Gatto v Felstead
[2012] VSCA 14
•9 February 2012
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2011 0195
| PAUL GATTO | Applicant |
| v | |
| STEVEN ROSS FELSTEAD | Respondent |
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JUDGES: | WEINBERG JA and KYROU AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 9 February 2012 | |
DATE OF JUDGMENT: | 9 February 2012 | |
MEDIUM NEUTRAL CITATION: | [2012] VSCA 14 | |
JUDGMENT APPEALED FROM: | Felstead v Gatto [2011] VSC 617 (Bell J) | |
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APPLICATION FOR LEAVE TO APPEAL – Orders made by trial judge in an appeal under s 109 of the Magistrates’ Court Act1989 and an application under O 56 of the Supreme Court (General Civil Procedure) Rules 2005 – Magistrate made an order staying the respondent’s proceeding with costs without considering all the grounds in support of the application for a stay – No express finding by trial judge of special circumstances under r 56.02(3) for granting an extension of time – Trial judge entitled to determine that special circumstances existed in the light of the applicant’s conduct at trial – Trial judge required to have regard to ss 7, 8 and 9 of the Civil Procedure Act 2010 in applying r 56.02(3) – Trial judge’s consideration of evidentiary matters did not vitiate conclusion that there was an error of law on the face of the Magistrates’ Court record – Trial judge erred in dismissing application for a stay with costs instead of setting aside the magistrate’s order and remitting the proceeding to the Magistrates’ Court – Substantial injustice arising from that error – Leave to appeal granted only in respect of that error.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr M G McKenney | Mallesons Stephen Jaques |
| For the Respondent | Mr D Laidlaw | Derek Norquay |
WEINBERG JA:
I shall invite Kyrou AJA to deliver the first judgment.
KYROU AJA:
Introduction
Paul Gatto has applied for leave to appeal against orders made by a trial division judge on 30 November 2011 in two related proceedings in which Mr Gatto was the defendant and Steven Felstead was the plaintiff.[1] The first proceeding was an appeal under s 109 of the Magistrates’ Court Act1989 (‘MC Act’) against an order made by a magistrate on 21 March 2011. The magistrate’s order stayed Mr Felstead’s proceeding against Mr Gatto seeking payment of overdue remuneration of $50,031.74 and required Mr Felstead to pay Mr Gatto’s costs. The second proceeding was an application under O 56 of the Supreme Court (General Civil Procedure) Rules 2005 (‘Rules’) for an order quashing the magistrate’s order.
[1]The primary decision is Felstead v Gatto [2011] VSC 617 (29 November 2011) (‘Reasons’). Leave to appeal is required in accordance with s 17A(1)(b), (3A)(b) and (4)(b) of the Supreme Court Act 1986.
The orders of the trial judge were in the following terms:
1.The applicant is granted leave under r 56.02(3) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) to issue his application for judicial review.
2. The affidavits and other documents filed in the applicant’s appeal are to be treated as filed in the application for judicial review.
3. The orders of the Magistrates’ Court of Victoria dated 21 March 2011 staying the applicant’s proceeding in that court and ordering him to pay the respondent’s costs are set aside.
4. The respondent’s application in the Magistrates’ Court for the applicant’s proceeding in that court to be struck out or stayed is dismissed and the respondent is ordered to pay the applicant’s costs of that application.
5. The applicant’s appeal in this court is dismissed.
6.The respondent is to pay the applicant’s costs (including any reserved costs) of that appeal and the application for judicial review.
7. In respect of the applicant’s costs of the appeal and application for judicial review which the respondent has been ordered to pay, the respondent shall have an indemnity costs certificate under s 4(1) of the Appeal Costs Act [1998] (Vic).
Mr Gatto seeks leave to appeal against all but the fifth order. For Mr Gatto’s application to succeed, he must show that the decision below is wrong or attended with sufficient doubt to warrant the granting of leave and that substantial injustice would result if the decision were to stand.[2]
[2]Niemann v Electronic Industries Ltd [1978] VR 431, 433, 441.
