Massive Holdings Pty Pld v Nyora Car Club Inc
[2001] QDC 322
•6 December 2001
DISTRICT COURT OF QUEENSLAND
CITATION: Massive Holdings Pty Pld v Nyora Car Club Inc [2001] QDC 322 PARTIES: MASSIVE HOLDINGS PTY PLD (Appellant)
v
NYORA CAR CLUB INC (Respondent)FILE NO/S: Appeal No. 12 of 2001 DIVISION: District Court PROCEEDING: General Civil Appeal ORIGINATING COURT: Magistrates Court at Maroochydore DELIVERED ON: 6 December 2001 DELIVERED AT: Maroochydore HEARING DATE: 29 October 2001 JUDGE: K. S. Dodds DCJ ORDER: Appeal is dismissed with costs CATCHWORDS: APPEAL – decision from a Magistrate to grant summary judgment on a claim based upon a dishonoured cheque - no defence to the claim – counterclaim and alleged equitable set off arising out of alleged breach of contract to supply services – execution on summary judgment stayed until counterclaim determined – whether Magistrate erred in exercising the discretion under r292(2) before amendment – whether “proceeding” under r292 includes all claims between the parties.
APPEAL – alleged failure to supply adequate reasons – alleged error of law.
A New Tax System (Goods and Services Tax) Act 1999
A New Tax System (Australian Business Number) Act 1999
Cheques and Payment Orders Act 1986
District Court Act 1967 (Qld) s118
Uniform Civil Procedure Rules 1999 (Qld), r 292(2), r295(1), r298.Brown & Shipley & Co Ltd v Alicle Hosiery Ltd (1966) 1 Lloyds Rep 668, considered
Eagil Trust Co Ltd v Piggott Brown & Anor [1985] 3 All ER 119, considered
Eversure Textiles Manufacturing Co Ltd v Webb [1978] Qd R 347, considered.
House v The King (1936) 55 CLR 499, considered
Hoe & Bickley v Baulch (1951) QWN 14, considered
James Lamont & Co Ltd v Hyland Ltd [1950] 1 KB 585, considered
K.D. Morris & Sons Pty Ltd (in Liquidation) v Bank of Queensland Ltd (1979-80) 146 CLR 165, considered
King Ranch Australia Pty Ltd v Cardwell Shire Council (1985) 2 Qd R 182, considered
McPhillamy v McMaster (1903) St R Q 68, considered
Newman v Lever (1887) 4 TLR 91, considered
Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH [1977] 1 WLR 713, considered
Palmer v Clark [1989] 19 NSWLR 158, considered
Pettitt v Dunkley (1971) 1 NSWR 376, considered
Public Service Board of New South Wales v Osmond (1986) 159 CLR 656, considered
Rawson v Sammual (1841) 41 ER 451, considered
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, consideredCOUNSEL: R. D. Green for the appellant
B. T. Porter for the respondentSOLICITORS: Welsh & Welsh Solicitors for the appellant
Gall Stanfield & Smith for the respondent
[1] This is an appeal by a defendant against a Magistrates order for summary judgment in favour of a plaintiff on the plaintiff’s claim. The Magistrate also ordered execution on the judgment be stayed until the determination of the defendant’s counterclaim.
[2] The decision whether to give judgment was discretionary. To succeed the appellant must show that the Magistrate made some error in exercising his discretion; that is he exercised it upon some wrong principle, mistook the facts, allowed extraneous or irrelevant matters to intrude or failed to take into account some material consideration: House v The King (1936) 55 CLR 499 at 504-5.
[3] The Plaintiff’s (Respondent) claim in the Magistrates court was for the amount of a cheque drawn by the defendant (Appellant) for $43,000 payable to the plaintiff, which when duly presented for payment, was dishonoured, and for interest.
[4] By its defence and counterclaim the appellant claimed a right to a set off and also counterclaimed. Both relied upon an alleged breach of an agreement between the respondent and the appellant whereby the respondent was to provide a show of events at a venue under the control of the appellant, known as Nyora speedway, by way of entertainment. It alleged that the respondent’s execution of certain terms of the agreement amounted to a breach of it in a number of particulars. The breaches included that some of the events were performed negligently and in a manner which breached the terms of the agreement and, additionally, that the respondent had failed to account to the appellant for monies the respondent had earned through merchandising sales at the venue. It also alleged the respondent failed to comply with the provisions of “A New Tax System (Goods and Services Tax) Act 1999” and “A New Tax System (Australian Business Number) Act 1999” by not providing the appellant with a tax invoice despite demand and by demanding payment without providing an Australian Business Number. It alleged it had suffered loss and damage as a result of the breaches and that it was not obliged to pay any amount to the respondent unless and until it complied with the tax legislation.
