| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : KP ELECTRIC (AUSTRALIA) PTY LTD -v- BLACK PEARL NOMINEES PTY LTD [2013] WADC 8 CORAM : EATON DCJ HEARD : 28 NOVEMBER 2012 DELIVERED : 18 JANUARY 2013 FILE NO/S : APP 58 of 2012 BETWEEN : KP ELECTRIC (AUSTRALIA) PTY LTD Appellant
AND
BLACK PEARL NOMINEES PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA Coram : MAGISTRATE ROBERTS File No : BRO GCLM 51 of 2011 Catchwords: Appeal from a magistrate - Nonparty discovery or disclosure of documents - Failure to comply with an order for disclosure
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Legislation: District Court of Western Australia Act 1969
Magistrates Court (Civil Proceedings) Act 2004
Magistrates Court (Civil Proceedings) Rules 2005
Supreme Court Act 1935
Rules of the Supreme Court 1971 Result: Appeal allowed in part
Representation: Counsel:
Appellant : Ms F F Xue
Respondent : Mr T Lethbridge
Solicitors:
Appellant : Gadens Lawyers
Respondent : Kott Gunning
Case(s) referred to in judgment(s):
Allesch v Maunz [2000] HCA 40; 203 CLR 172
Grassby v The Queen (1989) 168 CLR 1
Pelechowski v Registrar, Court of Appeal [1999] HCA 19; 198 CLR 435
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1 EATON DCJ: On 26 May 2011 Black Pearl Nominees Pty Ltd (hereinafter referred to as 'Black Pearl') filed a general procedure claim in the Broome Magistrates Court seeking to recover $33,977.27 from KP Electric (Australia) Pty Ltd (hereinafter referred to as 'KP'). The claimed amount was said to be owing by KP to Black Pearl for subcontracting services rendered by Black Pearl to KP. On 12 July 2011 KP gave notice of intention to defend. A pre-trial conference was listed for 27 October 2011. On that day directions were made to the effect that there be mutual discovery on oath by 14 November 2011 and that the matter otherwise stand adjourned to a listing conference. In fact, there was a further pre-trial conference on 16 November 2011 which was adjourned to 4 April 2012 with, again, a direction for mutual discovery on oath by 16 March 2012.
2 In compliance with the subsequent direction, the parties each filed an affidavit of discovery on 16 March 2012. On 4 April 2012, at the adjourned pre-trial conference, directions were made requiring KP to file an affidavit annexing certain documents, requiring Black Pearl to file a statement of claim and KP to file a defence. There appears to have been compliance with those directions. 3 On 25 June 2012 KP filed an application seeking, in effect, further and better discovery and non-party discovery. The latter involved orders against three electrical sub-contractors seeking against each of them any documents in respect of work performed and materials used by them in respect of jobs performed at Woolworths stores in Broome and Derby, Centrelink, Jones Lang Lasalle and BWS stores which were invoiced to Black Pearl for the period from April 2008 to June 2010. The application was supported by an affidavit sworn by Ms F F Xue, solicitor for KP on 25 June 2012. Black Pearl filed an affidavit in opposition to the application sworn by Paraskevi Perry, a director of Black Pearl on 10 July 2012. 4 The application was heard in the Magistrates Court at Broome by his Honour Magistrate Roberts on 13 July 2012. He dismissed the application. His reasons for doing so were so brief they may be set out as follows: I note here that I am advised that most of the dispute arose when the Black Pearl Nominees said they wouldn't work any longer for KP Electrical because they hadn't been paid. I note that Woolworths, the beneficiary of the works, had signed off on the works and they had been paid. It is put to me that this is really a fishing expedition for the purposes of delay. It is had to resist that view given the chronology of events. In the (Page 4)
circumstances I believe it would be oppressive for Black Pearl Nominees to comply with a form 23. I therefore dismiss the application. I make a further order that the defendant pay the plaintiff's costs today to be taxed if not agreed. 5 On 2 August 2012 KP filed a notice of appeal. On 17 August 2012 Black Pearl filed notice of its intention to take part in the appeal and to argue that the magistrate's decision should be upheld. 6 The appeal was heard by me on 28 November 2012. I have the benefit of written submissions and a list of authorities filed by both the appellant and the respondent, respectively. 7 It is common ground that KP is contracted by Woolworths Limited to provide electrical contracting services at various locations including the Kimberley region of Western Australia. It has, from time to time, engaged Black Pearl to provide services on its behalf in respect of work for Woolworths Limited. 8 Black Pearl asserts in its statement of claim that KP was not only under contract to Woolworths Limited but also to Centrelink and Jones Lang Lasalle to provide electrical and other services at various locations including the Kimberley region of Western Australia. Black Pearl provides maintenance services throughout the Kimberley and employs as necessary, contractors to carry out and assist with such maintenance services. 9 Black Pearl asserts that in about November 2007 KP contracted with it to provide electrical services on behalf of KP for its various clients in the Kimberley region. The contract was said to be oral and made in the course of telephone conversations between a Mr Perry for Black Pearl and Mr King for KP. Black Pearl claims that it received purchase orders from KP from approximately 28 November 2007 until 8 June 2010 and that, in accordance with the agreement reached, it performed works for KP and employed some sub-contractors to perform work for KP. 10 At par 10 of its statement of claim Black Pearl lists a number of invoices totalling $33,977.27 which, it says, are outstanding and owing by KP to it. It says that, as a result of KP's failure to pay those invoices it, on 8 June 2010, informed KP that it was not prepared to attend to any further work until all outstanding invoices were paid. (Page 5)
