within the principles expressed by Kirby P in Coles v Burke. There being no misconduct or dishonourable conduct of either party, I am of the view that no relevant irregularity could be demonstrated. Certainly, it is not suggested that there was any illegality or that the judgment was entered against good faith, the only argument being that because of the mistake made by at least one party the judgment was irregularly entered. However, that mistake, in my opinion, could not give rise to jurisdiction within the magistrate.

24    In my opinion an innocent mistake in an agreement between parties, who have agreed to settle a matter in the civil claims jurisdiction of the Local Court, could never, having regard to the principles in Coles v Burke, found jurisdiction in the Magistrate to set it aside under Pt 26 r 3.

25    With respect to the second determination of the Magistrate, that the terms of settlement be set aside because of a mistake by the defendant, it is plain that the Magistrate approached the matter upon an incorrect legal basis. The parties before me agree that before the terms of settlement could be set aside there must be a mutual mistake, the mistake of only one party being irrelevant. In any event I am not aware of any jurisdiction in the magistrate to make an order setting aside the parties agreement. This was conceded before me by the defendant.

26    If I had been of a mind that the magistrate had jurisdiction to entertain the application to set aside the judgment, I would also have determined that his approach to the agreement between the parties was in error. However, it would appear that before the magistrate the defendant framed its claim only upon a unilateral mistake, rather than common mistake, and, accordingly, I would have reservations as to whether it would be appropriate to allow the defendant to frame its case on an alternative basis. It appears to me that if the case had been framed as one of common mistake the plaintiff may have reasonably sought to bring evidence. Accordingly, the matter only having been raised on the appeal, I doubt whether the defendant should now be given an opportunity to frame a different case.

27    In any event, having regard to my finding with respect to jurisdiction, it is not necessary for me to determine any further matter.

28    For these reasons I make orders 1 and 2 in the summons. I order the defendant to pay the plaintiff's costs.

Last Modified: 05/23/2001