Freeman v McCabe

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: FREEMAN & ANOR -v- McCABE & ORS [2008] WADC 125

CORAM: SWEENEY DCJ

HEARD: 27 FEBRUARY 2008

DELIVERED : Delivered Extemporaneously on 27 FEBRUARY 2008 typed from tape and edited by Trial Judge

FILE NO/S: CIV 114 of 2007

BETWEEN: SANDRA PEARL FREEMAN
First Applicant
MERRYL GAI ROTHENBURY
Second Applicant
AND
MICHAEL JOHN McCABE
First Respondent
SCENIC ASSET PTY LTD
Second Respondent
URSULA KARINE WACHMER
Third Respondent

Catchwords:

Application to transfer matter from Magistrates Court to District Court

Legislation:

Magistrates Court (Civil Proceedings) Act 2004 s 39

Result:

Matter transferred to District Court

Representation:

Counsel:

First Applicant               :     Mr T R Thies
Second Applicant          :     Mr T R Thies
First Respondent           :     Mr R Garas
Second Respondent      :     Mr R O'Brien
Third Respondent          :     Mr R O'Brien

Solicitors:

First Applicant               :     Timothy R Thies
Second Applicant          :     Timothy R Thies
First Respondent           :     Paiker & Overmeire
Second Respondent      :     Allens Arthur Robinson
Third Respondent          :     Allens Arthur Robinson

Case(s) referred to in judgment(s):

Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993
National Australia Bank Ltd v Maher (No 2) [1999] 3 VR 589

