City of Unley v Verco - [2005] SASC 69

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
CITY OF UNLEY & ANOR v VERCO & ANOR
Judgment of The Honourable Justice Anderson
1 March 2005
PROCEDURE - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE - VARIATION AND SETTING ASIDE OF CONSENT JUDGMENT
MAGISTRATES - APPEALS FROM AND CONTROL OVER MAGISTRATES - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
Appeal from an interlocutory decision of a Magistrate transferring proceedings from the Magistrates Court to the District Court, and dismissing the second appellant’s application to have judgment entered - whether the completion by the second appellant of the endorsement on the first respondent’s Form 2 Claim indicating that it consented to the whole of the amount claimed entitled the second appellant to have judgment entered - whether the solicitors for the second appellant acted unconscionably in endorsing Form 2 - following the filing of the endorsement consenting to the full amount claimed the first respondent’s solicitors applied to have the case transferred to the District Court on the basis that the first respondent's damages were now calculated to be in excess of the Magistrates Court's jurisdictional limit - whether Magistrate erred in finding that he had a general discretion whether or not to enter judgment after consent endorsed on Form 2 - whether entitlement to interest potentially resulting in a total award in excess of the jurisdictional limit meant that there was no agreement between the parties to support a consent judgment - held: completion of the endorsement on the Form 2 entitled the second appellant to have judgment entered - solicitors for the second appellant did not act unconscionably - Magistrate erred in dismissing the application for judgment to be entered and in transferring matter to the District Court - appeal allowed – order that judgment be entered in accordance with consent endorsed on Form 2.
Magistrates Court Act 1991 s8, s9, s34; Magistrates Court (Civil) Rules 1992 r12.3, r55, r57, r84, referred to.
Xenophon v Lucas [2001] SASC 160, applied.
Holyoak v Ivanoff (1995) 193 LSJS 21; Turley v Saffin (1975) 10 SASR 463, discussed.
Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106; Lugg v Wright [1941] SASR 106; Barrenger v Coward [1965] Tas SR 243; Re Dunsborough Districts Country Club Inc [1982] WAR 321, considered.

CITY OF UNLEY & ANOR v VERCO & ANOR
[2005] SASC 69
Magistrates Appeal

Anderson J This is an appeal from a Magistrate who ordered that proceedings in the Magistrates Court be transferred to the District Court of South Australia pursuant to s19 of the Magistrates Court Act 1991 (SA).
This decision was made by the Magistrate against the protest of Strata Corporation No 2822 Inc (“the second appellant”), which had requested the court to enter judgment in accordance with a consent to judgment endorsed on the Form 2 claim which had been filed in the court by the second appellant.
There were two plaintiffs in the action, a husband and wife, with the former claiming for damages for personal injury, and the latter claiming damages for loss of consortium.
The claims arose out of an alleged incident which occurred on property allegedly owned or controlled by the appellants.
There is really no dispute as to the facts of this matter. On 6 July 2004 the solicitors for the second appellant endorsed on the Form 2 claim filed in the Magistrates Court a consent to judgment for the total amount claimed by the first respondent, namely, $40,000, plus an amount set out on the form for the appropriate costs on the scale. The following day the solicitors for the second appellant forwarded a letter to the solicitors acting for the first respondent and included a copy of the endorsed consent to judgment, and confirmed what had happened. That was followed up in turn by a payment into court to satisfy the terms of the consent judgment.
Following this action by the second appellant’s solicitors, the respondents’ solicitors then applied to have the matter transferred to the District Court.
At the outset there is an argument as to the effect of the consent to judgment endorsed on the Form 2. The second appellant claims that the first respondent made, by virtue of his claim, an offer that he would accept an amount of $40,000 plus costs. $40,000 is the jurisdictional limit for claims of this type. The second appellant argues that it has simply accepted that it is liable for that full amount, consented to judgment on the appropriate form, and that therefore a binding agreement has been concluded. It is simply an offer by the first respondent to accept the amount claimed and an acceptance by the second appellant.
