SAM Law Pty Ltd v ADZ Homes Pty Ltd
[2016] VSC 41
•29 February 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2015 00324
| SAM LAW PTY LTD (formerly Matisi Moors Pty Ltd) (ACN 140 917 362) | Plaintiff |
| v | |
| ADZ HOMES PTY LTD (ACN 124 135 280) AND OTHERS (according to the attached schedule) | Defendants |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 November 2015 |
DATE OF JUDGMENT: | 29 February 2016 |
CASE MAY BE CITED AS: | SAM Law Pty Ltd v ADZ Homes Pty Ltd and ors |
MEDIUM NEUTRAL CITATION: | [2016] VSC 41 |
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JUDICIAL REVIEW AND APPEALS — Appeal from Magistrate — Magistrates’ Court Act 1989 (Vic) s 109 — Whether the order of the Magistrate final or interlocutory — Consider legal not practical effect of the orders — Neuss v Magistrates’ Court of Victoria and anor [2013] VSC 326, DPP v Sabransky [2002] VSC 143 and Director of Public Prosecutions v Moore (2003) 6 VR 430 considered — Magistrates’ Court proceeding could be reinstated — Order for summary judgment interlocutory — JBS Southern Aust Pty Ltd v Westcity Grove Holdings Pty Ltd & Ors [2011] VSC 476, Schiffer v Pattison (2005) 143 FCR 328 and Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401 considered — Order striking out proceeding interlocutory — Appeal dismissed.
JUDICIAL REVIEW AND APPEALS — No error of law — Matters not raised in written and/or oral submissions before the Magistrate — Whether Magistrates’ Court had jurisdiction to hear the matter — Dispute over who had right to possession of the certificate of title not possession of the land itself — Whether second to fourth defendants had standing — Whether solicitor had a general lien — Bona fide claim — Triable issues — Summary judgment application unlikely to have been successful — Obligations under the Civil Procedure Act 2010 (Vic).
COSTS — Magistrates Court General Civil Procedure Rules 2010 (Vic) r 63.15 — External/supervening events rendered proceeding futile — Soteriadis v Nillumbik Shire Council [2015] VSC 363, Ferny Sky Pty Ltd & Ors v Capital Finance Australia [2006] VSC 366 and Jeruth Pty Ltd v Haybale Pty Ltd [2004] VSC 319 applied.
JUDICIAL REVIEW AND APPEALS — Procedural fairness — Magistrate did not take into account irrelevant matters — Appellant represented by counsel in Magistrates’ Court proceeding — Judicial officers’ obligations under the Civil Procedure Act 2010 (Vic) to efficiently deal with disputes.
PRACTICE AND PROCEDURE — Overarching obligation not to make a claim without a proper basis — Civil Procedure Act 2010 (Vic) s 18 — Award of costs against legal representatives exercised cautiously — Dura Australia Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2014] VSC 400 applied — Proceeding reasonably brought — Appeal dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M T Lapirow | SAM Law Pty Ltd |
| For the First to Fourth Defendants | Mr M J Hoyne | HWL Ebsworth |
| For the Fifth Defendant | Mr M J Hoyne | Best Hooper |
HER HONOUR:
This proceeding, being an appeal from the decision of His Honour Magistrate Smith on 10 December 2014, arises out of a dispute between the plaintiff, SAM Law Pty Ltd (‘SAM Law’), and its former client, the defendant, ADZ Homes Pty Ltd (‘ADZ Homes’). SAM Law had previously acted for ADZ Homes in relation to, among other things, disputes and other matters in connection with a residential subdivision in Eltham (‘subdivision’). There is no need for present purposes to go into any great detail regarding the relationship between the parties and the souring of that relationship. It is sufficient to note the following:
(a) by reason of the work carried out by SAM Law for ADZ Homes, SAM Law was in possession of the certificate of title for one of the lots in the subdivision (‘certificate of title’);
(b) after the director of ADZ Homes terminated SAM Law’s instructions, SAM Law issued three separate bills in relation to work carried out by it in relation to the subdivision;
(c) ADZ Homes issued proceedings in the Costs Court in relation to each of the three bills. Orders were made by the Costs Court on 20 August 2012, 5 December 2012, and 1 March 2013, with a total value of $31,371.18 (‘judgment debt’);
(d) prior to the finalisation of the Costs Court proceeding, ADZ Homes demanded that SAM Law return the certificate of title. SAM Law refused, claiming a lien over the certificate of title until all amounts owing to it in relation to the three files were paid in full;
(e) on 8 April 2014, ADZ Homes commenced a proceeding in the Magistrates’ Court seeking the return of the certificate of title, claiming that SAM Law was liable in conversion, detinue, and contract for failing to return the certificate of title. The second to fourth defendants in this proceeding were also plaintiffs in this proceeding. In its defence dated 19 May 2014, SAM Law stated that:
This Honourable Court does not have the jurisdiction to entertain the application, as the property, being the title to the specified herein, has a value exceeding the jurisdictional limit;
and
Further, the Defendant holds the Certificate of Title as security pursuant to a general lien.
(f) under cover of the objection to jurisdiction, the defence stated that the lien could be discharged by the payment of the judgment debt and the interest which had accrued upon the judgment debt;
(g) the property to which the certificate of title applied (‘property’) was sold. Prior to settlement, an attempt by ADZ Homes to tender a cheque for an amount which included the amount of the judgment debt, plus interest and SAM Law’s cost of the garnishee summons and a warrant of execution issued by it in this Court, was rejected by the principal of SAM Law. By that time SAM Law had obtained an order from this Court to garnishee the proceeds of sale to satisfy the judgment debt. Ultimately, the certificate of title was handed over, the judgment debt was paid, and the sale of the property settled;
(h) on 5 December 2014, the same day as the settlement of the sale of the property, SAM Law issued a summons seeking summary judgment against ADZ Homes, and made an application for declarations that Best Hooper, the solicitors for ADZ Homes had breached their obligations under the Civil Procedure Act 2010 (Vic) (‘Civil Procedure Act’). SAM Law sought that the costs of the proceeding be payable by ADZ Homes and/or Best Hooper on an indemnity basis. Annexed to the affidavit sworn in support of the summons was a document heading ‘Tax Invoice’ and ‘Re: Magistrates’ Court proceeding E112 44383 and associated matters’, which was in the form of an itemised bill, totalling $17,985.53 inclusive of GST; and
(i) at the return of the summons on 10 December 2014, counsel for ADZ Homes made an oral application for leave to discontinue the proceeding, given that, with the handing over of the certificate of title at the settlement of the sale of the property, the proceeding no longer had any utility. After some submissions and discussion, the learned magistrate made orders striking out the proceeding, with no orders as to costs as between SAM Law and ADZ Homes. He dismissed SAM Law’s application against Best Hooper, and made orders that SAM Law pay Best Hooper’s costs of the hearing that day. It is from these orders that the current appeal is brought.
