Kline v GDR Marketing & Distribution Pty Ltd

[2023] NSWDC 246

District Court

New South Wales

Medium Neutral Citation:

Kline v GDR Marketing & Distribution Pty Ltd [2023] NSWDC 246

Hearing dates:

29 June 2023

Decision date:

29 June 2023

Jurisdiction:

Civil

Before:

Newlinds SC DCJ

Decision:

Appeal dismissed.

Respondent to pay the Appellant’s costs of the appeal.

Catchwords:

Local Court Appeal – s 39(2) Local Court Act2007– lack of jurisdiction – s 39(2) Local Court Act 2007

Legislation Cited:

Local Court Act 2007, s 39(2)

Cases Cited:

House v the King (1936) 55 CLR 499

Category:

Principal judgment

Parties:

Victor Alan Kline (Appellant)
GDR Marketing & Distribution Pty Ltd (Respondent)

Representation:

Counsel:
Appellant self-represented
A Edwards (Respondent)

Solicitors:
Kerrs (Respondent)

File Number(s):

2022/354794

Publication restriction:

None

 Decision under appeal 

Court or tribunal:

Local Court Manly

Date of Decision:

22 November 2021

Before:

Magistrate Denes

JUDGMENT: EX TEMPORE

1. HIS HONOUR: This is an appeal by amended summons by the appellant Mr Kline who is a practising barrister, an aspiring politician and for the purpose of this case has acted for himself. Mr Kline appeals a decision of a magistrate made on 22 November 2021. He brings the appeal under s 39(2) of the Local Court Act 2007.

2. Mr Kline got into a dispute with the defendant who is a professional printer when he ordered some brochures or flyers for the purpose of the recent federal election in which Mr Kline was standing as a candidate for the seat of North Sydney.

3. Mr Kline alleges the defendant breached either the express or implied terms of the contract to produce those brochures by either not producing them properly or not producing them in a timely manner, which breach of contract caused him loss and damage.

4. He brought proceedings for breach of contract against the defendant in the Small Claims Division of the Local Court and after service on the defendant applied for, and was granted, default judgment in the sum of approximately $19,000.

5. That sum was made up by, firstly, the amount that had already been paid by Mr Kline to the defendant of $7,634.  Secondly, an amount for professional costs being Mr Kline's estimate of how much of his time that he had spent appearing on his matter would have been worth, and, finally, an amount of $10,000 for mental and physical distress.

6. By the time the matter came before the magistrate Mr Kline recognised there had been a holding by the High Court of Australia to the effect that lawyers and other professionals acting for themselves, whilst they may be entitled to get their reasonable expenses of acting for themselves, are not entitled to effectively charge themselves for their own time. 

7. Before the magistrate on 11 November 2022 Mr Kline accepted that position and one of his complaints is that he was not given the opportunity of explaining to the magistrate that he no longer pursued that part of his claim.

8. After judgment was entered by Mr Kline, the defendant made an application to set aside that default judgment under the relevant rules of the Local Court which application came before Magistrate Denes sitting at the Local Court at Manly on 11 November 2022.

9. So, to summarise, the magistrate had before her an application by a defendant to set aside a default judgment entered in the Small Claims Division in the sum of $19,000.

10. It is not surprising, in that context, that the hearing before the magistrate did not take very long and that her Honour's reasons are brief.

11. However, brevity in reasoning by judicial officers is, in my view, something that ordinarily should be commended rather than criticised.

12. Before the magistrate the defendant read certain evidence by a Mr Wang in support of the application to the effect that Mr Wang was employed by the defendant as its accounts director.  The owner and manager of the business was at the relevant time overseas.  When the Court documents were received he, not being familiar with legal process and never having been involved in a legal matter did forward those documents to the owner and manager of the business but never followed that person up.

13. It is conceded, before me, properly by Mr Kline, that in relation to his claim for damages and in particular the portion of the claim that relates to mental and physical distress it is obvious that if the matter went to a contested hearing, there would be a legitimate debate about such a claim at all and if such a claim was available, the quantum of that claim.

