LOCKLANDS Pastoral Pty Ltd v Williams - [2005] SASC 33

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
LOCKLANDS PASTORAL PTY LTD v WILLIAMS & ANOR
Judgment of The Honourable Justice Bleby
28 January 2005
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - MAGISTRATES COURT
STAY OF PROCEEDINGS
Application for leave to appeal from decision of Magistrate – Decision not to grant stay of proceedings – Defendant seeking order from Supreme Court for stay of whole of Magistrates Court proceedings – Third party’s oral application to Magistrate that third party claim be stayed – Principles governing leave to appeal – Supreme Court Rules r 96B.02 and r 97.18(d) – Ability of judge to determine appeal on leave application – Defendant had also instituted proceedings of wider scope against third party in Federal Court – Whether outcome of Magistrates Court proceedings would affect Federal Court action – Injustice to plaintiff if whole of proceedings stayed – Whether grounds for staying third party claim – Whether Magistrate erred – Appeal dismissed – Magistrate’s refusal to grant stay of whole of proceedings confirmed – Stay of third party claim granted.
Supreme Court Rules 1935 (SA) r 96B.02, r 97.18(d); Magistrates Court (Civil) Rules 1991 (SA) r 92, referred to.
Caloundra Boatyard Pty Ltd v The Ship Almonta [1968] SASR 325; Williams v Hunt [1905] 1 KB 512; Earl Poulett v Viscount Hill [1893] 1 Ch 277, applied.
Portellos v Chapley and Chapley (2000) 207 LSJS 79; Nash and Nash v Lapins (Unreported, 27 August 1997, Judgment No. S6345), considered.

LOCKLANDS PASTORAL PTY LTD v WILLIAMS & ANOR
[2005] SASC 33
Magistrates Appeal: Civil
Introduction

BLEBY J: The first respondent, Mr Williams, (“the plaintiff”) is the plaintiff in an action in the Civil (General Claims) Division of the Magistrates Court. The appellant (“the defendant”) is the defendant in that action. The second respondent, Horwood Bagshaw Australia Pty Ltd (“the third party”) was joined as a third party in the action by the defendant. In fact, the action is the consolidation of two actions brought by the plaintiff against the defendant. Together the two claims exceed the civil jurisdiction of the Magistrates Court. Nevertheless, the action is proceeding as a consolidated action with the consent of all parties pursuant to s 8(2) of the Magistrates Court Act 1991.
On 3 December 2004 the defendant applied for an order “that the progress to trial of this action … be stayed until further order”. The defendant also applied for leave to amend its third party claim in a manner referred to below. Although it does not appear from any of the papers on the court file or from the Magistrate’s reasons, it was agreed by all parties before me that at the hearing the third party made an oral application to the Magistrate to stay proceedings on the defendant’s third party claim.
On 23 December 2004 the Magistrate dismissed the defendant’s application for a stay. It is from that decision that the defendant now seeks leave to appeal to this Court. It seeks from this Court an order that the whole of the proceedings in the Magistrates Court be stayed. That order is opposed by the plaintiff. The third party seeks to have only the third party claim in the Magistrates Court stayed.
Principles governing leave to appeal
The application is brought pursuant to r 96B.02 of the Supreme Court Rules. That rule relevantly provides:
“(1)   Unless a Magistrate has certified that the proposed appeal involves:
(a)     A point of law of difficulty or importance; or
(b)    A point of sufficient importance in the proceedings to warrant an interlocutory appeal being dealt with before final judgment in the action,
any appeal against an interlocutory judgment under Section 40 of the Act is subject to leave being obtained from the Supreme Court.
…
(5)Where all necessary parties are represented on the hearing for leave to appeal the single Judge may treat that hearing as the argument on the appeal and determine the appeal accordingly.”
In Portellos v Chapley and Chapley (2000) 207 LSJS 79 I held that it was appropriate and that consistency required that a single judge of the Supreme Court, when considering an application for leave to appeal, apply the same criteria that magistrates must apply under r 96B.02(1). Lander J took a similar view in Nash and Nash v Lapins (Unreported, 27 August 1997, Judgment No. S6345).
Upon the hearing of the application, all parties were represented before me, and so I have the option, if I decide to grant leave, of now determining the appeal under sub-rule (5).
The Magistrates Court pleadings
The plaintiff’s particulars of claim allege a contract between the plaintiff and the defendant to carry out certain contract seeding work on the defendant’s property. He pleads, incidentally, that a Mr Stagg, representing the third party, while the plaintiff was performing the work, requested him to send the invoice to the third party. The plaintiff acted in accordance with the request, but was not paid. The defendant also refused to pay the plaintiff.