This proceeding was commenced on 27 January 2015 by way of originating motion. There were some issues in regularising the proceeding and settling a notice of appeal, which do not need to be canvassed here. Ultimately, on 7 May 2015, Mukhtar AsJ gave SAM Law leave, if leave was necessary, to bring the appeal out of time, and gave leave to SAM Law to amend its notice of appeal. The leave to amend was not availed of, and the document before the parties and the Court was a document dated 27 March 2015 and headed ‘Draft Notice of Appeal’ (‘Notice of Appeal’). Counsel for ADZ Homes and Best Hooper noted that there were some inconsistencies between the Notice of Appeal and SAM Law’s written submissions, but that did not seem to create any substantial difficulties for the parties in addressing the issues raised in this appeal.
Consequent upon earlier directions, SAM Law filed an extensive affidavit in support. Counsel for ADZ Homes formally objected to large portions of the affidavit evidence being largely irrelevant to the determination of the appeal. I would generally agree, save that some of the evidence is useful in establishing the factual background to the dispute, and in identifying the chronology of events. However, in determining the appeal, I have largely had regard to the following documents:
(a) the summons of SAM Law and the affidavit in support filed 5 December 2014;
(b) the transcript of the hearing before the learned magistrate on 10 December 2014;
(c) the Notice of Appeal; and
(d) the written outlines of submissions of the parties and the authorities referred to therein, including Best Hooper’s outline of submissions filed in opposition to the grant of leave.
SAM Law seeks the following orders:
As against the First – Fourth Defendants:
1. this appeal be allowed;
2.Orders of the Magistrates’ Court of Victoria, per Magistrate Smith, be set aside, and in lieu, the following Orders be made:
(a)that the Magistrates’ Court proceeding ADZ Homes Pty Ltd, Daniel Chin, Anthony Ziino and Peter Paul Ferla (No E 11244483) (the “Proceeding”) be dismissed;
(b)that the First to Fourth Defendants pay the costs of, and incidental to, the Proceeding, including the Summons dated 5 December 2014;
3.the First to Fourth Defendants pay the Plaintiff’s costs of the hearing below;
4.the First to Fourth Defendants pay the Plaintiff’s costs of this appeal.
As against the Fifth Defendant:
1.this appeal be allowed;
2.the declaration that the Fifth Defendant has breached its overarching obligations under the Civil Procedure Act 2010; and
3.the Fifth Defendant pay the Plaintiff’s costs of the hearing below;
4.the Fifth Defendant pay the Plaintiff’s costs of this appeal.
Essentially, this appeal is about costs. SAM Law seeks to reverse the order of the learned magistrate that there be no order as to costs of the proceeding, and seeks orders that ADZ Homes and Best Hooper pay the costs of the Magistrates’ Court proceeding.
The appeal is brought upon the following questions of law:
1. Whether the Magistrates’ Court erred, in not affording the plaintiff procedural fairness, in failing to consider the application for summary judgment, brought by summons dated 5 December 2014 and heard on 10 December 2014, for an Order pursuant to:
(a) Order 22 of the Magistrates’ Court General Civil Procedure Rules 2010; and/or
(b) section 63 of the Civil Procedure Act 2010.
and whether, had it heard the application, it would have dismissed the proceeding and, in a proper exercise of its discretion, would have ordered the defendants to pay the plaintiff’s costs of the proceeding.
2. Whether the Court erred, on 10 December 2014, in not affording the plaintiff procedural fairness, in failing to consider, or properly consider, the plaintiff’s application that Best Hooper had breached its overarching obligations under the Civil Procedure Act 2010 and whether, had it heard the application and considered, or properly considered, the application, it would have made an order that Best Hooper pay the plaintiff’s costs, rather than ordering that the plaintiff pay Best Hooper’s costs.
3. Whether the decision of the Magistrates’ Court was manifestly unreasonable, in ordering that there was no order as to costs of the proceeding, given that:
(a) under Rule 63.15 of the Magistrates’ Court General Civil Procedure Rules 2010, the presumption is, that the party discontinuing the proceeding must pay the costs of the party to whom the discontinuance or withdrawal relates, to the time of the discontinuance or withdrawal, and that the Court did not consider, or give proper consideration, to the operation of the Rule; and
(b) at all relevant times, the Magistrates’ Court had no jurisdiction to hear the complaint in the proceeding, and the plaintiff had not provided written consent to jurisdiction, given that the claim was in conversion and detinue, seeking the return of a Certificate of Title, in relation to property, the value of which exceeded $100,000;
(c) when the plaintiff filed its defence in the proceeding, being 19 May 2014, it specifically pleaded:
(i) This Honourable Court does not have the jurisdiction to entertain the application, as the property, being the Title to the property specified herein, has a value exceeding the jurisdictional limit; and
(ii) further, the defendant holds the Certificate of Title as security, pursuant to a general lien.