SWEENEY DCJ: This is an application on the part of the plaintiff to have a Magistrates Court matter transferred to the District Court pursuant to s 39 of the Magistrates Court (Civil Proceedings) Act 2004 ("the Act").
Section 39(1) provides:
"In this section, 'superior court' means the District Court or the Supreme Court."
Section 39(2) provides:
"A party to a case in the Court may apply to a superior court for an order that all or part of the case be transferred to the superior court."
Section 39(4) provides:
"The superior court may make such an order if it is satisfied that all or a part of the case is within its jurisdiction and –
(a)involves a claim by the claimant or another party, or an issue, that is outside the Magistrates Court's jurisdiction; or
(b)should be dealt with by the superior court because of its complexity or because of a question of law involved."
Section 39(7) provides:
"If an order is made under subsection (4) the superior court is to deal with the case as if it had been commenced in that court."
This application is confined to s 39(4)(a), namely the limb dealing with a matter which involves a claim by the claimant or another party, or an issue, that is outside the Magistrates Court's jurisdiction. It is not suggested that the case should otherwise be dealt with by this Court because of its complexity or because of a question of law involved.
The plaintiffs also seek an order that the minute of statement of claim attached to the plaintiffs' solicitor's affidavit stand as the statement of claim in this Court as against the second and third defendants. No such application is made in respect of the first defendant but the reason for that is clear, namely that a default judgment was entered against him prior to any statement of claim having been filed.
The second and third defendants take a neutral stance in relation to this application and did not wish to be heard.
The description of the claim in the Magistrates Court Form 3 General Procedure Claim reads as follows:
"The claimants claim demolition, remedial building and legal costs consequent upon the first defendant's breach of contract dated 2 March 2004, warranty and misrepresentation as to inter alia the lawfulness of use of improvements being the alfresco dining area and lean‑to/shed on the land at 22 Marlborough Way, sold by the second and third defendants on behalf of the first defendant to the claimants; also misrepresentations as to title to the land and encumbrances H468966 and H46123; and as against the second and third defendants in respect of conduct in contravention of sections 52 and 53A of the Trade Practices Act 1974 and sections 10 and 12 of the Fair Trading Act of 1987."
Form 3 requires, in the case of a monetary claim, the amount of the claim to be filled in. The claimant specified the sum of $10,651.45. The Court has procedures in relation to claims under $7,500 designed to reduce costs by which legal costs are generally not recoverable.
The second and third defendants entered a notice of intention to defend the claim. The first defendant failed to do so and the claimants - I say claimants because that is what they were in the Magistrates Court – filed for default judgment for an unliquidated amount in excess of $7,500 to be assessed. On 3 May 2006 the Court sent notice that default judgment had been entered. The certified copy of the application for default judgment, Form 13, has been endorsed by the Magistrate to state "against Michael John McCabe quantum of damages to be listed for assessment".
The assessment was, according to the papers before me, set down for hearing on 8 June 2006 but no such assessment has ever taken place. The claim before the Magistrates Court as it currently stands on its face, that is to say the description of the claim in the general procedure claim, is within that Court's jurisdiction. However, I have before me an affidavit from the claimants' solicitor, Mr Tim Thies, which sets out the background information I have referred to and annexes quotes for demolition, repair and rebuilding work suggesting that the costs involved in demolition and rebuilding of the structures is more in the order of about $100,000, if I have understood those papers correctly.
The affidavit also attaches the minute of statement of claim which it is proposed will stand as the statement of claim in this court as against the second and third defendants and in that minute of statement of claim are additional heads of damages, including the difference in value between the amount of money paid for the property and the amount of money it is said to be worth.
The minute of statement of claim asserts as against the first defendant, though in fact there is no order for it to stand against him, breach of express terms of the contract for the sale of land including that the land was free of encumbrances, that none of the structures encroached and that the use of the land was lawful when the plaintiffs say, in fact, there was a registered restrictive covenant on the land, the use of land was not lawful, the "lean‑to/shed" constituted a nuisance to the neighbouring property and the limestone wall encroached onto the neighbouring property and so the plaintiffs claim loss and damage for breach of the contract.
They also claim breach of a restrictive covenant. That cause of action is not entirely clear to me, however that is a claim in respect of which there is no order that it stand against the first defendant.
The loss and damage is said, in the minute of statement of claim, to consist of demolishing, rebuilding and surveyors fees, future engineering and labour costs and also legal costs including costs of attempting to persuade the City of Wanneroo and then the State Administrative Appeals Tribunal to set aside a demolition order over the unapproved works. The sum claimed is in the vicinity of $304,000.
The minute of statement of claim also alleges misrepresentations consistent with the express terms of the contract which are said to have been false, or alternatively made without belief in their truth or recklessly, which induced the plaintiffs to enter into the contract for the sale of the land. Although the word, "fraudulent" is not pleaded, that is clearly what is being alleged. Damages are claimed representing the difference in price between the amount the plaintiffs paid for the property and the claimed actual value of the property, the difference being pleaded in the order of $270,000.
As against the second and third defendants, who are the real estate agent and her employer, is alleged misleading and deceptive conduct against the Trade PracticesAct and Fair Trading Act and, in effect, fraudulent misrepresentation. The plaintiffs also claim exemplary and aggravated damages.
Pursuant to the procedures set down by the Magistrates Court (Civil Proceedings) Rules 2005, either accompanying the general procedure claim form or, alternatively, 14 days after receiving a notice of intention to defend a claim, the claimant must file a statement of claim containing a summary of the facts and a legal basis for the claim and the remedy or relief claimed and, if the amount of the claim has been reduced in order to bring the claim within the jurisdictional limit, a statement to that effect. No such statement of claim was ever filed in this matter because the proceedings have not reached that point.
Pursuant to s 16 of the Act that Court may allow a party to amend its case statement, defined in s 3 of the Act to mean the statement of claim, whether as originally lodged with the Court, or as amended, or as supplemented by additional information given voluntarily or as ordered by the Court. It is clear then the powers to amend are broad and it is equally clear that the Magistrates Court is not a court of strict pleadings. The Court also has power to strike out any claim which is outside its jurisdiction and that is provided for by s 17(1) of the Act which provides:
"The Court may strike out all or a part of the case statement if:
(a)any claim in it is outside the Court's jurisdiction;
…
(d)it is an abuse of the Court's process …"
The claimants could not, in the Magistrates Court, file the statement of claim in the minute before me without either reducing its amount to bring it within the jurisdiction or, alternatively, being liable to be struck out as being outside the Court's jurisdiction which is limited to $50,000. Nor could the claimants in the Magistrates Court hope to persuade any Magistrate that they should be allowed to amend any existing statement of claim in terms of that minute, because it is outside that Court's monetary jurisdiction.
The fact that the claim currently in the Magistrates Court is, on its face, within the Magistrates Court's jurisdiction does not persuade me, as the first defendant submits, that I have no jurisdiction to entertain this application to transfer the case to this Court. In my view, that would subvert the intention of s 39 of the Act in circumstances where the claimant cannot amend its pleadings to exceed the jurisdiction and therefore demonstrate that the case is outside the jurisdiction.
Section 39 was not intended in my view to be limited to cases where the claim pleaded in the general procedure claim form is outside the jurisdiction of the Court. The expression employed in s 39(4) of the Act is "the superior court may make such an order if it is satisfied that all or part of a case … involves a claim by the claimant or another party or an issue that is outside the Magistrates Courts' jurisdiction …" (emphasis added).
