Polglaze Nominees Pty Ltd v Rooke - [2003] WADC 49

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: POLGLAZE NOMINEES PTY LTD -v- ROOKE [2003] WADC 49

CORAM: NISBET DCJ

HEARD: 10 FEBRUARY 2003

DELIVERED : 11 MARCH 2003

FILE NO/S: CIV 1633 of 2001

BETWEEN: POLGLAZE NOMINEES PTY LTD (ACN 008 786 892)
Plaintiff
AND
HOWARD WILLIAM ROOKE
Defendant

Catchwords:

Practice and procedure - Amendment to counterclaim - Appeal from Deputy Registrar - Declaratory relief sought - Jurisdiction of District Court - Remit to Supreme Court

Legislation:

District Court of Western Australia Act

Result:

Appeal allowed

Representation:

Counsel:

Plaintiff: Mr R H B Pringle QC
Defendant: Mr P P McCann

Solicitors:

Plaintiff: Granich Partners
Defendant: Jonathan Eastoe

Case(s) referred to in judgment(s):

Chantec Pty Ltd v Comgroup Supplies Pty Ltd [2001] WASCA 238
Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721
Malliaros v Moralis [1992] 2 VR 501
Trimble v Piggott (1995) 14 WAR 329

Case(s) also cited:

Commercial Development Pty Ltd v Mercantile Mutual Insurance Ltd (1991) 5 WAR 208
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423