4. Whether the Magistrates’ Court order that the plaintiff pay Best Hooper’s costs was manifestly unreasonable, given that:
(a) On 9 April 2010, Best Hooper, per a principal of the firm, Matthew David Francke, filed a Proper Basis Certification, pursuant to section 42 of the Civil Procedure Act 2010, that there was a proper basis to commence the proceeding, notwithstanding the facts that:
(i) as the second to fourth defendants, and each of them, were not registered proprietors of the property, there was no basis, on the factual or legal material available to Best Hooper, at that time, or subsequently, for them to prosecute pleaded causes of action in the proceeding; and
(ii) the Magistrates’ Court never had jurisdiction to hear the proceeding, given the claim was in conversion and detinue, seeking the return of a Certificate of Title, in relation to property, the value of which exceeded $100,000 and accordingly, the value of the claim exceeded the jurisdiction of the Magistrates’ Court, and the plaintiff never consented, in writing, to jurisdiction;
(b) having regard to the fact that Best Hooper had breached its overarching obligations under the Civil Procedure Act 2010, the Court should have:
(i) considered the operation of, and made Orders pursuant to, section 29 of the Civil Procedure Act 2010 and the appropriate Order, in the circumstances, was that Best Hooper pay the plaintiff’s legal costs; and
(ii) pursuant to section 28 of the Civil Procedure Act 2010, taken into account Best Hooper’s contravention of an overarching obligation, in the exercise of any of its powers, in relation to the hearing on 10 December 2014.
5. Whether the Magistrates’ Court erred, in not affording the plaintiff procedural fairness, in failing to consider:
(a) the evidence contained in the plaintiff’s affidavit material, relating to the plaintiff’s:
(i) Summary Judgment application; and
(ii) application that Best Hooper had breached its overarching obligations, as imposed by the Civil Procedure Act 2010; or alternatively
(b) properly consider the plaintiff’s submissions:
(i) in relation to the aforementioned applications;
(ii) in response to the submissions made by the defendant’s counsel.
6. Whether it was open to the Magistrates’ Court to strike out the proceeding, rather than dismiss it, given that:
(a) there was no application by any party to strike out the proceeding; and
(b) there was, and is, no basis to strike out the proceeding, as at all relevant times the Magistrates’ Court had no jurisdiction to hear the complaint in the proceeding and the plaintiff had not provided written consent to jurisdiction, given that the claim was in conversion and detinue, seeking the return of a Certificate of Title, in relation to property, the value of which exceeded $100,000.
7. Whether there was a breach of procedural fairness and a failure to afford natural justice to the plaintiff, in considering the defendant’s oral application to discontinue proceedings for which:
(a) no prior notice was given; and
(b) for which no evidence was tendered;
instead of the Magistrates’ Court consider the plaintiff’s application for Summary Judgment.
B. Grounds of Appeal
1. That his Honour erred in law, in considering irrelevant and extraneous matters including:
(a) the conduct of the plaintiff relating to, and the outcome of, the Supreme Court proceedings ADZ Homes Pty Ltd v Matisi Moors Lawyers Ltd (SCI 2581 and 3510 of 2012);
(b) that the plaintiff had obtained Costs Orders against the first defendant in the Supreme Court proceedings; and
(c) it was his practice not to make dismissal Orders, as a rule, because there had been no decision made on the merits;
instead of considering the plaintiff’s Summary Judgment application before the Court.
2. That his Honour erred in law, in failing to take into account relevant factors, namely:
(a) at all times, the Magistrates’ Court had no jurisdiction or power as property the subject of the proceeding had a value exceeding its jurisdictional limit;
(b) the plaintiff had a complete defence, in the form of a general lien, to the complaint filed in the proceeding, wherein the first to fourth defendants’ causes of action were in conversion and detinue; and
(c) there was no basis in law, for the second to fourth defendants to commence and maintain an action against the plaintiff in the proceeding.
3. That his Honour erred in law, in finding:
(a) that the plaintiff acted unreasonable and contrary to law in retaining the Certificate of Title in Volume 11274 Folio 276;
(b) that the second to fourth defendants had an arguable claim in law in the proceeding against the plaintiff; and
(c) that there was no difference between dismissing and discontinuing the proceeding.
4. That it was not open to his Honour to find that the proceeding should be struck out rather than dismissed.
5. That his Honour erred in law in reasoning that, as all parties agreed, as he characterised the parties’ respective positions, that maintaining both the complaint and defence was futile, as at 10 December 2014, the appropriate test was that unless egregiously unreasonable conduct is shown, that his Honour did not have to decide the merits of the claim and each party should ‘walk away’, notwithstanding the fact that the plaintiff had made a summary judgment application, which was returnable on that date.
The affidavit of SAM Law’s principal, Ms Sharynn Moors, filed in support of SAM Law’s summons filed on 5 December 2014 dealt with the following matters:
(a) the proceedings initiated in the Costs Court by SAM Law, and the orders made in the Costs Court;
(b) Ms Moors’ assertion that SAM Law retained the certificate of title by way of a general lien as security for the amounts owed to it by ADZ Homes;
(c) that it was always Ms Moors’ position that the certificate of title would be returned to it upon payment of the judgment debt plus interest;
(d) the procedural history of the proceeding in the Magistrates’ Court;
(e) the recovery proceedings undertaken by SAM Law in this Court in October 2014;
(f) Ms Moors’ communications with the garnishee, that is, the purchaser of the relevant property;
(g) SAM Law’s communications with Best Hooper regarding payment of the judgment debt and the return of the certificate of title;
(h) the events of 14 November 2014, when representatives of Best Hooper attended the offices of SAM Law and attempted to tender a cheque;
(i) what occurred at the hearing before Derham AsJ on 20 November 2014 and remarks made by his Honour at that hearing;
(j) subsequent negotiations between the parties and the events leading up to the settlement of the sale of the property; and
(k) the impact of the dispute upon SAM Law, and Ms Moors’ views regarding the conduct of ADZ Homes and Best Hooper.
The transcript of the hearing on 10 December 2014 does not make it entirely clear whether the learned magistrate had reviewed this affidavit or the pleadings prior to the commencement of the hearing, although some remarks made by the learned magistrate suggested that he had not. The schedule to Best Hooper’s submissions in support of its contention that leave to appeal out of time ought not be granted contains a useful, and hopefully non‑contentious summary of what transpired on 10 December 2014, and is reproduced below (omitting transcript references), including additional relevant discussions between the bench and the bar table identified by me during the course of my review of the transcript of the hearing before the learned magistrate.[1]
[1]Additions are italicised.