14. I have nothing before me to judge the strength or weakness of the claim or punitive defence, but because I am satisfied that there is a legitimate arguable case about quantum I proceed upon the basis that there was before the magistrate sufficient evidence for the magistrate to properly conclude that there was an arguable case in relation to the amount or quantum of the judgment.

15. Before I turn to the merits of any criticism of the magistrate's reasoning I need to identify the jurisdiction which I have been asked to exercise.

16. That jurisdiction is found in sections 39(2) of the Local Court Act2007.

17. That section is found in the context of section 39(1) which is the more familiar appeal provision being the right of a party, before the Local Court, sitting in its General Division to appeal to the Supreme Court but limited (without leave) to questions of law.

18. Subsection (2) gives a dissatisfied litigant from the outcome of a Local Court division sitting in its Small Claims Division on appeal to this Court but only on the grounds of “lack of jurisdiction or denial of procedural fairness”.

19. Mr Kline has sought to engage both limbs of that jurisdiction.

20. There was discussion between Mr Kline and myself during the course of argument as to what the legislation intended by the phrase "lack of jurisdiction" in the context of section 39.

21. Mr Kline's submission, adopting by analogy a series of what used to be called administrative law cases, that any failure by the Local Court to properly exercise a jurisdiction would amount to a jurisdictional error (again to pick up the phrases used in other areas of the law).  I am not so sure about that.  I think that if one juxtaposes the requirement for lack of jurisdiction appeals provided for by subsection (2) of section 39 with appeals to the Supreme Court limited to questions of law in subsection (1) it is plain that the legislation meant the lack of jurisdiction ground in subsection (2) to be something much more restrictive than errors that could otherwise be described as an error of law.

22. To consider the proper construction of the legislation in the context of the facts of this case and the submissions that Mr Kline makes, his submissions eventually boil down to what is often described as a House v the King (1936) 55 CLR 499 error, that is, he says either the learned magistrate failed to take into account relevant factors or took into account irrelevant factors when exercising her undoubted discretionary jurisdiction.

23. It is well understood that a decision‑maker exercising a discretion will make an error of law if the decision‑maker in the exercise of that discretion fails to take into account a relevant matter or takes into account an irrelevant matter.  If one of those two things happen the discretion will have miscarried legally rather than factually.

24. It is for that reason that I tend to think the proper construction of “lack of jurisdiction” in subsection (2) is very restrictive and is reserved for situations where the Local Court sitting in its Small Claims Division makes an order beyond its actual statutory jurisdiction.

25. The second limb of subsection (2) also sought to be engaged by Mr Kline, is that of a denial of procedural fairness.

26. I allowed him to amend his summons during the hearing to add that claim because I think the way it was put is no more than the other side of the coin of the lack of jurisdiction argument and in any event, I think in all the circumstances, he was not denied procedural fairness before the magistrate.

27. Accordingly, I have concluded that Mr Kline's submissions about the magistrate's reasons amount to submissions that the magistrate made errors, both legally and factually, in the decision‑making process but do not amount to a lack of jurisdiction.  The appeal out be dismissed for that reason alone. If I am wrong as to the scope of my jurisdiction, I also do not think the magistrate made any error in exercising her discretion. Moreover, I have concluded that the magistrate did not deny Mr Kline procedural fairness at the hearing of the matter on 2 November.

28. To explain why I have come to those conclusions I set out below the relevant portion of the magistrate's reasons.

“HER HONOUR: This is an application or a notice of motion brought by GDR Marketing and Distribution Pty Ltd seeking to set aside a default judgment that was entered against them on 9 September, I understand that to be. That related to a statement of claim brought by Mr Kline who whilst he might – I understand he has legal qualifications, arguably he is acting for himself, representing himself, at times he was – at the relevant time he was a candidate for the Federal election. He engaged the services of the defendant applicant company, seeking for the printing and distribution of some flyers – advertising flyers.