Claim is defined in s 3 of the Act to mean "a claim made to a Court by a party (whether a claimant, a defendant or another party)". The expression "involves" a claim, as opposed to "is" a claim, "which is outside the jurisdiction" in my view is broad enough to encompass the current situation. This case "involves" a claim for money outside the monetary jurisdiction of the Magistrates Court in that the claimant generally has an ability to seek leave to amend its claim to increase the sum claimed, but cannot do so in this case because the increase sought will put the claim outside the jurisdiction of the Magistrates Court. In my view, that is precisely one of the factual scenarios that s 39 was intended to encompass.
The general procedure claim form does not raise any issue that is outside the Magistrates Court's jurisdiction on its facts, but the sum of damages which is sought to be claimed by the plaintiffs and which, were that sum within the Magistrates Court's jurisdiction, the plaintiffs could amend their claim to include, is outside the Magistrates Court's jurisdiction.
The particulars in the minute of statement of claim, while they are not at this stage to stand against the first defendant and, at this stage, I am not sure by what mechanism they could be sought to stand against him, nevertheless give indication in a broad sense as to how the plaintiffs would seek to run their case in respect of an assessment of damages. The sum claimed, even if it be limited to the costs of demolition and remedial building work and costs, involves a claim well outside the Magistrates Court's monetary limit on jurisdiction. The claim will be within this Court's jurisdiction.
I entirely accept the argument by the plaintiffs that the upper limit on the Magistrates Court's jurisdiction does not define a lower limit on the District Court's jurisdiction. While the District Court does indeed have a discretion to remit to the Magistrates Court any matter commenced in this court that is within the Magistrates Court's jurisdiction, no counsel has referred to any statutory provision which suggests that the Magistrates Court's jurisdiction is exclusive and nor does the first defendant's counsel press that submission.
The first defendant argues that the plaintiffs cannot now amend their claim to exceed the claim for $10,651 made in the Magistrates Court. Notwithstanding that Form 3 requires a sum of money to be specified and that a sum was specified, I conclude, and I think having discussed this with counsel this is now not controversial, the claim was for an unliquidated sum. While perhaps, with respect to Mr Thies, it was not elegantly drafted it claims "demolition, remedial building and legal costs" for breach of contract, misrepresentations giving rise to breach of contract and misrepresentations as to the title to the land and encumbrances and misleading and deceptive conduct.
In substance, the nature of the claim is for damages, even though the word "damages" is not used, represented by the "demolition, remedial building and legal costs". It is not a claim for a debt or liquidated damages. The fact that a sum of money is specified does not alter its essential character. I conclude that the learned Registrar, contrary to the written submissions filed by the first defendant, was correct to enter default judgment for an unliquidated sum as requested and set the matter down for an assessment for the amount of the judgment.
The description of claim in the Form 3 General Procedure Claim as against the first defendant encompassed breach of contract and misrepresentation. The alfresco area and the "lean-to/shed" are specifically mentioned. The limestone fence is not mentioned. Misrepresentations to the title are alleged, but whether this is sufficiently broad to encompass the notion of encroachment by the limestone fence is, I would have thought, debatable.
The proposed statement of claim as against the second and third defendant seeks to plead new heads of damage such as the reduced value of the property and also particularises the claim for damages in a way which increases the sums claimed. It will, I conclude however, be a matter of live argument as to precisely what was decided by the default judgment, whether that be in this court or the Magistrates Court. In Volume 1 of "Civil Procedure of Western Australia", par 13.0.10, the author states "Default judgments give rise to estoppel per rem judicatum but they will be scrutinised carefully to ascertain the bare essence of what they necessarily decide for they estop only for what must necessarily and with complete precision have been decided by their entry", citing the case of Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 at 1010, 1012 in support of that proposition.
It is permissible to amend pleadings even after judgment has been entered. When judgment has been entered as to liability but damages are still to be assessed, the Court can still allow an amendment, but not so as to add a new cause of action: National Australia Bank Ltd v Maher(No2) [1999] 3 VR 589.
I see no bar to the plaintiffs now increasing the amount claimed by them. They cannot do so, however, in the Magistrates Court above the $50,000 jurisdictional limit and it is clear that the plaintiffs' claim is a claim far in excess of that sum. No application has been made in the Magistrates Court to set aside the default judgment, though the Court has power to do so pursuant to s 19 of the Act.
I was asked in the written submissions and to some extent in oral submissions to take some account of the fact that the first defendant allowed judgment to be taken in the knowledge that the claim was for no more than $10,651 and that different considerations might have applied if the plaintiffs' claim had been for damages. It is submitted that different considerations might have applied if this issue had been decided in a court with an upper monetary limit that was not $50,000.
I take it this is a suggestion that letting judgment be entered might have been an economic decision on the part of the first defendant assuming his liability would be capped by the amount specified in the general procedure claim or, if not, then at least capped by the upper monetary jurisdiction of that Court. The contention is not supported by affidavit, is purely hypothetical and, in the absence of any application to set aside that judgment, is in my view irrelevant and I take no account of such statements. I can see no basis for finding otherwise than that the judgment was regularly entered by the learned Registrar.
The first defendant submits that the plaintiffs elected, by seeking default judgment, an assessment of damages within that Court's jurisdiction of $50,000. I do not accept that submission. The quotes attached to the affidavit of Mr Thies, which raised the issue for the claim for higher damages, were obtained after default judgment had been entered. Section 39 of the Act contains no limitation, timewise or by reference to any stage of the proceedings, as to when an application for transfer may be made.
I accept on the strength of the affidavit material before me that the plaintiffs' case now involves a claim which is outside the jurisdiction of the Magistrates Court and there is no ability in that Court to amend that claim to encompass the higher claim for damages. I am therefore satisfied that the criteria in s 39 of the Act is made out.
The section says I may make an order transferring all or part of the case to this Court. It is therefore discretionary. I envisage this Court may refuse to exercise that discretion in an applicant's favour where, for example, the claim is only minutely over the jurisdictional limit, or where the increase in the claim which takes it over the monetary limit is plainly spurious or an abuse of process or vexatious and factors of that kind.
I would also envisage that this Court might refuse to exercise that jurisdiction if factors such as prejudice or hardship come into play such as to make the transfer inappropriate and contrary to the interests of justice. The only prejudice that will result to the first defendant in this case is that he will be subject to a higher monetary limit on the potential award of damages. Damages will be assessed according to law by this Court and so it follows that, if that results in an award over the Magistrates Court's jurisdiction, it will still be no more damages than the plaintiffs are entitled to.
I do not consider that amounts to prejudice or for that matter, an abuse of process. I do not consider that to be a factor weighing against granting the application. There is no material put before me on affidavit to point to any particular prejudice over and above the increase of the monetary limit on jurisdiction. I do not see it as necessary or desirable for me, on an application such as this, to look too closely to consider the merits of the plaintiffs' claim for damages to assess the merits of the various heads of damages contained in the proposed statement of claim against the second and third defendants and assess the likelihood of each individual claim's success if they are not apparently doomed and are, at least on their face, arguable.