11 In its defence KP refers to certain alleged terms of engagement and to alleged breaches of those terms. It concludes by denying that Black Pearl is entitled to any of the money sought to be paid. 12 Section 40 of the Magistrates Court (Civil Proceedings) Act 2004 provides that a party to a case that is not a minor case may appeal to this court against an order made by the Magistrates Court in the course of proceedings. The matter before Magistrate Roberts was not a minor case. The section provides that such an appeal must be conducted in accordance with the District Court Rules 2005 and that this court must decide the appeal on the material and evidence that was before the Magistrates Court and any other evidence that it gives leave to admit. Neither party sought to adduce further evidence. 13 Regulation 50 of the District Court Rules provides that an appeal to this court must be by way of consideration of the evidence that was before the primary court unless the parties otherwise agree. 14 In its notice of appeal KP complains that in making his decision to dismiss the application for further discovery and non-party discovery the magistrate took into consideration irrelevant factors such as: (a) the dispute had arisen between the parties a substantial time after the initial invoices were issued; (b) Woolworth had paid the appellant for the invoices in dispute; (c) allegations were made by the Respondent that this application is a fishing expedition for the purpose of delay; (d) the length of time that had passed since the issuing of the invoice made it oppressive to compel the parties to provide further discovery. KP complains further that the magistrate failed to apply the appropriate test in determining whether further discovery should be ordered and that, had he properly considered the clear evidence in support of the proposition that documents relevant to the case did, in fact, exist, he would have ordered that further discovery be given by the respondent and discovery be given by non-parties. 15 In response Black Pearl raises, inter alia, the question of whether the Magistrates Court has jurisdiction to order non-party discovery. It contends that it does not. KP contends that it does. (Page 6)
16 Both parties are agreed that the Magistrates Court has no inherent jurisdiction. KP submits that the court, nevertheless, has wide powers to control and manage cases within its jurisdiction, referring to s 16(1) of the Magistrates Court (Civil Proceedings) Act. It refers, in particular, to the power conferred in that section to 'take any other action or make any other order for the purpose of complying with section 13'. Section 13 of the Act requires the court to ensure that cases are dealt with justly. To do so, according to the section, includes ensuring that cases are dealt with efficiently, economically and expeditiously in circumstances where, so far as is practicable, the parties are on an equal footing and where the court's judicial and administrative resources are used as efficiently as possible. 17 Section 16(1)(n) grants power to the Magistrates Court to order a party to provide additional information to that in or attached to its case statement, whether by disclosing or providing documents or by answering interrogatories. That is the only reference in s 16 to a power to provide additional information by disclosing or providing documents. It is clearly confined to requiring a party to do so. By s 3 the term 'party' means a party to a case and the term 'case' means any proceeding in the court involving or in connection with the court's civil jurisdiction. 18 The Magistrates Court (Civil Proceedings) Rules 2005 provide for disclosure of documents. Rule 30 provides that when a Registrar or the court makes an order under s 16(1)(n) of the Act that a party must provide additional information by disclosing documents relevant to the case, the party must lodge and serve an affidavit containing a list of documents within the period ordered by the registrar of the court. Rule 31 stipulates requirements for an affidavit of disclosure under r 30. Rule 32 provides the bases upon which a party may object to the disclosure of a document. Rule 33 deals with the process of inspection of disclosed documents. Rule 34 provides that if a party discloses a document it must have the document available at trial. 19 It would appear to be clearly the case that, firstly, the court has no inherent jurisdiction, and, secondly, such power in respect of disclosure of documents as is conferred by the Act and the rules is confined to disclosure only by parties to the proceedings. 20 In support of its contention that there is jurisdiction to order discovery or disclosure of documents from non-parties KP relies upon a passage from LexisNexis Civil Procedure Western Australia: Magistrates Court (at Service 60) [1910.20] in the following terms: (Page 7)