[5] Before the Magistrate the respondent relied upon s.76 of the Cheques and Payment Orders Act 1986 and the dishonour of the cheque drawn by the appellant in favour of the respondent. It submitted there was no defence to the respondent’s claim. For interest it relied upon s.76 of the Act or alternatively s.47 of the Supreme Court Act 1995.
[6] Before the Magistrate the appellant read an affidavit by Paul Walkinshaw, an office bearer of the appellant, and by his wife Irene Walkinshaw. Ms Walkinshaw said that while the events the subject of the agreement between the respondent and the appellant were in progress she was approached by a principal of the respondent who requested payment for the events which the respondent was providing. She was apparently in possession of a blank cheque which was already signed by a signatory to the bank account. She asked how much the cheque was to be made out for, completed it accordingly, countersigned it and handed it over. Mr Walkinshaw said he first learned of this after the cheque had been handed over. The next day a decision was made to stop payment of the cheque due to the breaches of agreement which had occurred. A cheque for $22,000 was provided in lieu.
[7] The application for summary judgment came before the Magistrate on 15 May 2001. It was opposed. Decision was reserved. On 18 May 2001 the court record indicates the Magistrate gave judgment for the respondent against the appellant on the claim for $43,000, for interest at 5.41% from 8 February 2001 to 18 May 2001 $630, and for costs of $1192; a total of $44,822. He ordered execution of the judgment be stayed forthwith until judgment on the respondent’s counterclaim. The record indicates the Magistrate was satisfied “ as to the provisions of UCPR r292(2) in respect of the plaintiff’s claim”.
[8] It appears that subsequently the solicitor for the appellant wrote to the Magistrate requesting a copy of written reasons for the judgment. The Magistrate later telephoned the solicitor and advised that the reason for the judgment was that he was satisfied as to all of the matters under r292(2) of the Uniform Civil Procedure Rules (“UCPR”).
[9] Apparently the Magistrate later provided a document headed “further reasons for decision of 18 May 2001”. I was told by the appellant this was at the suggestion of a District Court Judge but the record does not indicate any such suggestion or direction. In any event so far as I have been informed that document included the following
[10] “that the fact that the defendant has triable issues in relation to its counterclaim does not in my view bring the counterclaim within proceeding as it appears within r292(2)(c). The plaintiffs action is in relation to a cheque separate and apart from the defendant’s counterclaim. On all of the material available to me I consider it is clear the plaintiff is entitled to judgment on the cheque and the defendant’s action on the counterclaim can continue as a separate issue -- that in accordance with the Cheques and Payment Orders Act 1986 (“CTH”), in particular the liability provision of Part X, the plaintiff is entitled to the amount of $43,000 as claimed – there is no need for a trial of the plaintiff’s action, which in my view is the proceeding as it appears in r292(2)(c)”.
[11] It can be seen that this does not really add anything. The view more fully expressed was already implicit on the record referred to.
[12] Rule 292(2) of UCPR as it was at the time of the application before the Magistrate was as follows:
r292(2) “The court may give judgment for the plaintiff for all or part of the relief claimed in the application if the court is satisfied –
(a) the plaintiff has complied with this part and is entitled to all or part of the relief sought in the statement of claim; and
(b)the defendant has no defence other than in relation to the amount of the claim; and
(c)there is no need for a trial of the proceeding”
[13] On the appeal the appellant did not challenge the Magistrates finding that there was no defence to the claim. It accepted that neither the defence or the affidavit material filed on behalf of the defendant before the Magistrate disclosed any basis upon which a defence under the Cheques and Payment Orders Act 1986 (“CTH”) could be founded. The appellant did however contend that the respondent had not shown that it was entitled to the relief claimed and had not shown that there was no need for a trial of the proceeding. It also contended that lack of reasons at the time judgment was delivered constituted an error of law and meant that the judgment could not stand.
No Need for a Trial of the Proceeding
[14] There is judicial support for summary judgment in the case of a plaintiff suing on a bill of exchange, promissory note or cheque where there is no defence to the instrument but a separate counterclaim for damages. Execution on the judgment may be stayed pending judgment on the counterclaim, but that is a matter of discretion, for instance James Lamont & Co Ltd v Hyland Ltd [1950] 1 KB 585; McPhillamy v McMaster (1903) St R Q 68; Hoe & Bickley v Baulch (1951) QWN 14; Eversure Textiles Manufacturing Co Ltd v Webb [1978] Qd R 347.