At the hearing of Mr Gatto’s application before this Court, a preliminary issue arose as to whether the application was filed one day late and whether an extension of time was required. These issues turned on whether the trial judge had made his order on 29 November 2011 or on 30 November 2011. The order itself states that it was made and authenticated on 30 November 2011. In my opinion, in the absence of an amendment to the order, it must be treated as having been made on 30 November 2011. Accordingly, an extension of time is unnecessary.
Factual background and procedural history
The Victorian North East and Border Trades and Labour Council (‘Council’) is an unincorporated association whose members are various trade unions. Mr Gatto was a member of the executive committee of the Council. Mr Felstead alleges that he became an employee of the executive committee of the Council on 9 December 2003 and that, in that capacity, he carried out the duties of secretary/treasurer of the Council. On 25 February 2004, Mr Felstead was elected to the office of secretary/treasurer of the Council and held that office until 2 July 2008.
On 9 December 2009, Mr Felstead commenced a proceeding in the Magistrates’ Court against Mr Gatto seeking payment of remuneration allegedly owing to him. Mr Gatto made an application under r 23.01 of the Magistrates’ Court General Civil Procedure Rules 2010 for an order staying the proceeding on three grounds.
The first ground was that any contract of employment between Mr Felstead and the executive committee of the Council could not incorporate an implied term for the novation of the contract upon changes in the composition of the executive committee. The second ground was that, as a matter of law, an elected officer of the Council cannot be characterised as an employee. The third ground was that, as Mr Gatto was a member of the executive committee in the capacity of an agent of a union, he could not be personally liable to Mr Felstead.
The magistrate rejected the first ground, upheld the second ground and did not deal with the third ground. In the magistrate’s reasons for decision dated 21 March 2011, the magistrate said the following in relation to the second ground:
The question is whether it is arguable that, after February, 2004 the plaintiff performed the duties of Secretary/Treasurer under a contract of employment in parallel with his election to the office of Secretary/Treasurer. In my view, in light of the authority of Roughan v Coulson, the suggestion that the plaintiff upon election had the capacity of both holder of the office of Secretary/Treasurer and that of employee of the Council in the role of Secretary/Treasurer, cannot be sustained and is doomed to failure. I have formed this view in light of the Rules and Constitution of the Council and in particular the scheme of representation of affiliated unions through credentialed representatives, such as the plaintiff and the prescription of the duties and privileges of office upon election to Council under those Rules.
It follows therefore, that upon election to office, the Plaintiff is unable to sustain his claim in contract against the Defendant. I find that the proceeding does not, consequent upon my ruling, disclose a cause of action and/or is vexatious in that it cannot be sustained. I do not consider this defect is capable of being cured by the provision of particulars. Pursuant to Rule 23.01 I order that the proceeding be stayed.[3]
[3]Gatto v Felstead (Unreported, Magistrates’ Court of Victoria, Magistrate Chambers, 21 March 2011) [21]-[22].
On 20 April 2011 Mr Felstead commenced an appeal against the magistrate’s order staying the Magistrates’ Court proceeding and requiring Mr Felstead to pay Mr Gatto’s costs. On 6 September 2011, Mr Felstead became aware that at the hearing of the appeal, Mr Gatto would contend that the appeal was incompetent because it was not in respect of a ‘final order’ as required by s 109 of the MC Act. On 16 September 2011, Mr Felstead filed an application under O 56 of the Rules seeking an order quashing the magistrate’s order. On 18 November 2011, Mr Gatto filed a summons seeking an order for summary dismissal of the O 56 proceeding on the basis that it was not filed within 60 days of the making of the magistrate’s order, as required by r 56.02(1) of the Rules.