Subsection (1) permits the court to make additional discovery orders. It is submitted that one of the employments possible under the scope of this section extends to orders of pre-trial discovery of the type contemplated by O 15A of the Federal Court Rules and its equivalents in the various state jurisdictions. Order 15A enables an order to be made against an identified person who is not a party. Section 16 is clearly limited in its scope to parties to the action, but it does under s 16(1)(o) require the parties to attend before the court to deal with pre-trial issues and to do anything that in the court's opinion may facilitate the case being conducted and concluded economically and expeditiously. Under subparagraph(i) it may order that an issue be tried separately, and, under other rules, may summon witnesses for that purpose. On this reasoning the court can construct something like the Federal Court's application for pre-trial discovery. 21 With respect to the author of the foregoing passage I fail to understand how the Magistrates Court of Western Australia might employ the rules of the Federal Court of Australia to construct 'something like' a power to order non-party discovery or disclosure of documents. 22 The Rules of the Supreme Court 1971 do provide, in O 26A, for discovery from non-parties and potential parties. Order 26A r 5 provides that if there are reasonable grounds for believing that a person who is not a party to an action had, has, or is likely to have had or to have, possession of documents that relate to any matter in question in the action, a party to the action may apply for an order under that rule. Such an application is to be supported by an affidavit. Copies of both the application and affidavit are to be served on the non-party and upon other parties to the action. The court, in considering such an application, may order the non-party to give discovery of all documents that are or have been in the non-party's possession and that relate to any matter in question in the action. 23 Section 14 of the Magistrates Court (Civil Proceedings) Act provides that the procedure to be followed in a case is that set out in rules of court unless another written law provides otherwise. If the procedure to be followed in a case is not set out in rules of court, the Act or another written law, the procedure is to be that decided by the court for the purposes of the case. Section 48 provides that the rules of court may regulate the practice and procedure to be followed in the court and its registries, either generally or in relation to particular cases or to the exercise by the court of any particular aspect of its civil jurisdiction. (Page 8)
24 It is the case that the predecessor of the Magistrates Court, the Local Court, was governed by the Local Courts Act 1904 which provided, at s 35, that 'The several rules of law enacted and declared by the Supreme Court Act 1935 shall be in force and receive effect in Local Courts, so far as the matters to which such rules relate shall be respectively cognisable by such courts'. There is no such provision in the Magistrates Court (Civil Proceedings) Act. 25 The author of the Civil Procedure Western Australia: Magistrates Court [1910.5] submits: Although litigants are not expressly directed to the Rules of the Supreme Court as they were in previous legislation, it is the practice of the District Court judges on appeal to look to the Supreme Court jurisdiction in the event of procedural deficiency and to find the answer there. It is submitted that magistrates will likewise resort to the same place. 26 Section 35 of the former Local Courts Act and s 57 of the District Court of Western Australia Act 1969 provide that the several rules of law and equity enacted and declared by the Supreme Court Act have application in the Local Court and District Court, respectively. The latter is still the case. The Magistrates Court (Civil Proceedings Act) contains no such provision. There is no reference in either the Act or the Rules to disclosure of documents by a non-party. With respect to the author of Civil Procedure Western Australia: Magistrates Court in the passage quoted above, I am not aware of any general practice of judges of this court on appeal importing provisions from the Rules of the Supreme Court into the rules and procedures of the Magistrates Court. 27 In its written submissions Black Pearl makes reference to Pelechowski v Registrar, Court of Appeal [1999] HCA 19; 198 CLR 435. In that case Gaudron, Gummow and Callinan JJ [50] cited with approval the following passage from Grassby v The Queen (1989) 168 CLR 1, being the words of Dawson J, who gave the leading judgment: It is in that way that the Supreme Court of New South Wales exercises an inherent jurisdiction. Although conferred by statute, its powers are identified by reference to the unlimited powers of the courts at Westminster. On the other hand, a magistrate's court is an inferior court with a limited jurisdiction which does not involve any general responsibility for the administration of justice beyond the confines of its constitution. It is unable to draw upon the well of undefined powers which is available to the Supreme Court. However, notwithstanding that its powers may be defined, every court undoubtedly possesses jurisdiction arising by implication upon the principle that a grant of power carries with it everything necessary for its exercise … Those implied powers may in (Page 9)