It may be in this case that some of the aspects of the plaintiffs' claim for damages will ultimately not be made good against any party or, alternatively, that argument before this Court will limit the extent of the default judgment against the first defendant to strict terms, but I am satisfied that the claim for an award of damages over the $50,000 limit is arguable, even if limited to the costs of demolition, rebuilding and legal costs. I am satisfied, at least for the purposes of this application, that the plaintiffs stand an arguable chance of achieving an award of damages outside the jurisdiction of the court below.
Should the amount of the judgment ultimately be assessed as against the first defendant as falling below the jurisdictional upper limit in the Magistrates Court then that can be reflected in awarding any costs in the plaintiffs' favour to be assessed on the scale applicable to the lower court.
Given that I reject the submission that the plaintiffs are limited in their claim against the first defendant to the amount specified in their Form 3 general claim, I accept the plaintiffs' submission that the whole of the case should be transferred to this Court and, subject to any contrary order later made by this Court in relation to the default judgment, the assessment of damages should be determined by the trial Judge who determines the case as against the second and third defendants.
The issue of precisely what the default judgment has determined and what falls within the principle of res judicata can still, it seems to me, be ventilated in this Court.

[2008] WADC 125

27 FEBRUARY 2008 (Delivered Extemporaneously; typed from tape and edited by Trial Judge)