Mr Felstead’s appeal and O 56 proceeding and Mr Gatto’s summons were heard together by the trial judge on 29 November 2011. During the course of the hearing, Mr Gatto abandoned the summons. The hearing proceeded on the basis that the O 56 proceeding would be treated as the substantive proceeding and that the evidence and the parties’ submissions would be considered in that proceeding. His Honour granted the relief sought by Mr Felstead in the O 56 proceeding. He dismissed the appeal proceeding without deciding the substantive grounds of appeal or whether it was validly brought under s 109 of the MC Act. His Honour said the following:
It is unnecessary to determine whether the orders made by the magistrate were final. Under O 56 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic), Mr Felstead issued a precautionary application for judicial review. He claimed an order in the nature of certiorari setting aside the orders of the magistrate on the basis that her Honour made an error of law on the face of the record. That application can and will be the vehicle for the determination of the substantive issues which are in controversy. I will grant all necessary leave for that application to be issued, including leave under r 56.02(3) for it to be issued out of time. I will also order that the materials filed in the appeal are to be treated as filed in the application for judicial review. I will determine the proceeding on that basis. I acknowledge with gratitude Mr Gatto’s cooperation in adopting this convenient course and will take it into account on the question of costs.[4]
[4]Reasons, [5].
The trial judge held that it was clear from the magistrate’s reasons that the magistrate decided the application for the stay of the Magistrates’ Court proceeding on the sole ground that Mr Felstead could not be both an employee and the elected secretary/treasurer of the Council at the same time.[5] According to his Honour, the magistrate erred in concluding that Roughan v Coulson[6] was authority for the proposition that a person cannot have the dual capacities of an employee and an office holder and that this error appeared on the face of the Magistrates’ Court record.[7]
[5]Reasons, [9].
[6](1982) 3 IR 393.
[7]Under s 10 of the Administrative Law Act 1978, the reasons of an inferior court form part of the court’s record.
Having found an error of law on the face of the record, the trial judge decided to set aside the magistrate’s order. His Honour stated:
There will be orders dismissing Mr Gatto’s application in the Magistrates’ Court for Mr Felstead’s proceeding to be struck out or stayed and for Mr Gatto to pay Mr Felstead’s costs of that application in that court. Mr Felstead’s appeal in this court will be dismissed. Mr Gatto will be ordered to pay Mr Felstead’s costs (including any reserved costs) of that appeal and the application for judicial review. In respect of those costs of Mr Felstead of the appeal and the application for judicial review which Mr Gatto has been ordered to pay, he shall have an indemnity costs certificate under s 4(1) of the Appeal Costs Act 1998 (Vic). In granting that certificate, and in doing so in respect of all of those costs, I take into account Mr Gatto’s cooperation as aforesaid. As the consequence of these orders will be that Mr Felstead’s proceeding in the Magistrate’s Court is not stayed and must be heard and determined by that court, there is no need for a formal order of remitter to that effect.[8]
[8]Reasons, [16].
Proposed grounds of appeal
Mr Gatto’s proposed notice of appeal sets out five grounds of appeal which may be summarised as follows:
(a) The trial judge granted an extension of time for the commencement of the O 56 proceeding without making a valid determination that there were special circumstances for the granting of the extension, as required by r 56.02(3) of the Rules;
(b) The trial judge exceeded the Court’s powers under O 56 by granting relief to Mr Felstead notwithstanding the absence of an error of law on the face of the record of the Magistrates’ Court;
(c) The trial judge erred in finding that the magistrate decided Mr Gatto’s application for a stay of the Magistrates’ Court proceeding on the sole ground that Mr Felstead could not simultaneously be an employee and an office holder of the Council;
(d) The trial judge erred in dismissing Mr Gatto’s application for a stay of the Magistrates’ Court proceeding, rather than setting aside the magistrate’s order and remitting the proceeding to the magistrate to determine the third ground in support of the application for a stay which had not been decided by the magistrate; and
(e) The trial judge erred in ordering Mr Gatto to pay Mr Felstead’s costs of the appeal in circumstances where his Honour dismissed the appeal.
