Foote v Cannon
[2024] VSC 453
•2 August 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2022 02307
| CRAIG FOOTE | Appellant |
| v | |
| SCOT CANNON | Respondent |
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JUDGE: | Richards J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 July 2024 |
DATE OF JUDGMENT: | 2 August 2024 |
CASE MAY BE CITED AS: | Foote v Cannon |
MEDIUM NEUTRAL CITATION: | [2024] VSC 453 |
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MAGISTRATES — Appeal from order of the Magistrates’ Court of Victoria — Judgment entered against appellant in default of defence — Whether magistrate erred in entering judgment in default of defence where a defence had in fact been filed — Whether error material — Appeal allowed — Whether appropriate to remit matter to Magistrates’ Court for re-hearing — Order set aside — Appellant to pay replacement cost of goods subject of proceeding, interest, and costs — Magistrates’ Court Act 1989 (Vic) s 109.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | In person | |
| For the Respondent | Ms R N Malone | White Cleland Pty Ltd |
HER HONOUR:
In early 2019, Craig Foote and Scot Cannon agreed to work in partnership, in a cabinet making and joinery business. At the time, they had neighbouring factories in Frankston. They worked together in Mr Cannon’s factory, in which he stored some personal goods — a motorboat with trailer, a jet ski with trailer, a panel saw, a table tennis table, and a Holden utility tub. In about May 2019, they agreed to store the goods in Mr Foote’s factory, in order to declutter their working space.
In July 2019, the two men fell out bitterly and the partnership ended. Mr Cannon asked Mr Foote to return his goods. Mr Foote refused to do so until Mr Cannon paid him the money he said he was owed. Each of them held stubbornly to his position, and their dispute escalated. Mr Cannon sued Mr Foote in the Magistrates’ Court of Victoria for the return of the goods, or payment of $13,000. Rather than returning the goods, Mr Foote sold them. He also counterclaimed against Mr Cannon for payment of $90,000 for storage of the goods.
On 29 March 2022, Magistrate Pithouse ordered Mr Foote to pay Mr Cannon $20,959 plus costs of $14,397.87, in default of defence. The magistrate made a separate order striking out Mr Foote’s counterclaim for failure to comply with the Magistrates’ Court rules. The circumstances in which those orders were made are described in detail below.
Mr Foote has now appealed the magistrate’s order to this Court, under s 109 of the Magistrates’ Court Act 1989 (Vic). Section 109 enables a party to appeal on a question of law from a final order of the Magistrates’ Court in a civil proceeding. After hearing and determining the appeal, this Court may make such order as it thinks appropriate, including an order remitting the case to the Magistrates’ Court for re-hearing.[1]
[1]Magistrates’ Court Act 1989 (Vic), s 109(6).
Mr Foote raises two questions of law in the appeal:[2]
(a) whether the magistrate erred in entering judgment in default on the basis that no notice of defence had been filed, on the grounds that a defence had been filed; and
(b) whether the magistrate erred in rejecting his defence filed on 20 November 2020 on the basis that it was in the wrong form.[3]
[2]Amended notice of appeal filed 3 December 2022, in accordance with the order of Steffensen AsJ made on 18 November 2022.
[3]On 18 November 2022, Steffensen AsJ ordered Mr Foote to file an amended notice of appeal limited to two questions of appeal. The second ground in the amended notice of appeal that Mr Foote filed on 3 December 2022 differed from the second ground identified by Steffensen AsJ, which was whether the magistrate erred in entering judgment in default due to noncompliance with an order requiring a defence or amended defence, on the grounds that no such order had been made. As will become clear, nothing turns on the variance.
Mr Foote also sought to appeal against the magistrate’s order striking out his counterclaim. However, on 18 November 2022, Steffensen AsJ ruled that Mr Foote did not have an arguable case on appeal in relation to that order.[4]
[4]Transcript of ruling, Steffensen AsJ, 18 November 2022, 22:27–23:15.