In the hearing before the Magistrate, the following took place:
(a)Counsel for the Plaintiffs in the Magistrates Court proceeding (ADZ Homes) made an oral application for leave to discontinue. No objection was taken to this course;
(b)After counsel for ADZ Homes explained that events had overtaken the proceeding, and the title had been returned, the Magistrate noted that leave to discontinue would “probably be forthcoming”;
(c)Costs were identified as being the live issues (Counsel for ADZ Homes also told the learned magistrate that, Counsel for SAM Law wanted costs to be payable by ADZ Homes on a special basis);
(d)Counsel for ADZ Homes explained that there were costs orders in favour of SAM Law in the amount of $31,371 against ADZ Homes and that a lien had been claimed but there was a dispute as to the existence, and width, of the lien;
(e)It was the position of ADZ Homes that, because SAM Law had asserted a wider lien than it was entitled to, and for more than it was entitled to, any lien it might have had was lost;
(f)Counsel for ADZ Homes submitted that the Magistrate did not have to determine the merits of ADZ Homes’ claim against SAM Law and the Magistrate commented, “that’s what I was thinking too” and that all he had to determine was that the proceeding had been issued bona fide and there was an arguable case. (After this discussion, counsel for ADZ Homes stated that he was not going so far as to seek his clients’ costs, and went into some detail regarding the chain of events between the taxation of the bills and the making of the garnishee order. The learned magistrate queried the relevance of these matters to what he had to determine);
(g)The Magistrate said it would not make any difference whether the proceeding was dismissed or discontinued in these circumstances;
(h)The Magistrate said that the proceeding no longer served any utility because the document had been returned but when proceedings were issued there was no indication that the document would be returned;
(i)The Magistrate said that it was probably appropriate for the proceeding to be struck out as there had been no determination on the merits leaving only the question of costs;
(j)The Magistrate summarised the case of ADZ Homes that there should be no order for costs because ADZ claimed that SAM Law’s retention of the certificate of title was “unreasonable and actually contrary to law”;
(k)The Magistrate then asked “What does the defendant [ie SAM Law] say?”;
(l)Counsel for SAM Law accepted that the proceeding could not continue and submitted that the second to fourth plaintiffs had no cause of action. Discussion then occurred as to who the second to fourth plaintiffs were with the Magistrate expressing the view that the second to fourth plaintiffs did not have a claim but it probably did not matter much as there were no additional costs caused by them being joined. (The learned magistrate was then informed by counsel for ADZ Homes that the second to fourth plaintiffs were also the beneficiaries of unregistered transfers of the property);
(m)Counsel for SAM Law said that “the first plaintiff has always been the correct plaintiff to bring this claim, there no doubt about it” but when asked by the Magistrate, he was unable to explain any additional expense that SAM Law had been put to by reason that the second to fourth defendants had been included. Indeed, counsel for SAM Law submitted that SAM Law ought be entitled to costs on scale for the whole proceeding because of the inclusion of the Second to Fourth Plaintiffs;
(n)The Magistrate asked counsel for SAM Law why they should be entitled to costs of the whole proceeding if the proceeding was brought bona fide. Counsel for SAM Law referred only to the inclusion of the second to fourth plaintiffs which the Magistrate again noted, did not result in additional costs being incurred to which counsel for SAM Law agreed;
(o)The Magistrate then asked why should anyone get costs in circumstances where there was no egregiously unreasonable conduct by any person, events have overtaken the proceeding and in the ordinary course he would not have to decide the merits of the case. (In passing, he stated ‘I don’t particularly like the defence much, by the way’);
(p)The Magistrate did say that he was not interested in hearing about what occurred on 14 November 2015 which was when the payment was tendered and the representative from SAM Law tore up the cheque. The Magistrate made the point on two occasions that what he was interested in was that the claim had been made bona fide and reasonably, there was a reasonable defence, events had now overtaken the proceeding and so, in the ordinary course, there should be no order as to costs. (When he queried why SAM Law had not enforced the judgments in his favour, counsel for SAM Law referred to ‘bullying and intimidating conduct’);
(q)Counsel for SAM Law then asserted that by tendering payment, that was inconsistent with an assertion that they did not have a lien, but the Magistrate pointed out that it was, as they were just paying an amount that was owed. He also made the point (again) that he said the second to third plaintiffs did not have any right to bring the proceeding which again led to a discussion about the role played by the second to fourth defendants;
(r)Submissions were then made by counsel for Best Hooper. The Magistrate again made the point that the issue was whether there was an arguable claim and an arguable defence, and then if leave to discontinue is given, parties will ordinary be required to meet their own costs where the proceeding has ceased to have utility. There was no prejudice by reason of the fact that the second to fourth plaintiff were included;
(s)Counsel for Best Hooper sought costs of the application which failed and those costs were awarded on scale;
(t)The Magistrate then asked Counsel for SAM Law why Best Hooper had been brought there and the reason said was that the second to fourth plaintiffs ought not have been included. (The learned magistrate commented that at the date the proceeding was issued ‘prima facie’ the second to fourth plaintiffs did have a beneficial interest in the property);
(u)Counsel for SAM Law then said he would not persist with the application for costs against Best Hooper. He then said he would not take the matter any further other than to note the history of the matter again and to say that everyone should bear their own costs including Best Hooper;
(v)The Magistrate ordered that the proceeding be struck out and each party bear their own costs, other than the costs of Best Hooper on the application which were to be paid on scale.
Paragraph 10 of SAM Law’s outline of submissions states that SAM Law relies upon each of the questions of law and grounds of appeal in the Notice of Appeal, but that the issues on the appeal can be distilled as follows:
(a) the learned magistrate erred, in failing to consider the appropriate test and apply the appropriate principles when considering, and the manner of his consideration vis a vis SAM Law’s counsel, the discontinuance application. As a consequence, his decision was manifestly unreasonable and a breach of procedural fairness. The error in the learned magistrate’s consideration of the appropriate principles, is exemplified and highlighted by his error, in striking out the claim, rather than dismissing it;
(b) that the learned magistrate erred, in failing to consider, let alone apply, the appropriate principles in relation to the summary judgment application before him, which was the ostensible purpose for the hearing, As such, there was a breach of procedural fairness;
(c) that the learned magistrate erred, in failing to consider the appropriate test and apply the appropriate principles when considering, and the manner of his consideration vis a vis SAM Law’s Counsel, SAM Law’s application, that Best Hooper had breached the Civil Procedure Act.