Ground 1: special circumstances under r 56.02(3)
Under cover of ground 1, Mr Gatto submitted that the trial judge lacked jurisdiction under O 56 because he failed to determine that there were special circumstances warranting the granting of an extension of time to Mr Felstead to commence the O 56 proceeding. Mr Gatto contended that Mr Felstead had not adduced any evidence on the question of special circumstances and that, if his Honour had applied the well-established principles for determining whether special circumstances existed, he would have been compelled to find that there were no special circumstances in the present case. In particular, Mr Gatto submitted that a delay in commencing a proceeding under O 56 due to a late realisation that an alternative remedy that was being pursued was unavailable, cannot constitute special circumstances.
Mr Felstead submitted that it was implicit from his Honour’s reasons that he had determined that special circumstances existed on the basis of Mr Gatto’s abandonment of the summons seeking to summarily dismiss the O 56 proceeding.
I agree with Mr Felstead’s submission. While it is true that the trial judge did not make an express finding that Mr Felstead had established special circumstances for the purposes of r 56.02(3), it is clear that his Honour was aware of the provision and the need to grant an extension of time pursuant to it in order for the O 56 proceeding to continue.
It is also true that a failure to commence a proceeding under O 56 within 60 days on the erroneous view that an alternative remedy was available will not ordinarily constitute special circumstances.[9] However, there were additional considerations in this case that enabled his Honour to be satisfied that special circumstances existed. A critical consideration was Mr Gatto’s abandonment of his summons to summarily dismiss the O 56 proceeding. Another consideration was the parties’ acquiescence to the O 56 proceeding being treated as the substantive proceeding. Even if these steps did not amount to a concession by Mr Gatto that special circumstances existed for the purposes of r 56.02(3), his Honour was entitled to take them into account in determining that question.
[9]Mann v Medical Practitioners Board of Victoria (2004) 21 VAR 429, 447 [58], 449 [67], 451 [72]-[76].
My conclusion that the trial judge was entitled to determine that special circumstances existed is reinforced by ss 7, 8 and 9 of the Civil Procedure Act 2010 (‘CP Act’).
Section 7(1) of the CP Act provides that the overarching purpose of the Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. Section 8(1) provides that the Court must seek to give effect to the overarching purpose in the exercise of any of its powers or in the interpretation of those powers. Section 9(1) provides that, in making any order, the Court shall further the overarching purpose by having regard to several objects, including the efficient use of judicial resources, the timely determination of the proceeding and dealing with the proceeding in a manner proportionate to the complexity or importance of the issues and the amount in dispute.
The trial judge was required to have regard to the above provisions of the CP Act in deciding whether special circumstances existed. Although his Honour did not expressly refer to the provisions, his reasoning and conclusion in relation to the extension of time under r 56.02(3) were consistent with them. The granting of the extension of time and the treatment of the O 56 proceeding as the substantive proceeding facilitated the just, efficient, timely and cost-effective resolution of the real issues in dispute.
Mr Gatto’s submissions in relation to ground 1 do not persuade me that the decision below is attended with sufficient doubt to warrant the grant of leave to appeal.
Ground 2: error of law on the face of the record
Under cover of ground 2, Mr Gatto submitted that the trial judge exceeded his powers by, in effect, treating the O 56 proceeding as an appeal rather than as an application for judicial review. In particular, Mr Gatto submitted that his Honour did not confine himself to determining whether there was an error of law on the face of the Magistrates’ Court record, but embarked upon a consideration of the evidence and the merits of the magistrate’s decision.
I reject Mr Gatto’s submissions. The trial judge clearly decided that the magistrate’s reasons – which, as I have noted in n 7, form part of the record – disclosed an error of law, namely, that a person cannot simultaneously hold office and be an employee. Mr Gatto has not sought to challenge his Honour’s finding that there is no rule of law that a person cannot simultaneously have these dual capacities.