There is an allegation of breach of contract, and he seeks to recoup some costs in relation to that. The flyer was properly printed and so the initial – the first payment was made. The breach of contract arises in circumstances where it is alleged by MR Kline that the flyers were not distributed in accordance with the contract, and so it would appear that Mr Kline in his statement of claim effectively seeks to have the contract void and seeks to recoup the money from the initial invoice that was paid, and damages and also professional costs. He talks about professional barrister fees or something like that, which in a small claims matter is capped and limited.

What is also interesting is that very close to the time when the matter was coming before the Court and that Mr Kline was making an application for default judgment and it would appear that the statement of claim was served by post, and I certainly do have an affidavit saying it was served by post, I do not have any real evidence before me as to when it was actually received by the defendant company, but ultimately a firm of solicitors – and I understand it is the same firm who appears today – wrote to Mr Kline an email asking him to just wait for a moment whilst they filed a defence and could instruct their client and could look further into the matter.

So I am satisfied there is a reasonable grounds for a defence, and ultimately int hose circumstances, had that been brought to the Court’s attention I am fairly certain that the Registrar or any Magistrate would have not entered default judgment on the basis that there might be an equally available resolution for the matter either through conciliation or mediation.

In those circumstances I am satisfied that there is evidence before me to explain the delay in relation to the matter, but also I have concerns, not necessarily an arguable case in relation to the issue about contract, but certainly in relation to the amount or quantum of the judgment and in those circumstances I am satisfied that the default judgment out to be set aside.

The defence is to be filed within 28 days and I make that to be 9 December 2022.”

29. In my opinion the proper construction of the magistrate's commendably brief reasons is as follows:

1. the magistrate correctly identifies the jurisdiction she was being asked to exercise in the first paragraph and sets out a neat summary of the dispute.

2. her Honour then continues to explain the genesis of the dispute and the issues concerning breach of contract and damages in the second paragraph.

3. her Honour then makes a finding to the effect that prior to the judgment being entered the firm of solicitors acting for the defendant at that time wrote to Mr Kline asking him to pause while they filed a defence or looked further into the matter.

4. her Honour then concludes that she was satisfied that there were reasonable grounds for a defence and that if, in those circumstances (which I read as the circumstances of a reasonable grounds for a defence) had been brought to the Court's attention upon the application for default judgment that the registrar or any magistrate would probably not have entered default judgment on the basis that there might be an equally available resolution of the matter either through conciliation or mediation.

5. Finally, the magistrate concluded that she was satisfied that there was evidence to explain the delay in relation to the matter and expressed have concerns, not necessarily as to an arguable case on liability contract but certainly in relation to the amount or quantum of the judgment and in all those circumstances concluded that the default judgment ought to be set aside.

30. Immediately following those reasons Mr Kline brought to her Honour’s attention that she was, in fact, wrong to have concluded that there was any correspondence between the solicitors for the defendant and Mr Kline prior to the entry of judgment.

31. Her Honour accepted that and then delivered further reasons in the following way:

“RESPONDENT: That is a simple fact, that default judgment was entered on 10 December, if your Honour is proceeding on the basis that the solicitors contacted me before default judgment, I am sorry, but that is completely wrong, it was six weeks after and I agreed to hold off on execution—

HER HONOUR: All right I am happy to be corrected. I do not have a copy of the default judgment, that’s all I am saying. I am happy to stand corrected and I will withdraw those comments in relation to contact with you, but ultimately I am still of the view that the default judgment should be set aside, particularly bearing in mind the nature of the costs that were sought, or the quantum of the judgment and ultimately, I am setting aside the default judgment and cost for the notice of motion, $700 to the applicant. Thank you.”

32. In those supplementary reasons the magistrate made it clear that she accepted that she had made an error in the first place, but concluded that, ignoring the erroneous assumption about notice, she was still of the view that the default judgment ought to be set aside, particularly bearing in mind the nature of the costs that were sought or the quantum of the judgment.