many instances serve a function similar to that served by the inherent powers exercised by a superior court but they are derived from a different source and are limited in their extent. The distinction between inherent jurisdiction and jurisdiction by implication is not always made explicit, but it is, as Menzies J points out fundamental. The term 'necessary' should be regarded as meaning reasonably required or legally ancillary. It does not mean essential. 28 Black Pearl submits that there is no reason why non-party discovery could or should be reasonably required or ancillary to the accomplishment of the purposes conferred upon the Magistrates Court. 29 My view is that such a power enables a court to cast obligations upon parties other than those before the court as parties to the proceedings before it. Such obligations may potentially be onerous and expensive to comply with. Given the express provision in the Local Courts Act (which would appear to have imported the provisions of the Rules of the Supreme Court into the rules of the Local Court), the complete absence of any similar provision in the Magistrates Court (Civil Proceedings) Act and the nature of the power sought to be invoked I do not regard the suggested power as being available by implication, it not being necessary as being reasonably required or legally ancillary to the exercise of the court's jurisdiction. In my view there is no power in the Magistrates Court to order non-party discovery or disclosure of documents. 30 To the extent that KP's application sought orders against three non-parties requiring them, within 14 days, to make and serve on KP a list of documents which are or have been in each of their respective possession, custody or power by reference to a schedule in the application, KP's application should have been dismissed. 31 Perusal of the transcript of the hearing before the magistrate suggests that he did turn his mind to the question of non-party discovery although in giving reasons for dismissing the application he made no reference to that aspect of the application at all. In the course of the hearing he inquired of counsel for Black Pearl why the named non-parties could not be subpoenaed to give evidence and/or produce documents at trial. Counsel for Black Pearl accepted that a subpoena could be issued. She added, however, that Black Pearl had chosen to seek non-party discovery. Somewhat later in the brief hearing the magistrate remarked: 'I hope the other parties are aware of the legal costs here'. (Page 10)
32 It is the case that the three named non-parties had not been served with either the application or an affidavit in support. It would appear that they were completely unaware of the application. They were not given an opportunity to be heard. It is extraordinary that the magistrate made no enquiry of counsel for KP as to whether any of the three named non-parties had been served with the application and supporting documents. 33 Paragraph 1 of the orders sought by KP concerned Black Pearl, seeking that it file an affidavit as to 'any document (including but not limited to receipts, tax invoices, other records of purchases) in respect of the materials charged by the claimant to the defendant in the invoices the subject of this claim'. The application was supported by an affidavit sworn by Fei Fei Xue, solicitor for KP. She deposed to having reviewed the documents discovered by Black Pearl. Annexed to her affidavit are a selection of documents said to be invoices issued by subcontractors to Black Pearl which appear to be blank, containing virtually no financial detail at all. The deponent deposes to the discovered invoices from subcontractors being deficient to the extent that there is no reference to the details of work provided by subcontractors, the date of the services performed, the hours worked and the materials provided. The deponent states that, among the matters in contention as between the claimant and defendant are whether or not the services charged by the claimant to the defendant were performed, whether the hours charged by the claimant to the defendant were reasonable and whether the materials charged by the claimant to the defendant were used or installed. 34 Paraskevi Perry, a director of Black Pearl, swore an affidavit on 16 March 2012 annexing a list of documents said to be documents relating to matters in question in the action which are or have been in the possession, custody or power of Black Pearl. Among the documents deposed to be presently in the possession, custody or power of Black Pearl is tax invoice 14709 dated 25 October 2009 rendered by G & L Irvine Electrical Contractors of Broome. That document is one of those annexed to the affidavit of Fei Fei Xue. By way of detail it describes the work carried out as 'Trace fault to PA system. Repair freezer lights. Repair overhead lights'. The document is entirely blank as to the amount of the invoice, the amount of GST, the materials used and the amount charged for labour (said to include travelling time in respect of 440 km). That document is similar to others annexed to the affidavit of Fei Fei Xue in that there is absolutely no reference to amounts charged, hours worked or material used. On the face of it, those documents would appear to have been altered with such material deleted. (Page 11)