By its defence, the defendant denies the contract, alleges that there was a contract between the plaintiff and the third party for the performance of the work, but admits that the work was done by the plaintiff.
By its third party claim the defendant claims indemnity from the third party against the plaintiff’s claim on the footing that in the event that the Court were to find a contract between the plaintiff and the defendant, the defendant alleges that the third party agreed to pay the defendant for the services of the plaintiff. The defendant further seeks “a declaration that the relevant contract that did come into being was between the plaintiff and the third party”. I observe in passing that the defendant would appear to have no standing to seek a declaration in those terms.
By its defence to the third party claim the third party denies any contractual relationship with the plaintiff or the defendant. It pleads that it advised the defendant, in order to reduce the potential for loss of income, that it should hire a contractor to carry out seeding work while the third party assessed a complaint by the defendant that certain equipment supplied by the third party to the defendant was faulty.
In an affidavit in support of the defendant’s application before the Magistrate, the defendant’s solicitor deposed to a wider dispute between the defendant and the third party concerning the allegedly defective machinery supplied to the defendant by the third party, and to the fact that the defendant was in the course of commencing proceedings in the Federal Court of Australia against the third party alleging misrepresentation, breach of contract, negligence and misleading and deceptive conduct incidental to the sale of the machinery. The affidavit was in support of the defendant’s application for leave to amend the third party claim in the same terms as the proposed statement of claim to be filed in the Federal Court and in support of the stay application. The proposed statement of claim in the Federal Court included pleadings which allege that, because of the defective machinery the third party engaged the plaintiff or, in the alternative, that the third party authorised the defendant, at the cost of the third party, to engage the plaintiff to undertake the seeding work. However, these allegations are but part of a great many other allegations made by the defendant in those proceedings. By the time the application was heard by the Magistrate, the proceedings had been instituted in the Federal Court with a statement of claim filed in terms of the draft that was proposed, although the Magistrate appears not to have been made aware of that.
The Magistrate’s decision
The hearing before the Magistrate took place on 16 December 2004. He published written reasons for his decision refusing the defendant’s application on 23 December.
The Magistrate appears to have overlooked the defendant’s application for leave to amend its third party claim to reflect the pleadings filed by it in the Federal Court. Those proceedings involve far wider issues than are raised by the plaintiff’s claim against the defendant and by the defendant’s original third party claim in the Magistrates Court. The claim for damages against the third party is said to be of the order of one million dollars – a claim well beyond the jurisdiction of the Magistrates Court. It is understandable that the defendant might want to commence proceedings in the Federal Court where the issues go beyond the jurisdiction of the Magistrates Court, notwithstanding that one of those issues was the subject of the third party claim; cf Caloundra Boatyard Pty Ltd v The Ship Almonta [1968] SASR 325. However, it is difficult to understand why the defendant would be seeking leave to make similar amendments to the third party claim in the Magistrates Court. To pursue such an application, having commenced proceedings involving identical allegations in the Federal Court, would appear to constitute an abuse of process: Williams v Hunt [1905] 1 KB 512, Lord Collins MR at 514; Earl Poulett v Viscount Hill [1893] 1 Ch 277 at 282.
Nevertheless, there remained the alternative allegations on the third party claim in the Magistrates Court that either there was a contract of indemnity between the defendant and the third party or that the third party had engaged the plaintiff. It was also clear that the defendant’s position before the Magistrate, as indeed it was before me, was that the whole of the proceedings in the Magistrates Court should be stayed, including the plaintiff’s claim.
The Magistrate also appears to have taken the third party’s application to stay proceedings on the third party claim as a submission by the third party that the whole of the proceedings should be stayed, whereas in fact the third party was only seeking a stay of proceedings on the third party claim.
The Magistrate dismissed the defendant’s application on the basis that the plaintiff was entitled to have his claim heard and determined, and that it would not be in the interest of justice to adjourn the determination of his claim pending the outcome of much more substantial and complex litigation to which the plaintiff was not a party.