The oral submissions of counsel for SAM Law levelled further criticisms of the conduct of the learned magistrate. The learned magistrate was said to have not read or understood the material, to have taken the easy way out, allowing counsel for ADZ Homes to ‘gazump’ the hearing, and ‘shooting from the hip’. The learned magistrate was said to have made it impossible for SAM Law to develop the argument as to why summary dismissal of the case was warranted and why the action should never have been brought. Counsel submitted that ‘the conduct and the words of his Honour were flawed, founded on incorrect assumptions based upon inadequate knowledge, including a lack of knowledge and understanding of the defence which he didn’t have addressed to him, he wouldn’t really permit that, and he didn’t apply the appropriate test, and he didn’t actually look at the affidavit material either.’
A significant ground of opposition to the appeal was that the appeal is incompetent, in that the learned magistrate’s decision is not a final decision, and, as such, s 109 of the Magistrates’ Court Act 1989 (Vic) (‘Act’) does not apply. This proposition was not addressed by SAM Law in its written submissions, notwithstanding the fact that it was on notice that such a submission would be made at least by 4 May 2015, when the issue was raised by Best Hooper in the submissions relied upon it in opposition to the grant of leave to appeal.
In his oral submissions, counsel for SAM Law relied upon the following passage of the decision of the High Court in Hall v Nominal Defendant:[2]
In most cases the test that seems to be most satisfactory, and the one that accords most nearly with what has been said on the subject in this Court, is it seems to me to look at the consequences of the order itself and to ask does it finally determine the rights of the parties in a principal cause pending between them.
[2][1966] 117 CLR 423, 443.
Counsel for SAM Law submitted that, from the perspective of the defendant, an order striking out or dismissing a proceeding is a final order, as there is nothing more that the defendant can do. It cannot come back to the court, or seek costs to be dealt with.
In my view, the order made by the learned magistrate was not a final order. While for all practical purposes the orders striking out the proceeding brought the proceeding to an end, it is clear from the authorities that one looks to the legal, rather than the practical effect of the orders.[3]
[3]See Dodoro v Knighting (2004) 10 VR 277, 281.
In the current case, the learned magistrate struck out the proceeding, rather than dismissing the proceeding, or giving ADZ Homes leave to discontinue. In Neuss v Magistrates’ Court of Victoria and anor,[4] Lansdowne AsJ conducted a survey of the authorities regarding the distinction between interlocutory and final orders. In DPP v Sabransky (‘Sabransky’),[5] Kellam J concluded that an order striking out charges in the Magistrates’ Court was an interlocutory order because it did not finally dispose of the rights of the parties. He stated:[6]
The Magistrates’ Court did not determine the matter on its merits. No evidence was called before the Magistrates’ Court as to the merits of the proceedings. The Court did not make any order dealing with the substantive issue leading either to conviction or dismissal of the charges brought before it. In my view, it is theoretically open for an application to be made to reinstate the proceeding, futile though such an application is likely to be in the present circumstances.
[4][2013] VSC 321.
[5][2002] VSC 143.
[6]Ibid [37].
In Director of Public Prosecutions v Moore,[7] Batt JA held that Sabransky was correctly decided, observing that:
The general principle is that what has been struck out, whether it be an information, charge, summons, proceeding or appeal, may be restored or reinstated, because the legal effect of striking out is merely to take the subject matter out of the court lists. As the subject matter is capable of being brought on again, the order striking it out is not final.
[7](2003) 6 VR 430.
Of course, both of the authorities referred to above concern criminal, not civil proceedings. However, it is clear from the authorities referred to by Best Hooper in their outline of submissions filed in opposition to SAM Law’s leave application before Mukhtar AsJ that orders which might practically bring finality to a civil proceeding may still be interlocutory.
In the current case, while ADZ Homes sought leave to discontinue the proceeding as a whole because it had achieved its objective of having the certificate of title returned to it, there seems to me to be no reason in principle why it could not apply to reinstate the proceeding to pursue its damages claim against SAM Law. Such an application might be resisted on various bases, and might be doomed to fail as an abuse of process, but there seems to be no reason why it could not be made. No findings had been made about ADZ Homes’ causes of actions or SAM Law’s defences which would give rise to an issue estoppel or res judicata.
Indeed, the Notice of Appeal impliedly concedes that the proceeding had not been brought to finality: it seeks that each of the orders made by the learned magistrate be set aside, including the order striking out the proceeding, and seeking an order in lieu that the proceeding be dismissed. This order is sought on the basis that the learned magistrate should have heard SAM Law’s summary judgment application, determined that application in its favour, and dismissed the proceeding. However, the authorities suggest that an order for summary judgment in favour of a defendant would ordinarily be classified as an interlocutory order, such that even if the learned magistrate had acceded to SAM Law’s application to dismiss the proceeding, no appeal under s 109 of the Act would lie.
In JBS Southern Aust Pty Ltd v Westcity Grove Holdings Pty Ltd & Ors,[8] Croft J surveyed the authorities in the context of determining whether an order for summary judgment in favour of a plaintiff was an interlocutory or a final order. He referred to the observations of Weinberg J (as he then was) in Schiffer v Pattison,[9] that there was a substantial body of authority for the proposition that an order for summary judgment in favour of a defendant is an interlocutory order. Croft J also referred to the decision of the Full Federal Court in Kowalski v MMAL Staff Superannuation Fund Pty Ltd,[10] where the court held that there was no distinction, for the purposes of determining whether an order was interlocutory or final, between an order for summary judgment in favour of a defendant and an order dismissing an action because it is frivolous, vexatious, an abuse of process of the court or does not disclose a reasonable cause of action. Their Honours stated:
We respectfully disagree with the views expressed by Finkelstein J in Jefferson Ford 167 FCR 372 at [12] that ‘[in] an application for summary judgment, the judge resolves the dispute on the merits’, and by Gordon J, by way of obiter dicta, at [164] that ‘an order granting summary judgment on all claims … is a final order because there are no further substantive rights in issue.’