NISBET DCJ: This matter has a somewhat complex history which has to be examined in order to understand why the plaintiff brings an appeal against the decision of the learned Deputy Registrar of this Court made 22 October 2002.
By its statement of claim, amended and filed in court 7 September 2001 the plaintiff pleaded:
"2.In or about May 1995, the defendant —
(a)was a real estate sales representative;
(b)orally requested Mr Bramley to assist him (the defendant) to become qualified as a licensed estate agent and holder of a triennial certificate under the Real Estate and Business Agents Act by undertaking and completing a course of study, the assistance to be in the form of monthly advances to him (the defendant) and in consideration he would not only repay the advances but would also split equally his commissions on the sale of strata titled units (on strata plan 31962) ('the development') for which he would be given the sole listing by the developer, Harwin Holdings Pty Ltd ('the developer')
3.In or about July 1995, the defendant showed Mr and Mrs Bramley a spread-sheet setting out a cash flow forecast which the defendant orally represented related to sales of strata units in the development through his agency, and which embodied figures for—
…
and which showed that all advances would be repaid by January 1997."
The plaintiff then pleaded out a cause of action based on the collateral oral contract to repay all advances by January 1997 leaving its claims for half the commissions on units sold up to the date of issue of the writ, to be determined at a later time. The reason for this was that the nature of the development had changed from the time when the defendant made his initial representations to the plaintiff and secured the plaintiff's financial assistance. Whereas originally it was contemplated that three blocks of units would be built in respect of which the defendant would have the sole selling rights it transpired that only one block of units was built and of those units not all were sold, many in fact being rented out through the agency of the defendant and him receiving commissions upon the rental. The plaintiff determined that it wanted to adopt a "wait and see" attitude as to what happened with the sale of the other units but having regard to the events as they had happened it decided to sue on the collateral contract for the return of its advances, thinking, with some justification, that it was somewhat unfair of the defendant to retain the advances without repaying them, relying upon the agreement in respect of half the commissions, when no attempt was being made to sell the units, which were instead being let and he was receiving commissions from the rentals!
As can be seen from an examination of the court record, the defendant was anxious to settle with the plaintiff all of its present and prospective claims against him and to that end through his representatives engaged in a battle of wits with the plaintiff and its representatives. This is demonstrated in part by Mr Eastoe's affidavit sworn 16 October 2002 and in particular par 3 thereof wherein Mr Eastoe recites the substance of conversations he had with the plaintiff's solicitors and counsel on 3 July 2001. This is a most instructive deposition for in it Mr Eastoe explains that he was told in no uncertain terms by each of the plaintiff's solicitors and counsel that the claim in the writ was limited to seeking repayment of the advances and was not intended to resolve all of the plaintiff's claims against the defendant.
Thereafter the defendant entered an appearance and put in a "holding" defence at the same time applying to strike out the statement of claim. The strike out application came on for hearing before me on 22 April 2002 and I had little difficulty refusing it for the reasons set out in my extemporaneous judgment delivered that day and now published as [2002] WADC 91.
The next step was taken by the defendant. He filed an amended defence and counterclaim on 7 May 2002 which basically tried to 'roll up' the agreement and the collateral agreement into one by the importation of some significant implied terms and the like, and counterclaimed for some expenses allegedly incurred in the performance of the agreement.
The next important step in the proceedings was that the defendant then made an offer to settle the plaintiff's claim pursuant to the provisions of O 24A of the Rules of the Supreme Court. As some reliance was placed upon the terms of the offer to compromise, it is as well to set it out in full. It is exhibited to the affidavit of the plaintiff's solicitor, Mr Oakley, sworn 7 August 2002:
"TAKE NOTICE that the Defendant offers the sum of $70,000 in satisfaction of the Plaintiff's claim.
This offer remains open for a period of 28 days after service upon the Plaintiff's solicitor.
This offer is not made without prejudice."
The plaintiff accepted this offer of compromise within the 28 days and I have been informed that the money has been paid.
On 27 May 2002 the plaintiff applied to strike out various paragraphs of the defence comprised in the amended defence and counterclaim previously referred to, together with the counterclaim in its entirety, on the basis that the defendant needed leave to file a counterclaim at that stage of the proceedings and had been refused leave, and accordingly, I interpolate, that this was said to constitute an abuse of the process of the court. That summons was amended and an amended summons was filed 12 August 2002. This sought additional relief in the terms of pars 5, 6 and 7 which read as follows:
"5.Judgment in the sum of $70,000 be entered for the Plaintiff.
6.The sum of $200 paid into Court by the Plaintiff as security for costs on the 15th March 2002 be paid out to the Plaintiff.
7.The Defendant pay the Plaintiff's costs of the action, including any reserved costs, to be taxed."
That amended summons was dealt with by the learned Deputy Registrar on 19 August 2002, 10 September 2002 and finally, on 22 October 2002. The first attendance was simply to adjourn the summons to a special appointment. On the second attendance an order was made as asked in the terms of par 6 of the amended summons and the defendants were ordered to file a minute of their proposed amended counterclaim within 14 days. Costs were reserved. That minute of amended counterclaim bears date 27 August 2002 and was filed in the court on 29 August 2002. The amendments proposed were significant and they included a claim for relief that:
"21.a declaration that the Heads of Agreement is terminated".
When the matter came back on before the learned Deputy Registrar finally on 22 October 2002 he made the following orders:
"1.The Defendant do have leave to amend his defence in terms of the minute filed on 29th August 2002 within 14 days.
2.The Plaintiff do have 14 days after service to file and serve any defence to counterclaim.
3.Costs of the appearances on 6th June 2002, 19th August 2002 and 10th September 2002 and any costs thrown away by the amendment be the Plaintiff's in any event.
4.The costs of attendance today be the Defendant's in any event."
By notice of appeal filed in the court 28 October 2002 the plaintiff appealed from the decision of the learned Deputy Registrar in respect of his orders granting the defendant leave to amend his counterclaim and granting him the costs of his attendance before the learned Deputy Registrar on 22 October 2002.