On the other hand, the first respondent argues that the offer is not the Form 2 claim but is the offer to consent to judgment endorsed on the claim by the second appellant which can then be accepted or rejected by the first respondent. For reasons which I set out shortly, I do not believe that this analysis is correct.
The second appellant complains that the learned Magistrate did not deal with this aspect of the argument. It was submitted that the learned Magistrate failed to determine whether the claim by the first respondent had been brought to an end by the endorsed consent. If it was, then a final judgment should have been entered. It was argued by the second appellant that the position of the respective parties must be characterised as at the time that the form was endorsed so that the parties’ rights were at that point determined. The second appellant says that subsequent events become irrelevant in terms of what the parties’ rights are.
It is also relevant that no defence had been filed to the first respondent’s claim at the time the form was endorsed. The significance of this is that until the defence was filed, the first respondent had a maximum entitlement, being the jurisdictional limit plus whatever the calculated fee was for costs. That would change when the defence was filed with a different scale for costs then applying.
The Magistrates Court (Civil) Rules 1992 provide a process for the filing of offers to consent to judgment, and the acceptance of such offers, under Rule 55 which states:
“55. (1) At any time before final judgment, a party may file and serve on any other party an offer to consent to judgment.
(2) The offer may be made subject to specified conditions.
(3)An offer may relate to liability, quantum, matters in issue in the action or any order, remedy or relief sought.
(4)A party may file and serve a notice of withdrawal or variation of an offer which has not been accepted.
(5)A party may file and serve an acceptance of an offer.
(6)A party may request the Registrar to enter judgment in the terms of an accepted offer and the Registrar must enter it accordingly.”
This procedure, however, does not appear to govern a consent to judgment allowed by the completion of the endorsement section on the Form 2 Claim which, in my view, contemplates a speedy resolution at the initiating stage of the action. The Form 2 procedure does not contemplate the Rule 55 procedure. In truth it is probably not a strict ‘consent to judgment’ procedure but simply allows the defendant, as Perry J said in Holyoak v Ivanoff (1995) 193 LSJS 21, at 24, “to pay out the claim as formulated in the initiating process”. In that matter Perry J was dealing with heads of claims contained in both the Form 2 application and also the more detailed particulars of claim required under Form 22.
His Honour said at 24, specifically:
“The particulars furnished in Form 2 and in Form 22 are not to be equated with an offer to consent to judgment, although a plaintiff (sic) is always at liberty to pay out the claim as formulated in the initiating process.”
In my view, the second appellant here did just that, namely, paid out the claim as formulated in the initiating process which is the Form 2.
The Form 2 itself specified as follows:
“AMOUNT CLAIMED [if any]   $40,000.00

COURT FEE ON FILING    $115.00
SERVICE AND OTHER FEE      $19.80
SOLICITOR’S FEE    $1,760.00
TOTAL CLAIMED     $41,894.80”
At the end of the form it then invites the defendant in the action as follows:
“IF YOU CONSENT TO JUDGMENT PLEASE SIGN AND RETURN THIS FORM TO THE TRIAL COURT [ADDRESS ABOVE].

I CONSENT TO THE JUDGMENT FOR THE TOTAL CLAIMED …………………………….
DATE……………..(sign)………………………”
The solicitor for the second appellant, Ms Errington, endorsed the Form 2 as follows:
“I, FIONA ERRINGTON, SOLICITOR FOR THE SECOND DEFENDANT, CONSENT TO JUDGMENT IN RESPECT OF THE FIRST PLAINTIFF’S CLAIM FOR THE TOTAL AMOUNT CLAIMED.
DATE 6 July 2004 (sign) Fiona Errington.”
On the face of it, therefore, the plaintiff in the action was inviting the defendant to pay the sum of $41,894.80 being as to the total amount claimed, namely, $40,000 plus court fees and legal costs.
Attached to the Form 2 are the particulars of claim made by the plaintiff. As part of those particulars, the prayer for relief included a claim for damages not exceeding $40,000, interest and costs.
The prayer for relief, on the face of it, may be inconsistent with the amount claimed on the Form 2 if interest is to be added to the $40,000 claimed for damages and the amount claimed for costs. In that case, it seems to me that the first respondent must be saying, by virtue of the endorsement on the Form 2, that it is including any interest in the amount claimed because it does not specify that the $40,000 is solely for damages. Some sense can be made of this when one notes that the prayer for relief is for damages not exceeding $40,000 (my underlining). In other words it can be any amount up to that figure.