What the judge does, when considering a summary judgment application, is make a determination, on the material then before the court, as to the prospects of the moving party successfully prosecuting the proceeding. The legal effect of such a judgment is not final.
[8][2011] VSC 476 [28]-[30].
[9](2005) 143 FCR 328, 339.
[10](2009) 178 FCR 401, 411.
In the proceeding before him, Croft J concluded that an order for summary judgment in favour of a plaintiff was interlocutory in nature. While he did not expressly conclude that an order for summary judgment in favour of a defendant was an interlocutory order, such a conclusion is implicit in his reasoning. If an order for summary judgment is not characterised as final, it is difficult to see how an order merely striking out a proceeding could be held to have the legal effect of finally determining the rights of the parties.
However, while it is open for me to simply dismiss the appeal for not falling within the terms of s 109 of the Act, I will not confine my reasons to that issue alone. First, I may be wrong, and as such, I ought to deal with the appeal in its entirety. Further, the fact that the orders striking out the proceeding were not final orders does not preclude SAM Law, at least theoretically, seeking further relief in the form of judicial review, albeit well out of time. Given the tortuous history of this litigation and the dispute between the parties generally, I wish to at least promote, if not ensure, the finality of litigation between these parties.
Even if I had found the appeal to be competent, I would have dismissed the appeal, on the basis that SAM Law has established no error of law on the part of the learned magistrate. SAM Law’s complaints, which are conveniently summarised in the defendants’ ‘Outline of Issues’ are either misconceived, in that they do not accurately reflect what the learned magistrate actually did and determined, or do not establish any appellable error on the part of the learned magistrate. In a number of instances, SAM Law is constrained by the manner in which it conducted its case below, in that the issues sought to be raised by the appeal as relevant to the determination of the question of costs of the proceeding upon its discontinuance were simply not raised by SAM Law before the learned magistrate, despite being afforded the opportunity to do so. For example, a substantial plank of SAM Law’s submissions is that the learned magistrate erred in allowing ADZ’s counsel to interpose his oral application for leave to discontinue prior to hearing SAM Law’s summary judgment application: no objection to that course was taken by counsel for SAM Law before the learned magistrate.
The issues agitated by the Notice of Appeal can be summarised as follows:
(a) the learned magistrate should have heard the summary judgment application (and granted summary judgment in favour of SAM Law), not the application for leave to discontinue by ADZ Homes;
(b) the learned magistrate applied the wrong test in determining the question of costs upon the discontinuance: that is, he should have recognised that the starting position is that the party applying for leave to discontinue should pay the other party’s costs;
(c) the learned magistrate should have found that the Magistrates’ Court did not have jurisdiction to hear ADZ Homes’ claim in conversion, because the certificate of title related to a property with a value in excess of the jurisdictional limit of the Magistrates’ Court. Not only did this mean that SAM Law should have its costs of the proceeding, but those costs should have been payable by Best Hooper, as the absence of jurisdiction meant that there was no proper basis for issuing the proceeding;
(d) the learned magistrate took into account extraneous matters, being SAM Law’s conduct in issuing the garnishee proceeding, and that SAM Law had obtained costs orders against ADZ Homes in the Costs Court;
(e) the order by the learned magistrate that there be no order as to the costs of the proceeding failed to take into account the fact that the second to fourth plaintiffs (in the proceeding below) had no basis for making a claim as they were not the registered proprietors of the property;
(f) the learned magistrate failed to take into account the fact that SAM Law had a complete defence in the form of a general lien over the certificate of title by reason of the outstanding costs ordered in favour of it against ADZ Homes (this also relevant to SAM Law’s claim against Best Hooper); and
(g) the learned magistrate denied SAM Law natural justice in failing to consider its affidavit material, preventing its counsel from making submissions in support of its contentions on the question of costs, and preventing SAM Law from advancing its claim for costs against Best Hooper for its breaches of the Civil Procedure Act.
Essentially, SAM Law contends that it was in such an unassailable position in the proceeding below that not only should its costs have been paid, but the liability for those costs ought to have extended to ADZ Homes’ solicitors, Best Hooper, for bringing forward a hopeless claim. The reason why the learned magistrate did not appreciate the strength of SAM Law’s position in the litigation was twofold: first, he had not properly engaged with the pleadings and the other material before him, and secondly, he denied SAM Law the opportunity to properly advance its submissions regarding these issues. Finally, by failing to take as the starting point that ADZ Homes should have paid SAM Law’s costs as the price for obtaining leave to discontinue, the learned magistrate applied the wrong test.
For the reasons which follow, each of these propositions is incorrect, and the appeal ought to be dismissed.
SAM Law’s submissions in relation to this appeal are founded upon the assumption that its position in the proceeding below was so strong, and ADZ Homes’ position was so weak, that if the learned magistrate had not erred in the manner in which he prepared for and conducted the hearing, he would have made a costs order against ADZ Homes for bringing a claim with no prospects of success, and against Best Hooper for signing a certificate pursuant to s 42 of the Civil Procedure Act when there was no proper legal or factual basis for so doing. It is asserted that first, the Magistrates’ Court did not have jurisdiction to hear the claim, as the property to which the certificate of title related was valued at more than $100,000; secondly, the second to fourth plaintiffs below had no standing to bring the proceeding, as they were not the registered proprietors of the property; and thirdly, SAM Law’s general lien over the certificate of title amounted to a complete defence to ADZ Homes’ claim.
While there is no direct evidence before me on this point I consider that, in the absence of evidence to the contrary, I can take judicial notice of the fact that the value of a newly built residential home in Eltham, if not anywhere in the Melbourne Metropolitan area, would exceed $100,000. Further, there is a reference in correspondence between SAM Law and Best Hooper in November 2014 to the sum of $544,500.[11] However, as noted by counsel for ADZ Homes and Best Hooper, the dispute was over who had the right to possession of the certificate of title, not possession of the property. Further, the authority referred to me by counsel for ADZ Homes and Best Hooper, if not strictly binding upon me, indicates that the proposition that a certificate of title has a nominal value only is at least strongly arguable.[12] In any event, the contention that ADZ’s proceeding was brought in the wrong jurisdiction or that SAM Law ought have its costs on the basis that the Magistrates’ Court did not have jurisdiction to hear the proceeding was not even raised by counsel for SAM Law before the learned magistrate.