The principal ground upon which the appeal was made was that the plaintiff's claim having been compromised by acceptance of the O 24A offer there was no existing claim within the jurisdiction of the court to which the counterclaim could attach, it being obviously outside the court's original jurisdiction. When the appeal came on for hearing before me the defendant conceded that since the plaintiff accepted the defendant's offer of settlement pursuant to the provisions of O 24A the Supreme Court had exclusive jurisdiction to grant declaratory relief and that:
"Therefore the learned Deputy Registrar lacked jurisdiction to grant leave to amend the Counterclaim. As such his orders should be set aside and the plaintiff's application to strike out dated 27 May 2002 ('the Strike Out Application') should be adjourned sine die because it is an application to strike out a Counterclaim which the Defendant seeks to amend.
The Defendant seeks remittal of the action and the Counterclaim to the Supreme Court under Section 77 of the District Court of Western Australia Act (the action, although settled, is still alive in respect of the issue of costs)."
And accordingly, it can be seen, as was submitted by senior counsel for the plaintiff, the case now comes down to one of costs and the defendant is trying to avoid liability for costs by the promotion of a counterclaim over which this Court has no jurisdiction and which must be dealt with either by way of remittal from this Court to the Supreme Court or, if that fails, by a separate action instituted afresh by the defendant in the Supreme Court.
The plaintiff submits that the defendant having conceded the appeal now wants this Court to remit a counterclaim to the Supreme Court which has no prospects of success. In answer the defendant says that if this Court has no jurisdiction to entertain the counterclaim it has no jurisdiction in effect to strike it out thereby obliging the defendant to bring fresh proceedings in the Supreme Court.
I think, however, that the defendant's analysis of this is incorrect. The position is that the learned Deputy Registrar wrongly gave the defendant leave to amend its defence and counterclaim to bring in a counterclaim which exceeded the court's jurisdiction. If that order is set aside then there simply is no counterclaim before the court which is within the court's jurisdiction because the pleadings revert to the state that they were in before the counterclaim was amended with the leave of the learned Deputy Registrar. The defendant concedes that in the pleadings as they would then be, the defendant really has no counterclaim and the only way in which it can properly advance its position is by obtaining a declaration that the Heads of Agreement has been "terminated".
Accordingly, then, as I have a very broad discretion in relation to the remittance of matters to the Supreme Court under s 77 of the District Court of Western Australia Act, in my opinion it is appropriate for me to look at the case which the defendant wants transferred from this Court to the Supreme Court to see whether or not there is any merit in it such as would warrant the plaintiff being held out of its ordinary entitlement to an order for costs upon the disposal of an action. It is of course accepted by the parties that if I refused the order to remit sought by the defendant, it is open to the defendant to bring fresh proceedings in the Supreme Court for the relief he seeks. Alternatively, of course, what the defendant seems to me to fail to appreciate, at least in submissions made to me, is that he may wait and see whether the plaintiff does indeed bring a further action for half his commissions and then, should he choose, he can plead by way of defence that the "Heads of Agreement" has been "terminated" in the way in which he is seeking to agitate in his counterclaim.
What is it then that the defendant says gives rise to an actionable counterclaim for a declaration? It is to be found in the amended counterclaim dated 24 October 2002 received in the court 29 October 2002 and is said to have been amended pursuant to the order of the learned Deputy Registrar made 22 October 2002. By par 17 the defendant pleads:
"17.1The commencement of this action constituted a repudiation of the Heads of Agreement by the Plaintiff which repudiation was accepted by the Defendant by making the Order 24A Offer of Compromise and the Heads of Agreement was thereupon terminated.
17.2Alternatively by reason of the conduct of the parties (namely the making of the Order 24A Offer of Compromise the Defendant [sic – by] and its acceptance by the Plaintiff) the Heads of Agreement has been terminated.
17.3Alternatively it would be inequitable for the Plaintiff to claim entitlement to any further sums under the Heads of Agreement."
In my opinion not a great deal of time need be spent on this plea. It is, on its face, quite hopeless and has no prospect of success. This is because O 24A r 2 provides as follows:
"In any proceedings the plaintiff or the defendant may make to the other an offer to compromise any claim in the proceedings on the terms specified in the notice of offer." (My emphasis.)
Order 24A r 3(9) provides:
"Where an offer is accepted under the Rule, any party to the compromise may apply to the Court for such judgment or order as he may be entitled to and on the hearing of the application the Court shall give such judgment or make such order as it thinks fit."
In my opinion it is clear that an offer of compromise made under O 24A can only be made in respect of a claim in the proceedings in which it is made. No other cause of action but the cause of action in the suit in which the offer is made may be compromised within the ambit of this Rule. The judgment to which the plaintiff in this case is entitled in the money sum of $70,000 is judgment on its claim for repayment of the advances made in accordance with the collateral oral contract, and no other. The defendant may not clothe the acceptance of the O 24A offer to compromise the suit with any other character than that provided by the Rules. The defendant cannot attach strings to its acceptance. He cannot ascribe to the plaintiff's acceptance of his offer anything other than an offer to compromise the claim made in the action.
In my opinion it would run contrary to both the philosophy which underlies O 24A and s 77 of the District Court of Western Australia Act if I was to remit to the Supreme Court a bare counterclaim which has no prospect of success. See for example the discussion in cases such as Malliaros v Moralis [1992] 2 VR 501 at 505 and Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (as far as O 24A is concerned) and the cases in the Supreme Court of Western Australia dealing with s 77 of the District Court of Western Australia Act namely Trimble v Piggott (1995) 14 WAR 329 and Chantec Pty Ltd v Comgroup Supplies Pty Ltd [2001] WASCA 238.
By refusing to remit this matter to the Supreme Court I am not holding the defendant out of any remedy or right of action that may be available to him either in a properly formulated cause of action commenced in a court of jurisdiction or, alternatively, by way of a defence to any further claim as may be made by the plaintiff.
In the circumstances therefore the formal orders of the Court will be as follows:
1.The appeal be and is hereby allowed.
2.The order of the learned Deputy Registrar made 22 October 2002 giving the defendant leave to amend his defence in terms of the minute filed 29 August 2002 be set aside.
3.The order of the learned Deputy Registrar made 22 October 2002 ordering the plaintiff to pay the defendant's costs of 22 October 2002 be set aside and in lieu thereof the defendant do pay the plaintiff's costs of and incidental to the proceedings before the learned Deputy Registrar 22 October 2002.
4.The defendant do pay the plaintiff's costs of this appeal to be taxed.