If the damages for instance were assessed after a trial at $40,000 then there could be interest awarded on the top of that amount. However, in my opinion, the first respondent in the Form 2 endorsement was here sending a clear message to the second appellant that the total amount it claimed was $40,000 including interest, plus costs amounting in total to $41,894.80.
Mr Quick QC, for the first respondent, argued that ss8 and 34 of the Magistrates Court Act 1991 allowed the court to award interest on a judgment so that the total award could exceed $40,000. This point was raised to illustrate that there was no agreement between the parties at the time that the appellant filed the consent, because, contrary to the submissions of the second appellant, the full amount sought by the first respondent could not be assumed to be restricted to the jurisdictional limit. Mr Quick asserted that because ‘interest’ was sought in the prayer for relief claim, there could therefore be no concluded agreement between the parties.
That argument was based upon the decision in Turley v Saffin (1975) 10 SASR 463, in which the Full Court held that the Local Court had the power, under the Local and District Criminal Courts Act 1929-1974, to award interest on a judgment in a personal injuries action notwithstanding that the interest component would then result amount in the judgment being in excess of the $10,000 jurisdictional limit.
The question of interest in relation to a consent judgment is dealt with in Rule 57 of the Magistrates Court (Civil) Rules 1992 which states:
“57. (1) An offer to consent to judgment must specify whether the offer is inclusive of costs and interest, or if the offer is not so inclusive it must specify what is offered for the costs of the other party and what is offered for interest up to the date of such offer.
(2) If there is a failure to comply with Sub-rule (1) the party accepting the offer is entitled to costs and interest or whichever of costs and interest is not specified up to the expiration of 14 days from the date of service of the offer in addition to the sum offered.”
Again, like Rule 55 referred to earlier, this rule appears not to cover the situation of a consent to judgment endorsed on the Form 2, which, as I have said, is a procedure separate from that contemplated by Rule 55.
It is my view that the short answer is that if there was an award of $40,000 after a trial, a plaintiff would then be entitled to interest on top of that amount. That would be consistent with Turley v Saffin. However, here the first respondent is claiming only $40,000 which to make sense of the Form 2 procedure must include interest. Mr Nicholson, for the second appellant, put it that, “The total claim for the purposes of this cause of action is the face value on the front of the document”. I agree with that statement.
The second appellant claims support for its overall contentions is found in a decision of Perry J in Xenophon v Lucas [2001] SASC 160. That decision involved a claim in defamation brought by Mr Xenophon. The defendants to the claim consented to the full amount of the claim and provided a cheque to Mr Xenophon, who took no steps to enter judgment in accordance with that consent. Because no steps were taken to pursue the claim it was later dismissed under Rule 28.
Mr Xenophon then filed another claim in defamation against one of the original defendants, repeating the allegations which had been made in the original proceedings, asserting that the defendant had submitted to judgment in those proceedings, and then pleading further defamation by the defendant including assertions that the previous defamatory statements were true.
The determination of this later claim was adjourned pending the outcome of an appeal by Mr Xenophon against the dismissal of the earlier action. Mr Xenophon sought, in that appeal, to enter judgment in his favour in accordance with the defendant’s consent. The Magistrate hearing that appeal set aside the dismissal of the action, but declined to enter judgment in favour of Mr Xenophon.
The Magistrate’s decision not to enter judgment was appealed to the Supreme Court, and it is that appeal which is the subject of the decision in Xenophon v Lucas. Perry J, in allowing the appeal and substituting an order that judgment be entered, observed at [59] that:
“the learned Magistrate had before him proceedings which he had restored to currency, and a letter by the defendants consenting to judgment…No good reason existed at that stage why judgment should not have been entered in accordance with the defendants’ consent.”
In my view, the same reasoning applies here both to the endorsement on the Form 2 and to the letter subsequently sent by the second appellant.