[15] The appellant’s submissions on the appeal did not challenge this. Rather the submissions were based upon the wording of r292(2)(c). It contended that the Magistrate was in error in regarding the “proceeding” in r292(2)(c) as referring to the respondent’s claim separate from the appellant’s counterclaim. It was submitted there was only one proceeding being the plaintiff’s claim and the defendant’s counterclaim. The Magistrate recognised there needed to be a trial on the counterclaim. Therefore there needed to be a trial of the proceeding and summary judgment could not be given on the plaintiff’s claim.
[16] Rule 292(2) of UCPR has since been recast. It now provides:
“(2) if the court is satisfied that –
(a) the defendant has no real prospect of successfully defending all, or a part, of the plaintiff’s claim; and
(b)there is no need for a trial of the claim or the part of the claim;
(c)the court may give judgment for the plaintiff against the defendant for all, or the part of the plaintiff’s claim –”
[17] It can be seen that the basis of the appellant’s argument on the rule as it stood has been removed.
[18] UCPR provides that a proceeding starts when the Court issues the originating process. It may be a claim, an application, a notice of appeal or a notice of an appeal subject to leave: r8 UCPR.
[19] Division 2 of Part 5 of Chapter 6 of UCPR deals with counterclaims. It refers to a plaintiffs claim as the “original proceeding”: r175. Rule 177 provided that in a proceeding the defendant may make a counterclaim against a plaintiff instead of bringing a separate proceeding. Rule 178(3) provided that a person not a party to the original proceeding who is included as a defendant to a counterclaim becomes a party to the proceeding on being served with the defence and counterclaim. Rule 183 provided that a counterclaim may proceed after judgment has been given in the original proceeding or after the original proceeding is stayed, dismissed or discontinued.
[20] Rule 294 at the time of the proceeding before the Magistrate provided that “the giving of a judgment under this part (Part 2 of Chapter 9 UCPR) that does not dispose of all claims in issue in a proceeding or counterclaim does not prevent the continuation of any part of the proceeding or counterclaim not disposed of by the judgment”.
[21] Rule 295(1) as it previously existed provided:
“In a proceeding under this part evidence must be given by affidavit made by the party giving the evidence.”
[22] Rule 298 provided:
“If –
(a) the court dismisses as application under this part (Part 2 of Chapter 9 UCPR) for judgment; or
(b) a judgment under this part does not dispose of all claims in a proceeding;
(c) the court may give directions or impose conditions about the future conduct of the proceeding.
[23] What appears apparent from these few of the Rules I have set out, is that what is meant by “proceeding” depends upon the context in which it is being used.
[24] No rule has been referred to me which lends support to the interpretation of r292 as it previously existed the appellant contends for. Other Rules I have referred to are consistent with the interpretation the Magistrate applied.
[25] In my opinion, as it previously existed, r292(2) focused on a plaintiff’s application for summary judgment for all, or part, of the relief claimed in the application which was all, or part, of the relief sought in the statement of claim. That is the proceeding which the rule was dealing with. The reference in sub-rule (c) to “the proceeding” is a reference to the proceeding the Rule is dealing with; that is, the plaintiff’s application.
[26] The Magistrates decision about this was correct.
Entitlement to the relief claimed
[27] The contention on the appeal that the respondent had not established this was based upon the assertions in the defence and counterclaim that the services that the respondent had agreed to provide had been provided negligently, the respondent had failed to account to the appellant for monies received from mechandising sales, and the respondent was in breach of the agreement. It was submitted that these were triable issues which, if established, would mean that the judgment given on the plaintiff’s application failed “to properly reflect the parties respective legal position” and the true financial position between the parties.
[28] The respondent’s claim was a claim for the amount of the cheque which, when presented, was dishonoured. It was not a claim for damages. It did not depend upon the agreement to establish it. It was not contended that was any defence to the claim. Rather, there was a claim to unliquidated damages for breach of an agreement, a separate issue: Eversure Textiles Manufacturing Co Ltd v Webb supra.
[29] As to the allegation of a failure to account, it was contended that raised an equitable set off. The cheque was given after a request by the respondent which, because of the failure to account for the proceeds of merchandising sales, was made in breach of the agreement. The alleged breach of the agreement went directly to impeach the right to the cheque.