For the reasons that follow, I have concluded that the magistrate erred in entering judgment in default of defence, because a defence had in fact been filed and no order had been made requiring Mr Foote to file an amended defence. The appeal must therefore be allowed.
However, there is nothing to be gained by remitting the matter to the Magistrates’ Court for re-hearing, given that Mr Foote no longer has any viable defence to the claim. I consider that the appropriate order in this case is to set aside the order of 29 March 2022, and instead order Mr Foote to pay Mr Cannon $11,215 for the replacement value of the goods, plus interest of $2,630.15 and $8,000 for the costs of the Magistrates’ Court proceeding.
Magistrates’ Court proceeding
The proceeding in the Magistrates’ Court was plagued by procedural mishaps. Some of these were due to the disruption caused by the COVID-19 pandemic and the introduction of a new case management system for civil proceedings in the Magistrates’ Court. These difficulties were compounded by the fact that Mr Foote represented himself, according to his own notions of the law. Among other things, he referred to himself in documents filed in the Magistrates’ Court as ‘the CRAIG DAWSON FOOTE unit trust’, in a misguided attempt to separate his legal person — or ‘strawman’ — from his flesh and blood person. It did not help that Mr Cannon changed solicitors mid-proceeding.
Mr Cannon commenced the proceeding on 1 November 2019, in the Magistrates’ Court at Frankston. As mentioned, the complaint claimed the return of the goods stored in Mr Foote’s factory or damages for their value in the sum of $13,000, as well as interest and costs. On 15 June 2020, Mr Cannon obtained judgment against Mr Foote in default of a valid defence in the amount of $12,300.99, plus $795.35 in interest and costs of $2,608.20. On 30 October 2020, Mr Foote succeeded in having that judgment set aside, and was ordered to file a defence within 21 days.
On 23 November 2020, Mr Foote sought to file a defence and a counterclaim. The defence was accepted for filing, but the counterclaim was rejected. On 1 February 2021, Mr Foote succeeded in filing a counterclaim. Mr Foote replaced his name with the words ‘the CRAIG DAWSON FOOTE unit trust’ in the court heading of both documents.
A hearing listed on 7 October 2021 took place by audio visual link. Mr Cannon was represented by counsel, and Mr Foote appeared in person. The time allocated for the hearing was not sufficient to hear the claim and counterclaim, and it appears that the magistrate did not have the complete court file available to him. In particular, the magistrate could not locate Mr Foote’s defence, although he did have the counterclaim. The magistrate was critical of the fact that the counterclaim was made in the name of a unit trust, without disclosing an ACN or an ABN for the trust and without pleading the right of the trust of make the counterclaim. Having indicated that the counterclaim was liable to be struck out in its current form, the magistrate adjourned the hearing to a two hour directions hearing on a date to be fixed. His Honour also made orders that any application, with supporting affidavits, was to be made no less than seven days prior to the directions hearing, and that ‘any documentation that has been filed [and] requires amendment is to be made, filed and served 14 days prior to the directions hearing’.[5]
[5]Affidavit of Danielle Jane McCredden dated 19 October 2023, Exhibit DJM-1 — Extracts of Magistrates’ Court CMS Register in proceeding K12836131, 19.
The directions hearing took place on 29 March 2022, before the same magistrate. Once again the parties appeared by audio visual link. Mr Foote had not filed any amended documentation. Through his counsel, Mr Cannon made an oral application for the defence and counterclaim to be struck out and for judgment to be entered in his favour.
During this hearing, the magistrate appeared to be labouring under the misapprehension that Mr Foote had never filed a valid defence. This became clear in the following exchange with Mr Foote:[6]
[His Honour:] … What do you say about this, the proposition is that the original defence you filed was rejected. And it hasn’t been resubmitted in a proper form, in fact it hasn’t been re-submitted at all. Now on a legal basis, and quite properly so, Ms Malone is saying that in so far as the claim of the plaintiff, the court is now entitled to enter a judgment against you, in default, and that will be on a couple of bases, one, there is not a valid defence been filed, and secondly, the orders of this court with regard to filing a defence and counterclaim have not been complied with either so lets deal with the initial claim first, Why shouldn’t I make an order against you on the claim?