35 During the hearing before the magistrate counsel for KP said: A few of the subcontractors' invoices were attached to my affidavit which is filed in support of this application. If your Honour has a look at the invoices that were disclosed all of the relevant information in those invoices has been blanked out. Things like how much labour was charged, what material was done, what was the – you know, essentially the disclosure of those documents goes in no way to allow the defendant to determine whether the claimant was in fact invoiced for the work that they have subsequently invoiced. 36 The magistrate did not respond to the submission made by counsel for KP as to the documents disclosed by Black Pearl. At the beginning of the hearing counsel for Black Pearl inquired of the magistrate as to whether he had had an opportunity to read any of the material filed. He replied 'Not a lot, I'm afraid'. It may be that the magistrate either did not read or failed to note the obvious deficiencies in the invoices annexed to the affidavit of Fei Fei Xue. Had he done so it would have been readily apparent that, on the face of the material provided by KP, there had been a failure on the part of Black Pearl to provide proper discovery or disclosure of documents. The absence of essential detail on the invoices annexed to Fei Fei Xue's affidavit, details such as the amount of the invoice, passed without comment by the magistrate. 37 On 16 November 2011 the Magistrates Court ordered: The parties to exchange lists under oath of all documents that are or have been in their respective power, possession or custody relating to the matter at issue in this action by 16th March 2012. 38 Black Pearl purported to comply with that order on 16 March 2012 by filing an affidavit verifying a list of documents. On 25 June 2012 KP made its application. It was heard by the magistrate on 13 July 2012. Clearly the magistrate accepted the submission put to him by counsel for Black Pearl that KP's application was, in truth, a fishing expedition for the purposes of delay. He said: 'It is hard to resist that view given the chronology of events'. He concluded that, in the circumstances, it would be oppressive for Black Pearl to comply with the application. 39 The chronology of events so far as the requirement for disclosure of documents was concerned should not have, in my view, given rise to any concern on the part of the magistrate. A proper consideration of the documents annexed to Fei Fei Xue's affidavit and to her oral submissions during the hearing should have led the magistrate to conclude that, far from being oppressive so far as Black Pearl was concerned, there was (Page 12)
clear evidence that Black Pearl had not properly complied with the order made on 16 November 2011. The matter of the obvious deficiencies in the documents annexed to Fei Fei Xue's affidavit was not raised by the magistrate with counsel for Black Pearl at the hearing. In my view, it should have been. 40 Section 40 of the Magistrates Court (Civil Proceedings) Act provides that this court must decide the appeal on the material and evidence that was before the magistrate. Such an appeal is, therefore, an appeal by way of a rehearing. In Allesch v Maunz [2000] HCA 40; 203 CLR 172 Gaudron, McHugh, Gummow and Hayne JJ said at [23]: For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error. At least that is so unless, in the case of an appeal by way of rehearing, there is some statutory provision which indicates that the powers may be exercised whether or not there was error at first instance. And the critical distinction, for present purposes, between an appeal by way of rehearing and an appeal in the strict sense is that, unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance whereas, on an appeal by way of rehearing, an appellate court can substitute its own decision based on the facts and the law as they then stand. 41 In my view there was manifestly error on the part of the magistrate. In his brief reasons for decision he failed to make any reference to that part of the application concerning non-party discovery. KP's application was clearly borne out of the obvious deficiencies in the documents provided by Black Pearl purporting to be in compliance with the order made on 16 November 2011. In effect, his ruling was that it would be oppressive to require Black Pearl to properly comply with that order. In my view his discretion clearly miscarried. The 'chronology of events' did not support his conclusion that the application was no more than a fishing expedition. I am satisfied that there was error and that the appeal, at least so far as Black Pearl's obligations to give proper disclosure of documents is concerned, should succeed. 42 By s 43 of the Magistrates Court (Civil Proceedings) Act I may confirm, vary or set aside all or part of the magistrate's judgment and may give any judgment and make any order that he could have given or made. (Page 13)
Before proceeding to make final orders in respect of this appeal I propose to hear from counsel as to the apparent inadequacies of Black Pearl's compliance with the order made on 16 November 2011 and the means by which those inadequacies might be remedied.
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