[30] To establish an equitable set off the connection between a claim and a cross-claim was required to be such that the cross-claim impeached or impugned the title to the claim of the plaintiff. The party seeking the benefit of the set off must be able to show some equitable ground for being protected against the claimant’s demand. The existence of cross-demands was not sufficient: Rawson v Sammual (1841) 41 ER 451. Put another way it was required “that the set off actually go to the root of, be essentially bound up with -- the title of the plaintiff -- it was not sufficient that there be countervailing claims nor that those claims were mutual nor even that they arose out of the same transaction. The defendant -- had to establish that he possessed some equitable right to be protected from the plaintiff’s claim: Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 3rd ed [3709] at p818-9.
[31] In K.D. Morris & Sons Pty Ltd (in Liquidation) v Bank of Queensland Ltd (1979-80) 146 CLR 165 at 202-3, Aickin J approved the decision of the House of Lords in Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH [1977] 1 WLR 713, where it was held that a sellers action on a bill of exchange accepted by a purchaser could not be made subject to the purchaser’s claim for unliquidated damages for breach of the contract of sale by alleging an equitable set off.
[32] In Newman v Lever (1887) 4 TLR 91, Stephen J held that in an action on a dishonoured bill of exchange, cheque or promissory note, save in exceptional circumstances or upon strong grounds, a defendant will not be allowed to set up a set off or counterclaim for damages for breach of some other contract or the commission of a tort, and the plaintiff is entitled to judgment for the amount of his claim without a stay of execution: see also Anglo Italian Bank v Davies (1878) 38 LT 197.
[33] In Eversure Textiles Manufacturing Co Ltd v Webb, supra, Connolly J referred with approval to the judgment of Lord Denning MR in Brown & Shipley & Co Ltd v Alicle Hosiery Ltd (1966) 1 Lloyds Rep 668 at 669. His Honour held that an unliquidated cross-claim could not be relied upon by way of set off against a claim on a bill of exchange.
[34] I do not consider that the appellant’s claim to an account establishes an equitable set off against the respondent’s claim on the cheque. The title of the plaintiff arises from the dishonoured cheque. The claim to a set off allegedly arises from the terms of an agreement between the parties. It is distinct from the respondent’s claim
Reasons for Judgment
[35] It was contended that the Magistrate in the exercise of his discretion, whether to give judgment on the plaintiff’s claim summarily, was required to give reasons for the exercise of his discretion in favour of the plaintiff: Eagil Trust Co Ltd v Piggott Brown & Anor [1985] 3 All ER 119; King Ranch Australia Pty Ltd v Cardwell Shire Council (1985) 2 Qd R 182. It was contended no adequate reasons were given at the time and the reasons provided later lacked the necessary contemporaniety to be reasons for the decision. In this regard reference was made to Palmer v Clark [1989] 19 NSWLR 158.
[36] In Palmer v Clark reasons for judgment were given when judgment was pronounced but they were regarded as inadequate. Some three months later further, quite extensive, reasons dealing with issues of credibility explaining why judgment had proceeded as it had were given. The Court of Appeal set aside the judgment and ordered a new trial.
[37] It is trite law that a court from which an appeal lies to a higher court is under a duty to give reasons for arriving at its decision. The reason is, apart from informing the parties, so that the appeal court can have “a proper understanding of the basis upon which the verdict entered has been reached”: Carlson v King (1947) 64 WN NSW 65; Pettitt v Dunkley (1971) 1 NSWR 376; Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 666-7; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247.
[38] In this case the record contains the reasons of the Court at the time judgment was given. The Magistrate was satisfied as to the provisions of r292(2) in respect of the plaintiff’s claim. That which he provided at the later time does not really take those reasons any further. Satisfaction as to the provisions of r292(2) includes satisfaction as to all parts of the Rule. Given the nature of the claim, and the material before the Magistrate, further elaboration as subsequently occurred could not really add anything of significance. It was implicit in the reasons on the record that the Magistrate must have regarded the proceeding in r292(2)(c) as a reference to the respondent’s claim, which did not include the defendant’s counterclaim. It was implicit in the reasons on the record that the Magistrate must have regarded the plaintiff as entitled to the relief which it sought. I have read the written submissions of the appellant to the Magistrate on the hearing of the summary judgement application. A claim to an equitable set off is not raised. Nor is there raised any issue which required specific findings of fact. The appellant could not have been in any doubt about why the Magistrate had given judgment.
Conclusion
[39] It has not been shown the Magistrate made any error in exercising his discretion. Nor was there an error of law arising from an alleged lack of reasons.
[40] The appeal is dismissed with costs.
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