[Mr Foote:] Okay, the defence that has been submitted is to the best of my knowledge is compliant.
[His Honour:] No, it’s not, take it from me Mr Foote, it’s been rejected. It’s not compliant so therefore there is no defence filed, so that is (inaudible) submission to this court because you were given the opportunity to file a further defence the last time I dealt with these matters, on an interlocutory basis, for a further defence to be filed and a new counterclaim to be filed. Let’s look at the first issue, there is no defence so why should I not enter judgment against you, actually, for the return of the goods?
[6]Affidavit of Craig Dawson Foote dated 5 August 2023, Exhibit SCV-LC-23 — K12836131 hearing transcript - 29 03 2022, 7 (March 2022 transcript). Mr Foote personally transcribed the recordings of the Magistrates’ Court hearings. While the transcript was not prepared by an authorised transcript provider, Mr Cannon did not criticise Mr Foote’s transcription.
After discussion about the relief sought by Mr Cannon and the value of the goods, the magistrate reiterated his understanding that Mr Foote had not filed a defence:[7]
[His Honour:] Mr Foote, you are missing the point, I don’t know whether you are doing it deliberately .. I’ll put it to you again .. Do you, as a defendant, and you’ve been served with a summons and required to provide a defence within 21 days, that is (inaudible) in the form as set out in the rules.
[Mr Foote:] … originally, has never been rejected.
[His Honour:] It has been. It has been rejected. It continues to be rejected. There is no defence on file. So why should I not enter judgment?
[Mr Foote:] Because the whole process here is that the original controversy is because of the plaintiff’s actions in refusing to pay the outstanding amount.
[7]March 2022 transcript, 8–9.
A short time later the magistrate gave his decision:[8]
No (inaudible) this is going to go around in a circle. So in relation to the plaintiff’s claim, as this matter has no defence filed, it’s undefended technically, I am going to reject any claim by the defendant with regard to that matter and I’ll give an order in favour of the plaintiff to deliver the goods (inaudible) … the goods are to be delivered in their original form.
[8]Directions hearing transcript, 9.
At that point, Mr Foote informed the magistrate that the goods had been sold for around $4,500 and were no longer in his possession. The magistrate indicated that he would order Mr Foote to pay the replacement value of the goods, and asked Mr Cannon’s solicitors to advise the Magistrates’ Court of their market value to replace. Mr Cannon’s counsel sought an order for costs in the amount of $8,000.
The magistrate concluded the hearing with the following remarks:
… Mr Foote, you by self help have had a significant amount of money which hasn’t been quantified correctly by you just saying you think you got about $4000.00 … for the goods you sold, so on the basis of your failure to comply with the orders for (inaudible) defence and a proper counterclaim, the … counterclaim will be dismissed and struck out and there will be no order for costs so the order with be that the plaintiff is to advise the court of the replacement cost of the items claimed in the prayer for relief that’s replacement cost, and that the $8000.00 in costs and the amount to be paid to be notified to the court, which will then be notified to you, will be their claim plus $8000.00. That will all be due within 28 days and the costs on an indemnity basis.
On 21 April 2022, Mr Cannon’s solicitors sent an email to the Magistrates’ Court at Frankston attaching ‘valuations’ of the goods, as follows:
1.Boat Swift Craft Albatross value $8000. Inside the vessel were 5 life jackets that the Plaintiff advises a value of approximately $600.
2.Yamaha Wave Runner Jet ski $6490 - $7500.
3.Panel Saw $3000.
4.Table Tennis table $1339.00.
5. Holden Crewman 4 door Ute tub and cover $1025.00.
The ‘valuations’ attached to this email were copies of advertisements for equivalent goods from websites such as eBay.