The second appellant says that the first respondent could have formulated his claim in a different way if he had so chosen, and in particular he could have filed his claim in the District Court. The solicitors acting for him must be taken to have made a calculated decision that it was to their client’s benefit, perhaps for expediency or costs or both, to issue the claim in the Magistrates Court. As Mr Nicholson put it:
“If one files in the Magistrates Court for a sum not exceeding $40,000, then why should one complain when the defendant gives you what you have asked for?”
As counsel points out, the plaintiff always runs the risk that a judgment would be accepted for the full amount claimed so that if there is any doubt as to whether the jurisdictional limit of the Magistrates Court is appropriate, then it requires the advisors of any plaintiff to lodge their claim in a different court.
In my view, the first respondent has nominated that it is not seeking more than $40,000 plus a nominated amount for costs. It has therefore told the second appellant that it will accept that amount. The second appellant has decided to pay that amount and availed itself of the procedure on the Form 2 to enter a consent judgment. An offer has been made and accepted.
The second appellant also argues that the learned Magistrate erred when he considered that he had a discretion as to whether to enter judgment. Ultimately he indicated that in the exercise of his discretion he would not enter a judgment. It is argued that the learned Magistrate misinterpreted Rule 84(1) of the Magistrates Court (Civil) Rules 1992, which states:
“The Court may give judgment (including a final judgment) or make an order with the consent of the parties in the terms of the consent”
The argument put is that the word ‘may’ confers authority on the Magistrate to enter the judgment, but it does not create a general discretion in the way in which the Magistrate reasoned. His Honour said at [19]:
“In the circumstances of this matter, in my view it is a proper exercise of the discretion of the court if the discretion is open – to decline the application made by the second defendant on 27 August.”
In my view, there is considerable force in the argument that ‘may’ does not give a general discretion but merely confers authority. Any such general discretion comes, it seems, from Rule 12.3 which gives the court a general dispensing power according to the justice of the case. That is where, it seems to me, if the court is of the view that there has been unconscionable behaviour, it may be appropriate not to enter a judgment. Because of proved unconscionable behaviour the parties would not be ad idem. In those circumstances there would not have been a consent judgment and the court would decline to enter judgment.
Cases which support the construction of the word ‘may’ in the manner advanced by Mr Nicholson are Finance Facilities Pty Ltd v Federal Commission of Taxation (1971) 127 CLR 106 at 134-135 per Windeyer J, Lugg v Wright [1941] SASR 106, Barrenger v Coward [1965] Tas SR 243, and Re Dunsborough Districts Country Club Inc [1982] WAR 321. I have already indicated that I agree with that construction.
Mr Quick did argue that there was no consent because the second appellant was guilty of unconscionable conduct. He also argued that there was an abuse of process. The events which he relied on for both of these submissions are the same.
If the second appellant had been guilty of unconscionable conduct as alleged in the argument before me then the Magistrate would have been quite entitled to use his wide discretion in the interests of justice pursuant to Rule 12.3, but for the reasons which follow, I do not believe that there was any such conduct.
Mr Quick argued that the events which occurred were such that the second appellant knew or should have known that the first respondent was not in a position to finalise his claim, that his solicitors were still in the process of collecting evidence, that it was therefore obvious, or should have been obvious to the second appellant that the claim may exceed $40,000, and that therefore the action of the second appellant in consenting to judgment for the sum of $40,000 was, in all the circumstances, unconscionable. For the following reasons I reject that scenario.
That submission requires an analysis of the actual events which occurred. I will take the version most favourable to the respondent.
Mr Fabro, solicitor for the first respondent, sets out the history of this matter in his affidavit of 27 September 2004 in which he states that:
“2.In about November 2003, I sent by pre-paid post a letter of demand to the Chief Executive Officer of the Defendant, Strata Corporation No 2800 Inc. A true photostat copy of the said letter is annexed hereto and marked “DPF-1”. In this latter I inter alia advised the said Chief Executive Officer that “at this stage our client’s injuries have not yet stabilised and we are therefore unable to quantify his claim”.
3.On the 29^th day of April 2004, a copy of the within Form 2 Claim and Particulars of Claim were served on the defendant, Strata Corporation No 2822 Inc.