It is true that, after finding that there was an error of law on the face of the Magistrates’ Court record, the trial judge went on to consider the rules and constitution of the Council and other evidentiary matters. His Honour did so for the purpose of determining whether there was anything in the rules and constitution of the Council or the evidence before the magistrate which precluded a finding that Mr Felstead was an employee at the time that he held the office of secretary/treasurer of the Council. His Honour’s conclusions on these issues were unnecessary. They do not, however, vitiate his conclusion that there was an error of law on the face of the record.
Ground 3: sole ground for magistrate’s order
Under cover of ground 3, Mr Gatto submitted that the trial judge erred in finding that the magistrate decided the application for a stay of the Magistrates’ Court proceeding on the sole ground that Mr Felstead could not simultaneously be an employee and the elected secretary/treasurer of the Council.
In my opinion, there is no substance to this submission. The magistrate’s reasons that are set out at [9] above make it clear that the magistrate formed the view that Roughan v Coulson had the effect that Mr Felstead could not simultaneously be an employee and the elected secretary/treasurer of the Council. His Honour did not misconstrue the magistrate’s decision.
Ground 4: dismissal of Mr Gatto’s stay application in the Magistrates’ Court
Under cover of ground 4, Mr Gatto submitted that the trial judge’s finding that the magistrate had erred in law in relation to the second ground upon which a stay of the Magistrates’ Court proceeding was sought did not empower his Honour to dismiss the stay application. He contended that, in the light of his finding, the trial judge was obliged to set aside the magistrate’s order and remit the proceeding to the magistrate for the purpose of determining the third ground upon which a stay was sought.
Mr Felstead did not cavil with the proposition that his Honour should not have dismissed the application for a stay with costs. However, he submitted that Mr Gatto was not prejudiced because he could issue a fresh application seeking a stay on the basis of the third ground.
I accept Mr Gatto’s submission that the trial judge erred in dismissing Mr Gatto’s application for a stay and in ordering him to pay Mr Felstead’s costs of that application.
Ground 5: order for costs in relation to the appeal proceeding
Under cover of ground 5, Mr Gatto submitted that the trial judge erred in departing from the normal rule that costs follow the event by ordering Mr Gatto to pay Mr Felstead’s costs of his unsuccessful appeal.
In my opinion, no error has been demonstrated. In circumstances where the parties acquiesced in the appeal not being actively pursued and the O 56 proceeding being treated as the substantive proceeding, the trial judge was entitled, in the exercise of his discretion in relation to costs, to order Mr Gatto to pay Mr Felstead’s costs of the successful O 56 proceeding as well as the costs of the unsuccessful appeal proceeding. In any event, the effect of the costs order was ameliorated by the granting of a certificate under s 4(1) of the Appeal Costs Act 1998.[10]
[10]The reference to an appeal in s 4(1) includes a judicial review application: Dawson v Bethonga [2009] VSC 172 (28 April 2009) [27]; PRA v MA [No. 2] [2004] VSCA 50 (7 April 2004) [4].
Substantial injustice
At [30] above, I concluded that the trial judge erred in ordering that Mr Gatto’s application for a stay of the Magistrates’ Court proceeding be dismissed and that Mr Gatto pay Mr Felstead’s costs of that application.
In my opinion, substantial injustice would result if leave to appeal is not granted for the purpose of correcting that error. That is because, by dismissing Mr Gatto's application for a stay of the Magistrates' Court proceeding, his Honour deprived Mr Gatto of the opportunity to argue the third ground in support of that
application, namely the agency ground. In addition, if his Honour’s costs order against Mr Gatto were allowed to stand, the magistrate would be precluded from making a costs order in favour of Mr Gatto in the event that the magistrate ultimately upheld the agency ground.
In these circumstances, I would grant leave to appeal limited to setting aside paragraph 4 of his Honour's order. I would also treat the appeal as having been heard instanter and determined, set aside paragraph 4 of the order, and remit the Magistrates’ Court proceeding to that Court.
WEINBERG JA:
I agree.
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