The following day, Mr Foote responded with an email to the Magistrates’ Court at Frankston, submitting that there should be a further hearing to determine the value of the goods. He made the following points:
(a) The boat was a Swift Craft Sea Otter, not a Swift Craft Albatross, its runners were damaged, and both the boat and the trailer were unregistered;
(b) The jet ski was a different model to that previously owned by Mr Cannon, which had the odometer panel scratched;
(c) The panel saw in the valuation was a high value brand, while Mr Cannon’s was ‘a no name brand from China’ that Mr Cannon’s father bought for $760; and
(d) Similarly, the table tennis table was not comparing like for like.
Mr Foote referred to his affidavit in support of his application for a rehearing, which exhibited similar advertisements from the internet, and which he said showed a range of values for the items.
The magistrate did not hold a further hearing to determine the replacement value of the goods. On about 6 May 2022, the Magistrates’ Court mailed the orders to the parties. No explanation was given of how the amount of $20,959 had been calculated, or why the costs order was for $14,397.87 rather than the $8,000 ordered at the hearing on 29 March 2022.
Grounds of appeal
Mr Foote’s grounds of appeal were straightforward.
(a) First, he contended that the magistrate erred in law in entering judgment in default on the basis that no notice of defence had been filed, because he had in fact filed a defence on 20 November 2020. The notice of defence was not rejected by the registry, and receipt was acknowledged by Mr Cannon’s solicitors at the time.
(b) Mr Foote further contended that the magistrate erred in rejecting his defence filed on 20 November 2020 on the basis that it was in the wrong form. He relied on s 53 of the Interpretation of Legislation Act 1984 (Vic) and r 2.01 of the Magistrates’ Court General Civil Procedure Rules 2020 (Vic), and submitted that failure to use the right form was not a proper basis to strike out his defence.
In response, Mr Cannon acknowledged that Mr Foote did file a defence on 20 November 2020. His solicitor in this proceeding prepared a helpful affidavit setting out the result of her inquiries of the Magistrates’ Court about the steps taken in that proceeding. That affidavit resolved any lingering doubt about whether Mr Foote had filed a defence — it is clear that he did, and that the magistrate was mistaken in his understanding that no defence had been filed. The mistake concerned a matter essential to the magistrate’s jurisdiction to grant judgment in default of defence, and amounted to an error of law.[9]
[9][9] Chang v Neill (2019) 62 VR 174, [92].
However, Mr Cannon submitted that the magistrate would inevitably have struck out Mr Foote’s defence in any event, because:
(a) the defence did not comply with the rules;
(b) Mr Foote had not filed an amended defence in accordance with the magistrate’s orders of 7 October 2021; and
(c) the defence had no real prospect of success.
I understood this to be a submission that the magistrate’s error was not material to the outcome.
I do not agree that the defence must have been struck out as non-compliant with rr 8.03 and 13.02 of the Civil Procedure Rules. It followed the format of the prescribed Form 8A, in that it was headed ‘Notice of Defence’, was addressed to the plaintiff and the registrar of the Magistrates’ Court at Frankston, and gave notice that the defendant intended to defend the complaint. It then set out the defence in numbered paragraphs, after a statement that the ‘following facts stated in the statement of claim are denied for the following reasons’.
While the defence was not a conventional pleading, it was perfectly clear which facts were admitted, which were denied, and where Mr Foote had a different version of events. The substance of the defence was that there was no detinue because Mr Cannon owed money to Mr Foote, and there was no conversion because Mr Foote was not using the goods for his own benefit. Mr Foote also took issue with the value of the goods pleaded in the statement of claim, and gave his own valuations.
The fact that Mr Foote styled himself as a ‘unit trust’ in the court heading was objectionable, but in my view would not have been a reason to strike out the entire defence. As Mr Foote submitted to the magistrate on 7 October 2021 in relation to his counterclaim, those words could just have been deleted.
Even if the defence had substantially failed to comply with the Civil Procedure Rules, the magistrate had a broad discretion to dispense with compliance, and could not have struck out the defence unless a reasonable time had elapsed since Mr Foote had first become aware of the failure.[10] It is possible that these matters would have been resolved in Mr Foote’s favour, had they been considered.
[10]Magistrates’ Court General Civil Procedure Rules 2020 (Vic), Order 2, in particular rr 2.03, 2.04.