[11]Exhibit ‘SM-35’ to the affidavit sworn by Sharynn Anita Moors on 5 December 2014 in the Magistrates’ Court proceeding.
[12]See Laycock v Putty Community Association Incorporated [2006] NSWSC 900 [24].
What was referred to on several occasions before the learned magistrate was SAM Law’s contention that the second to fourth plaintiffs had no standing to bring claims in the proceeding, as they were not the registered proprietors of the property. At first the learned magistrate agreed with this contention, but appeared to have altered his view on this issue having been told that the second to fourth plaintiffs held unregistered transfer documents in their favour. Again, there is no evidence before me that this assertion was correct, but it was pleaded and, while I have not heard extensive argument on the issue, I see no reason to disagree with the learned magistrate’s (briefly expressed) conclusion that prior to the settlement of the sale of the property, the second to fourth plaintiffs may well have had standing, even after the execution of the contract of sale by the ultimate purchaser. As such, even setting aside the learned magistrate’s finding that the inclusion of the second to fourth plaintiffs caused no further costs to be incurred, I could not draw a conclusion that their claim was completely unmeritorious.
Finally, and this was raised and discussed before the learned magistrate, SAM Law’s assertion that its general lien amounted to a complete defence to the claim is quite possibly an overstatement. It may well have proven to be a successful defence at a trial, but it is apparent from the submissions of counsel for ADZ Homes before the learned magistrate and the authorities referred to me at the hearing of the appeal that the position is not nearly as clear cut as is and was contended for by SAM Law. In particular, as submitted by counsel for ADZ Homes and Best Hooper, if the issue had been fully ventilated before either the learned magistrate or at trial, ADZ Homes would have contended that there was no evidence as to the purpose for which SAM Law held the certificate of title, and that when SAM Law asserted a lien over all of its costs, it lost the entitlement to any lien to which it might have otherwise been entitled.
Accordingly, even if the learned magistrate had done what SAM Law asserted he should have done, that is, heard and determined the summary judgment application prior to hearing the application for leave to discontinue, it seems to me quite likely that this application would have been unsuccessful. While ADZ Homes might not ultimately have prevailed in its position in relation to the matters discussed above, they are, at least at first glance, triable issues.
In any event, it is difficult to see how the learned magistrate was in error in hearing the application for discontinuance first, leaving the summary judgment application in abeyance. It is an approach consistent with sheer common sense, and the court’s and the parties’ obligations under the Civil Procedure Act. There is little point in devoting substantial court resources to arguing the merits of a proceeding which is otiose.
Turning to the question of whether the learned magistrate applied the correct test when determining the question of costs upon granting ADZ Homes leave to discontinue, it is correct to say that by reason of the terms of rule 63.15 of the Magistrates’ Court General Civil Procedure Rules 2010 (Vic), the starting position is that the party applying for leave to discontinue ought to pay the other party’s costs.[13]
[13]Soteriadis v Nillumbik Shire Council [2015] VSC 363 [12].
As noted by Derham AsJ in Soteriadis v Nillumbik Shire Council:[14]
There is a distinction between cases in which one party, after litigating for some times, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court’s distinction otherwise than by an award of costs to the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.
[14]Ibid.
The statement above is consistent with earlier authority on the question of costs. In Ferny Sky Pty Ltd & Ors v Capital Finance Australia,[15] Whelan J (as he then was) stated as follows (citations omitted):
[15][2006] VSC 366 [25].
Having considered the authorities and having heard argument, it seems to me that the principles applicable to the case before me are these:
(1) Where neither party desires to proceed with litigation, the court should facilitate the conclusion of the proceeding by making a costs order. In this context it is legitimate to take into account the desirability of encouraging reasonable conduct by parties to litigation which furthers the expeditious and cost-effective resolution of disputes.
(2) In the absence of a trial on the merits it will usually not be appropriate for a court considering the issue of costs to determine the merits or to attempt to assess the likely outcome of a hypothetical trial. But in some cases, a judge may feel confident that one party was almost certain to have succeeded if the matter had been fully tried and, in such circumstances, the judge is justified in determining costs on that basis. In some cases, the discontinuance itself can be seen as an acknowledgement of likely or even certain defeat or as what has been described as a step amounting to ‘effective surrender’. Cases where external events overtake a proceeding or render it futile are in a different category. Such cases are not relevant here.
This is a case where external events had rendered the proceeding futile, and the learned magistrate treated it as such. While he did not refer expressly to the relevant rule, or to the relevant principles as established by the authorities, it is apparent from the discussions between the bench and the bar table that:
(a) the learned magistrate acknowledged that the proceeding had to come to an end, as ADZ Homes’ claims had been overtaken by events;
(b) he considered whether ADZ Homes acted reasonably in commencing the proceedings and whether SAM Law acted reasonably in defending the proceedings; and
(c) he concluded that in the absence of any compelling reason to award costs in favour of one party, the appropriate course was to make no order as to costs.
In doing so, he acted consistently with the reasoning of Redlich J (as he then was) in Jeruth Pty Ltd v Haybale Pty Ltd,[16] as follows (citations omitted):
If a supervening event or compromise so removes or modifies the issues in dispute that it cannot be said that one side has won, the Court should not attempt to assess the merits of the case. This is particularly so where the issues are complex or questions of credit are involved. If it is clear on the undisputed facts that one party would almost certainly have succeeded if the matter had been fully tried, the Court may make an order in favour of that party.
Where it is not clearly discernible that a party would have won and it appears that both parties have acted reasonably in commencing and defending the proceedings until the litigation was compromised or became futile, the Court would usually make no order as to costs. But where the Court concludes that a party has acted unreasonably prior to or during the course of the litigation the making of a costs order against it may be justified.
[16][2004] VSC 319 [4]-[5].
In the current case, as illustrated by the submissions before me, the dispute threw up issues of some complexity. There were issues of standing, jurisdiction, and SAM Law’s claim to a general lien over the certificate of title. Contrary to SAM Law’s submissions, there were solid arguments on each side in relation to each of these matters, which would be difficult to resolve in the absence of a trial.