4.On the 12^th day of May 2004, I received a facsimile transmission of the same date from Ms Fiona Errington of the solicitors for the Defendant, Strata Corporation No 2822 Inc. A true photostat copy of the said facsimile transmission is annexed hereto and marked “DPF-2”…
6.On the 24^th day of May 2004, I attended by telephone on Ms Errington to discuss the matters raised in the said facsimile transmissions. A true photostat copy of my cost entry relating to this telephone attendance is annexed hereto and marked “DPF-4”.
7.During the telephone attendance on Ms Errington referred to in the preceding paragraph of this my Affidavit, I discussed with her a number of matters including:-
7.1A general discussion regarding the circumstances of the accident which is the subject of the within Action…
7.8 That, however, I had no objections to her client having some time within which to file a Defence because, in any event, our clients were not in a position to formulate their claims because we were still waiting on a final report from the male plaintiff’s treating orthopaedic specialist and an accountant’s report regarding the business losses (if any) suffered by the male plaintiff as a result of the subject accident.
7.9I advised Ms Errington that the male plaintiff had undergone surgery since the issuing of the within proceedings and that his condition had been unstable but we have had to serve the proceedings because the twelve month time limit for doing so was expiring…
11.Between service of the within Form 2 Claim and Particulars of Claim on the defendant, Strata Corporation No 2822 Inc, on the 29^th day of April 2004 and the 8^th day of July 2004, the first plaintiff incurred legal costs. These legal costs were associated with multiple correspondence; perusal of medical reports; communications with experts such as Chartered Accountant, Mr Magor; communications with the plaintiffs and perusal of other documentation.
12.On the 8^th day of July 2004 I received by document exchange a letter from Ms Errington dated the 7^th of July 2004 together with the Second Defendant’s Defence to the Claim; a Statement of Claim endorsed with a purported acceptance by the Second Defendant of the First Plaintiff’s claim for the total amount claimed and a Contribution Notice issued by the Second Defendant against the First Defendant in respect of both Plaintiffs’ claims. A true photostat copy of the said letter of Ms Errington dated the 7^th day of July 2004 is annexed hereto and marked “DPF-7”…”

Mr Quick was particularly critical of the solicitors for the second appellant and submitted as follows:
“It looks very much like the solicitors, knowing that the plaintiff has good reason to amend its pleadings because circumstances have changed, have deliberately sought to take advantage of that, by stealth, sneaking down to the Magistrates Court and filing the document.”
I do not think those criticisms are justified. The solicitors for the second appellant had a duty to their client. The first respondent had put forward a claim for a maximum amount, and the solicitors for the second appellant, perhaps perceiving that it would be a good result for their client to have judgment for that maximum amount, took the necessary steps to effect that. That could not be regarded as unconscionable. They are not expected to attempt to read the mind of the first respondent’s advisor.
I do not consider that any of the matters raised by Mr Fabro in his affidavit illustrate anything out of the ordinary in what one would expect in an action of this type, namely, that the first respondent was still in the process of formulating its claim. The solicitors for the second appellant decided not to wait for a formulation from the first respondent and chose to pay the full amount of the claim rather than put their client at risk for a larger assessment of damages.
I do not accept that the second appellant’s solicitors induced the first respondent’s solicitors into believing that they were contesting the claim as is alleged, because in my view they were merely going through the normal processes of a defendant’s solicitor in attempting to ascertain the parameters of the claim so that they could advise their client of a likely estimate.
Once the second appellant filed the endorsement on the Form 2, it is my view that the court should have entered judgment, and I refer again to the decision of Xenophon v Lucas. In my view, the learned Magistrate should have entered judgment when requested and should not have interpreted Rule 84(1) to give him a discretion as to whether to enter judgment in the circumstances before him.
Assuming the facts as set out in Mr Fabro’s affidavit, it is my view that there is neither unconscionable conduct nor an abuse of process on the part of the second appellant.
I therefore allow the appeal and direct that judgment be entered in the Magistrates Court in accordance with the endorsement on the Form 2. The first respondent should pay the costs of the second appellant in both the Magistrates Court and this court.