I also do not accept the argument that the defence must have been struck out because Mr Foote had not filed an amended defence. The magistrate’s orders of 7 October 2021 did not require him to do so. The order was that ‘any documentation that has been filed [and] requires amendment is to be made, filed and served 14 days prior to the directions hearing’. There had been no discussion of the defence during the hearing, because the magistrate was under the misapprehension that none had been filed. The discussion was entirely focused on the counterclaim, and whether it could be brought by the alleged unit trust. I reject the suggestion that Mr Foote should somehow have realised that the order required him to file an amended defence.
Mr Cannon was on stronger ground with his argument that the defence had no real prospect of success. The defence itself did not plead the basis on which Mr Foote claimed to be owed money by Mr Cannon, referring to ‘the attached Counterclaim for damages’, or alternatively ‘the attached claim for storage fees and additional costs incurred because of the plaintiff’s belligerence, ignorance, petulance and immaturity’. Mr Foote’s defence that he was entitled to retain the goods pending payment was therefore contingent on the success of his counterclaim.
The counterclaim was not determined on its merits, but was struck out for failure to comply with the rules. That order did not preclude Mr Foote from commencing a fresh proceeding to recover the money he claimed to be owed by Mr Cannon, in his own name rather than that of a spurious unit trust. As at 29 March 2022, that option was open to Mr Foote. I am therefore unable to say that his defence must inevitably have been summarily dismissed as having no real prospect of success.
For those reasons, I do not accept Mr Cannon’s submission that the defence would have been struck out in any event, had the magistrate realised that a defence had been filed.
Mr Foote’s first ground of appeal is made out. The second ground of appeal does not arise, because the magistrate did not reject the defence filed on 20 November 2020 because it was in the wrong form.
Disposition
That leaves the question of what order should now be made, in July 2024, more than five years since the partnership between Mr Foote and Mr Cannon fell apart. The time, effort, and money that each of them has expended in this litigation is out of all proportion to the amount in dispute. Their combined obstinacy has cost them both dearly.
The situation now is that Mr Foote sold the goods in mid-2021, he has not brought a fresh proceeding for the money he claimed to be owed, and there is no appeal against the order striking out the counterclaim. He no longer has any tenable defence to the claim for detinue and conversion, if he ever had one. In those circumstances, it seems to me that there would be no point in remitting the proceeding to the Magistrates’ Court for rehearing.
Section 109(6) of the Magistrates’ Court Act provides that, after hearing and determining the appeal, the Supreme Court may make such order as it thinks appropriate. In this case, I consider the most appropriate course is to assess for myself the evidence submitted by the parties to the Magistrates’ Court regarding the replacement value of the goods, taking into account the matters raised in their respective emails of 21 and 22 April 2022.
Having undertaken that exercise, I consider that the replacement value of the goods is $11,215, comprising:
(a) $4,200 for a second hand Swift Craft Sea Otter with trailer and safety equipment;
(b) $4,500 for a second hand Yamaha WaveRunner jet ski with trailer;
(c) $1,000 for the panel saw, being the amount for which Mr Foote sold it;
(d) $490 for a mid-range Uxuan Sports Indoor Elite Series 190 table tennis table; and
(e) $1,025 for the ute tub and cover.
In addition, Mr Foote should pay interest on that amount from 29 March 2022 to the date of this judgment, calculated at the penalty interest rate of 10% per annum.[11]
[11]Magistrates’ Court Act, s 100(7).
Further, Mr Cannon conceded that the costs order below should have been $8,000, instead of $14,397.87. That concession was appropriate, given he had only sought costs in the amount of $8,000, and no explanation was provided for the higher amount ordered.
I will make the following orders:
(a) The appeal is allowed.
(b) The order of the Magistrates’ Court of Victoria at Frankston made on 29 March 2022 on the defence to claim in case number K12836131 is set aside.
(c) The appellant is to pay the respondent damages in the amount of $11,215, plus interest of $2,630.15 and costs of $8,000.
I will hear the parties in relation to the costs of this proceeding.
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