In the Matter of S72 of the Local Courts Act 1896 and in the Matter of Ark Pty Ltd

[1990] TASSC 153

Serial No B76/1990
List "B"

COURT:                 SUPREME COURT OF TASMANIA

CITATION:            In the matter of s72 of the Local Courts Act 1896 and in the Matter of Ark Pty Ltd [1990] TASSC 153; B76/1990

PARTIES:  IN THE MATTER OF S72 OF THE LOCAL COURTS         ACT 1896 AND IN THE MATTER OF ARK PTY LTD

FILE NO/S:  BDR M25/1990
DELIVERED ON:  11 December 1990
JUDGMENT OF:  Cox J

Judgment Number:  B76/1990
Number of paragraphs:  7

Serial No B76/1990
List "B"
File No BDR M25/1990

IN THE MATTER OF S72 OF THE LOCAL COURTS ACT 1896
AND IN THE MATTER OF ARK PTY LTD

REASONS FOR JUDGMENT  COX J

11 December 1990

1. By plaint and summons filed in the Court of Requests on 20 April 1990 the respondents, a firm of chartered accountants trading as Layh Hart at Mount Street, Burnie, sued the applicant company for $3,005.23 plus interest for work and labour done and services provided and disbursements expended in relation to the preparation and filing of income tax returns. Particulars show claims for fees of $2,082.95 on 31 December 1987 and subsequent monthly service charges to 31 October 1989. In addition a fee was claimed for $195.00 on 24 November 1988. The applicant filed a defence on 16 May 1990 admitting that the respondent plaintiffs had carried out accountancy work for it at its request in 1987 but denying any agreement to pay interest thereon and not admitting the rendering of accounts or their non payment.

1. Included in the defence was a counterclaim the substance of which was that the respondents were engaged by the applicant as professional accountants or advisers, that they had negligently advised the applicant to enter into certain transactions including a policy of insurance on the basis that the premium payments would not be taxable, and had caused the applicant loss because the premiums were not allowed by the Commissioner of Taxation and the policy of insurance contained a provision that in the event that a premium is not paid within 30 days of the due date the policy of insurance would terminate and all premiums paid should be forfeited to the insurer. The applicant counterclaimed payment of $45,000.00 and interest from 22 June 1983 at the rate of $20 per centum per annum.

1. This is an application under s72 of the Local Courts Act 1896 to restrain the respondents from proceeding with their action in the Court of Requests and an order that the applicant's counterclaim proceed in this court. I am required to enquire into the bona fides of the applicant's counterclaim and am empowered to make the orders sought or such other order in the matter as I deem meet. As I have no evidence before me other than the contents of the Court of Requests' file of the pleadings I have no means save them of determining the bona fides of the applicant's counterclaim. On the face of it, it alleges professional negligence in circumstances where the respondents knew the applicant was relying upon them for advice. But although some (unspecified) loss may be inferred from the fact pleaded that the premiums were disallowed as an income tax deduction no basis is pleaded for the claim for $45,000.00 paid to the insurer. All that is pleaded in this respect is:

"14The defendant relying on the advice of the plaintiffs entered into the contract of insurance with Adriatic Life Limited.

15The defendant paid to the said Adriatic Life the sum of $45,000.

16The said policy provided that in the event that a premium is not paid within 30 days of the due date the policy of insurance would terminate and all premiums paid shall be forfeited to Adriatic Life Limited.

17The defendant made payments under the contract of insurance after the plaintiffs had received advice from the Commissioner of Taxation that the premiums were disallowed as a deduction in the hands of the defendant."

1. No forfeiture is pleaded nor is it pleaded how any such forfeiture was occasioned by any act or advice of the respondents.

1. I cannot say in those circumstances that the applicant has a bona fide counterclaim for any amount in excess of the sum claimed from it in the plaint or in excess of the amount of the jurisdiction of the Court of Requests, still less for the sum of $45,000.00. The pleadings would have to be substantially amended before the real subject matter of this counterclaim becomes apparent.

1. The plaintiffs/respondent's claim does not appear to be seriously in dispute. But for the counterclaim the defence of non indebtedness is quite inadequate. As matters presently stand I see no just basis for restraining the plaintiffs/respondents in the prosecution of their claim nor for directing the counterclaim to proceed in this court as there is no basis shown for the quantum of the claim. I accordingly decline to make the orders sought. That would seem to leave the applicant the choice of abandoning the excess over the amount for which the Court of Requests has jurisdiction or of discontinuing the counterclaim and instituting fresh proceedings in this Court clarifying the nature and extent of its claim for negligence.

1. In any event I think the issues raised in the claim and counterclaim are so disparate and unrelated that justice requires that they be separately determined. The delay likely to attend the resolution of the counterclaim is a further reason why the respondent should not be forced to await its outcome before recovering that to which they are entitled (cf Gray v Webb (1882) 21 Ch D 802). The application is dismissed.