Whether the Magistrate erred
The Magistrate was correct to reject the defendant’s application. The plaintiff’s claim was only ever in contract against the defendant. The existence of the contract was denied by the defendant. The defendant had no right to a declaration that the plaintiff had entered into a contract with the third party. It emerged after the defendant had commenced proceedings in the Magistrates Court against the third party that in fact its claim against the third party extended far beyond a claim for indemnity in respect of the plaintiff’s claim. Whether there was a contract between the plaintiff and the defendant was capable of adjudication by the Magistrates Court. The existence of such a contract did not depend on and could not be influenced by a finding as to whether or not there was a contract of indemnity between the defendant and the third party. Because the defendant was engaged in a much wider dispute with the third party it was seeking to have the hearing of the plaintiff’s claim deferred until after its dispute with the third party was resolved. That would plainly cause injustice to the plaintiff. The finding by the Magistrates Court of the existence of a contract between the plaintiff and the defendant would not in any way compromise the defendant in its Federal Court action against the third party. Such a finding might cause the defendant to amend its pleadings against the third party in that Court to allege, if the contract were established, its liability to the plaintiff as an item of loss claimed against the third party. If the plaintiff were to fail in his action against the defendant, the pursuit of the defendant’s claim against the third party would not be compromised in any way.
What did become apparent was that the issues between the defendant and the third party in the Magistrates Court were now to be absorbed in a much wider claim then being pursued by the defendant in the Federal Court. In view of the defendant’s decision to proceed in the Federal Court, its third party claim in the Magistrates Court could not properly be amended to make the same allegations, and the Magistrate should have acceded to the third party’s claim that proceedings on the third party claim in the Magistrates Court be stayed.
The defendant nevertheless argued before me that the whole proceedings in the Magistrates Court, including the plaintiff’s claim, should be stayed because of the possibility of the Magistrates Court and the Federal Court arriving at conflicting decisions as to the party with whom the plaintiff entered into a contract. As I have said, I do not see that arising. The plaintiff’s claim is likely to be determined long before the Federal Court proceedings come to trial. The third party does not allege a contract with the plaintiff. If the defendant were to lose in the Magistrates Court and to persist with its allegation that there was a contract between the plaintiff and the third party, it will only be to its own detriment in the Federal Court proceedings. To delay the hearing of the plaintiff’s claim where there is no dispute by anyone that the plaintiff carried out the work would be to cause a gross injustice to the plaintiff.
At the same time, however, the Magistrate should have stayed proceedings on the third party claim, whether leave to amend were given or not. The allegations that the defendant made in the third party claim are encompassed in the pleadings now filed against the third party in the Federal Court. As I have said, it is understandable that the defendant should have taken those proceedings. The consequence must be, however, that it cannot proceed with the allegations on the third party claim in the Magistrates Court: Caloundra Boatyard Pty Ltd v The Ship Almonta (supra).
The fate of the application
It remains to consider whether leave to appeal should be granted and if so whether I should determine the appeal forthwith. If leave is granted, the conduct of the appeal is governed by r 97. Rule 97.18(d) enables the Court to amend, set aside or discharge any judgment appealed from.
Paragraph (e) of that rule enables the Court to give any judgment or make any order “which might have been made by the Court or tribunal appealed from and make such further or other order as the justice of the case may require”.
Paragraph (h) provides that the Court:
“may exercise its powers notwithstanding that:
(i)any party to the proceedings in the Court or tribunal below has not appealed;
(ii)any ground for allowing or dismissing the appeal or varying the decision is not stated in any notice of appeal, notice of cross appeal or notice of contention;
(iii)that there has been no appeal from some part of a decision.”
I return to the requirements to be satisfied before leave to appeal can be granted. The proposed appeal does not involve a point of law of great difficulty or importance. However, it is a point of sufficient importance in the proceedings to warrant the appeal being dealt with before final judgment in the action. The result of the appeal will indeed dictate the future course of the action in the Magistrates Court. Under the Magistrate’s order the subject of the application for leave to appeal, the action, including the third party claim, must proceed. I have said enough to indicate that the Magistrate was correct in dismissing the defendant’s application insofar as it sought a stay of the plaintiff’s claim. I have also said enough to indicate that the Magistrate should have acceded to the third party’s oral application to stay proceedings on the third party claim. Rule 92 of the Magistrates Court (Civil) Rules 1992 provides that unless the Court otherwise orders, a claim and third party claim must be heard together. There is an obvious need to order otherwise in this case.
I consider it would be inappropriate to remit the matter to the Magistrate to reconsider the application when it is clear what orders should have been made. I therefore propose to grant leave to appeal. I propose to allow the appeal but not for the purpose of substituting the order sought by the defendant. The order dismissing the defendant’s application will be confirmed. In addition, there will be an order that proceedings on the third party claim be stayed indefinitely. I will hear the parties as to the costs of the appeal and the costs of the application before the Magistrate.