33. In my judgment there is no discernible error in the magistrate's reasoning of the kind identified by Mr Kline.

34. True it is, that the first time though the magistrate did make such an error and did take into account what would now obviously be seen to be irrelevant and incorrect matter, but the magistrate, when that error was pointed out to her, quite properly withdrew that comment and re‑exercised her discretion without factoring in that erroneous matter.

35. The other matters that the magistrate had identified as relevant to her decision seem to me to be all entirely proper and most certainly relevant.

36. Accordingly, even if I had been persuaded by Mr Kline to give the “lack of jurisdiction” requirement in section 39(2) a broad reading, I would not find any error at all. Indeed, for what it’s worth I have no doubt I would have come to the same conclusion as the magistrate if I was hearing the matter afresh.

37. That brings me to Mr Kline's argument’s second limb, that is a denial of procedural fairness.

38. His first point is that he was denied procedural fairness because he did not get the opportunity to explain to the magistrate that there had been no letter written by the solicitors to him prior to judgment.

39. That submissions must be wrong.  Prior to the magistrate concluding the matter Mr Kline had been heard as to that matter and the magistrate had obviously listened to and understood and acted on his submission.

40. The second point about which he says he was not heard, is he tells me that he wished to bring to the magistrate's attention that he no longer pressed the claim for professional costs.  Presumably that means that he wanted to tell the magistrate that he accepted that the judgment should be set aside but only in part.

41. I do not think, in the circumstances of a busy magistrate dealing with an application to set aside a $19,000 judgment in the small claims division there was any denial of procedural fairness in that regard, but more importantly, as I read the magistrate's reasons, where she concludes that there was an arguable case in relation to the amount or quantum of the judgment at line 23 on page 7 of the bundle, where she said, "Particularly bearing in mind the nature of the costs that were sought or the quantum of the judgment" that it can be fairly said that if Mr Kline had made the submissions he said he did not have the opportunity to make it would have not made any difference at all to the outcome.

42. For those reasons I make the following orders:

1. Grant leave to the appellant to amend the amended summons for appeal from the Local Court filed 2 February 2023 by adding a new paragraph (2) under the heading Grounds of Appeal as follows:  "The magistrate denied the appellant procedure fairness."

2. I dismiss the summons and order that the appellant pay the respondents costs of the proceedings in this Court.

Anything else, gentlemen?  Do I need to do anything because the magistrate's order is there.  All I do is dismiss the appeal with costs.  The magistrate's order stands. 

APPELLANT: I wonder if your Honour needs to adjourn the matter to a different court.  I think that my friend wanted that.

HIS HONOUR: I do not think I have power to do that.  I am just sitting on this appeal.  What the Local Court does next, I think, is a matter for the Local Court.  So one of you will have to re‑energise the Local Court proceedings.  Thank you both.  Thank you, Mr Kline.

EDMONDS: Your Honour, my apologies.  I may have misheard but in relation to, I think it was order 2 the dismissal of the newly amended summons, was the appellant to pay the defendant's costs.  Was that as agreed or assessed because in my submissions I would say that the level of hopelessness would entitle the defendant to seek indemnity costs pursuant to s 98(1) of the‑‑

HIS HONOUR: I will deal with that.

EDMONDS: If you might.

HIS HONOUR:

43. Before I came onto the bench to hear this matter I had read quickly the submissions by Mr Kline and by Mr Edmonds and had noted that Mr Edmonds was seeking indemnity costs upon the basis that the appellant's appeal was always hopeless and doomed to failure.

44. I must say that I had formed a preliminary view that submission might have some merit, however, having heard the very careful and thoughtful submission by Mr Kline I am not so persuaded.  Accordingly, costs will simply be ordered on the usual basis.

Orders

1. Appeal dismissed.

2. Respondent to pay the appellant’s costs of the appeal.

**********

Decision last updated: 07 July 2023