Accordingly, in summary, to the extent that the appeal seeks to attack the substantive decisions of the learned magistrate to proceed with the application for discontinuance first, to not find in favour of SAM Law upon its summary judgment application, and to order that the proceeding be struck out with no order as to costs, the learned magistrate made no discernible error of law. He applied the correct test, and the outcome was unremarkable in the circumstances.
As for the procedural fairness grounds relied upon by SAM Law, it is difficult to see how these grounds can be made out, and, even if there could be some criticism of the learned magistrate’s conduct of the hearing, how that would have made any difference to the ultimate result. It is not, as contended for by counsel for SAM Law, immediately apparent from the reading of the transcript that the learned magistrate had not read or engaged with the material before him, prior to, or during the course of the hearing. He was not taken to the affidavit relied upon by SAM Law by counsel appearing on its behalf, and his remarks during the course of the hearing suggested that he was familiar with SAM Law’s defence. He did deal with the issues before him in a reasonably expeditious and interventionist manner, but showed no lack of even handedness. Contrary to the written submissions filed on behalf of SAM Law, he did not take into account irrelevant matters such as SAM Law’s conduct in issuing the garnishee proceedings: indeed, he expressly disclaimed the relevance of this matter to the question he had to determine, being the question of the costs of the proceeding before him. He did not prevent counsel for SAM Law from making submissions with respect to costs: from the transcript, it seems that counsel for SAM Law got somewhat bogged down in his submissions regarding the standing of the second to fourth plaintiffs and neglected to bring to the attention of the learned magistrate SAM Law’s defence based upon the court’s absence of jurisdiction. SAM Law was represented by counsel: in an adversarial system it cannot be the case that an obligation is imposed upon a judicial officer to prompt a barrister or seek confirmation that a barrister had made every point he or she wished to make, or bring to their attention points they ought to be making.
During his oral submissions, counsel for SAM Law seemed to suggest that the learned magistrate’s conduct of the hearing was overly interventionist and/or overbearing. Such submissions might have had more force had the aggrieved party been self-represented. But these submissions need to be viewed in their proper context. What was before the learned magistrate was the question of costs in circumstances where the proceeding had no further utility. The central issues in dispute had been resolved by the passage of events. He invited counsel for SAM Law to advance reasons why he should make a costs order in its favour. Reasons were advanced, but they found no favour with him. The fact that there might have been other reasons supporting SAM Law’s position with respect to costs which were not advanced is not an error which could be sheeted home to the learned magistrate. Further, the contention that a judicial officer should restrain themselves in engaging in dialogue with counsel about the strength or otherwise of their submissions is, in the present day, unsupportable.[17] It is not only parties and practitioners who are subject to the obligations under the Civil Procedure Act to promote the efficient use of court resources and ensure that the resources devoted to an issue are proportionate: the same obligations are imposed upon judicial officers as well to identify and efficiently deal with the real issues in dispute. In my view, the dispute received the attention it warranted in all of the circumstances.
[17]See, for example, Galea v Galea (1990) 19 NSWLR 263, where the Court of Appeal observed that increasing judicial intervention in the conduct of court proceedings could be in part attributable to ‘a growing appreciation that a silent judge may sometimes occasion an injustice by failing to reveal opinions which the party affected then has no opportunity to correct or modify.’
As for SAM Law’s claims against Best Hooper, it is correct that this matter was given very little attention at the hearing. However, again, the conduct of that part of the application needs to be viewed in its proper context. The basis of the application against Best Hooper was not clearly articulated or particularised in either the summons or the affidavit in support. In its summons, SAM Law sought:
A declaration that the Plaintiffs, and/or their solicitor, Best Hooper, have breached their overarching obligations as imposed by the CPA.
The only direct reference to the claim against Best Hooper in the affidavit in support was as follows:
In my opinion the behaviour of Best Hooper, throughout the entire duration of this dispute, has been highly questionable. In particular, and noting the comments made by Associate Justice Derham, Best Hooper’s role in instituting this proceeding, was decidedly inappropriate and indicates a complete disregard for its Civil Procedure Act obligations.
No reference was made in any of the materials before the learned magistrate as to which sections of the Civil Procedure Act were sought to be relied upon by SAM Law, although in his oral submissions counsel for SAM Law submitted that Best Hooper contravened s 18 of the Civil Procedure Act by bringing a proceeding on behalf of the second to fourth plaintiffs, and in circumstances where SAM Law had asserted a general lien over the certificate of title.
How a judicial officer’s failure to accede to such an inchoate application amounts to an error of law is somewhat beyond me, particularly in the light of the statements of John Dixon J in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5),[18] that ‘the jurisdiction to award costs against the opposite party’s legal representatives (r 63.23) is approached with considerable caution, and is exercised only in clear cases’, and further:
To order a lawyer to pay the costs of litigation is a ‘serious charge’, deriving from the fact that it is occasioned by an alleged breach of a duty to the court. To this end, the court may take into account the repercussions of making an order of this kind. It is accepted that the principles in Briginshaw v Briginshaw apply, and the court should not make an order solely based on inference without evidence. For reasons already stated, I accept that the discretion under s 29 is governed by the principles in Briginshaw.
[18][2014] VSC 400 [97], [108].
In any event, the dismissal of the claim against Best Hooper is entirely consistent with the learned magistrate’s ruling with respect to the costs of the proceeding, which in effect found that the proceeding was reasonably brought, and that there were arguable defences, and that each party ought to bear their own costs. In those circumstances, a finding that a firm of solicitors had breached its obligations under s 18 of the Civil Procedure Act by wrongly signing a Proper Basis Certificate would be arguably perverse.
Accordingly, I will dismiss the appeal and hear from the parties on the question of costs.
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SCHEDULE OF PARTIES
SAM LAW PTY LTD (formerly Matisi Moors Pty Ltd) (ACN 140 917 362) Plaintiff - and - ADZ HOMES PTY LTD (ACN 124 135 280) First Defendant DANIEL CHIN Second Defendant ANTHONY ZIINO Third Defendant PAUL PETER FERLA Fourth Defendant BEST HOOPER Fifth Defendant
0
6
0