Spanos v B & K Paton Pty Ltd (in Liquidation) No. Scgrg-98-1049 Judgment No. S6879

SPANOS v B & K PATON PTY LTD (in liquidation)
[1998] SASC S6879

Magistrates Appeal

Perry J

This appeal raises a short but important question as to the exercise of the civil jurisdiction of the Magistrates Court.
By a claim filed on 26 June 1997, the respondent (which was the plaintiff in the action - for convenience, I will continue to refer to it as the plaintiff) in short particulars endorsed on the claim asserted that $5954.90 was owing by the defendant “for goods sold and delivered September 1993”. The defendant filed an equally brief defence stating, in effect, that he had accepted the goods on behalf of someone else, and denying liability to the plaintiff “for the sum claimed or at all”.
The next step was the issue by the Magistrates Court of a notice of directions hearing scheduled for 4 August 1997. The matter was then adjourned in chambers to 11 September 1997. On that date, apparently by consent, and in the presence of solicitors representing both parties, a Magistrate, who later became the trial Magistrate, noted on the file that the matter was to be listed as a minor civil action. He incorporated in his file note the expression “jurisdiction waived”.
The matter was duly listed for hearing on 16 October 1997. Apparently there was no attendance of the plaintiff, and the defendant appeared in person. An order was made dismissing the plaintiff’s claim.
On the application of the plaintiff, the action was reinstated and re-scheduled for trial on 15 April 1998. On that day, an officer of the plaintiff company attended and was permitted to represent the company. The defendant appeared in person.
On the same day, at the conclusion of the hearing, the learned Magistrate delivered an ex tempore judgment in favour of the plaintiff for the amount claimed, that is, $5954.90 plus costs on the summons.
At the end of his judgment the learned Magistrate added a postscript in the following terms:
“I should note that this matter has been dealt with as a minor civil action. The matter came before myself sometime ago, both parties were represented by solicitors. Mr Marshall was there for the plaintiff. Mr Christie was there for Mr Spanos. It was agreed that jurisdiction be waived and that the matter would be dealt with as a minor civil action and it has been heard as such: accordingly, in my view in any event, any appeal should be as if this were a minor civil action. But on that point the parties should be advised by their respective solicitors.”
There is no appeal as such in a minor civil action in the Magistrates Court. But pursuant to s38(6) of the Magistrates Court Act 1991, the District Court (constituted of a single Judge) may, on the application of a party dissatisfied with the judgment given in a minor civil action, “review the proceedings”. On the review, the District Court may set aside the judgment and give any judgment which, in the opinion of the District Court, should have been given in the first instance.
The defendant filed an application in the District Court to review the decision of the Magistrate. The application was brought out of time, and the defendant sought an extension of time within which to lodge it.
The application to extend the time within which to lodge the application for review and the application for the review came before a Judge of the District Court on 14 July 1998. The defendant appeared in person and the plaintiff by a solicitor. The Judge, Lunn J, pointed that under the Magistrates Court Act 1991 a minor civil claim was defined as a monetary claim for $5,000 or less, and held that the parties had no right to increase the amount.
In the case of a claim in the Magistrates Court other than a minor civil claim, the right of appeal is to the Supreme Court. Judge Lunn advised the defendant to appeal to the Supreme Court.
He duly did so. The time to appeal to this Court was extended, and a notice of appeal was filed and served.
The grounds in the notice of appeal go to the merits of the decision of the Magistrate who heard the matter at first instance. But at the hearing of the appeal, Mr Michael Ward, who appeared as counsel for the defendant, first argued that the learned trial Magistrate had no jurisdiction to hear and determine the matter as a minor civil action.
At that stage, I elected to hear both counsel only on the jurisdictional point.
The Magistrates Court is established by the Magistrates Court Act 1991[1] ("the Act"). When sitting to adjudicate on any matter, the court must, if there is a Magistrate available, be constituted of a Magistrate.[2]
[1] See s4.
[2] See s7A(1). If there is no Magistrate available, the court may be constituted by two justices or a special justice: see s7A(2).
S3(1) of the Act defines a minor civil action as an action founded on - “(a) a small claim; (b) a claim for relief in relation to a neighbourhood dispute; or (c) a minor statutory proceeding”.
It is common ground that (b) and (c) do not apply.
So far as (a) is concerned, the same section separately defines “small claim" matters as “a monetary claim for $5,000 or less”.
S7 of the Act creates four divisions of the court. Relevantly, it provides:
“(1).. The Court is divided into the following Divisions:
(a).... the Civil (General Claims) Division;
(b) the Civil (Consumer and Business) Division;
(c)... the Civil (Minor Claims) Division;
(d) the Criminal Division.
(2)... ..........”

For present purposes, the two relevant Divisions are the Civil (General Claims) Division and the Civil (Minor Claims) Division.
Part I, Division III of the Act is headed JURISDICTION OF COURT. That Division encompasses sections 8 to 10B (inclusive).
S8 provides as follows:
“(1).. The Court has jurisdiction-
(a).... to hear and determine an action (at law or in equity) for a sum of money where the amount claimed does not exceed-
(i).... if the claim is for damages or compensation for injury, damage or loss caused by, or arising out of, the use of a motor vehicle - $60,000;
(ii)in any other case - $30,000;
(b)... to hear and determine an action (at law or in equity) to obtain or recover title to, or possession of, real or personal property where the value of the property does not exceed $60,000;
(c) to hear and determine an interpleader action where the value of the property to which the action relates does not exceed $50,000;
(d)... to grant any form of relief necessary to resolve a minor civil action.
(2)... The parties to an action may waive any monetary limit on the civil jurisdiction of the Court, and, in that event, the Court will have jurisdiction to determine the action without regard to that limitation."

Minor civil actions are dealt with specifically in s10A which provides:
“The jurisdiction of the Court to hear and determine minor civil actions is to be exercised-
(a).... subject to paragraph (b), by the Civil (Minor Claims) Division;
(b)in the case of minor civil actions falling within a statutory jurisdiction specifically assigned to the Civil (Consumer and Business) Division, by that Division.”
Section 10B provides:
“If proceedings commenced in one Division of the Court should have been commenced in another Division, the Court may, if it thinks fit, continue to hear and determine the proceedings as if it were sitting as that other Division and as if the proceedings had been commenced in that other Division.”
Part V of the Act is headed "SPECIAL PROVISIONS AS TO COURT CIVIL JURISDICTION." Division II within that part is headed "MINOR CIVIL ACTIONS" and comprises ss38 and 39.
Section 38 sets out special provisions applicable to the trial of a minor civil action. Sub-section (1) is in the following terms:
“(1).. The following provisions are applicable to the trial of a minor civil action;
(a).... the trial will take the form of an inquiry by the Court into the matter in dispute between the parties rather than an adversarial contest between the parties;
(b)    the Court will itself elicit by inquiry from the parties and the witnesses, and by examination of evidentiary material produced to the Court, the issues in dispute and the facts necessary to decide those issues;
(c)... the Court may itself call and examine witnesses;
(d)    the parties are not bound by written pleadings;
(e)... the Court is not bound by the rules of evidence;
(f)     the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.”
Other sub-sections to s38 provide that at or before the trial of a minor civil action, the court must explore any possible avenues of achieving a negotiated settlement. Furthermore, after giving judgment in a minor civil action, the court must advise the unsuccessful party of his or her right to apply for a review of a proceedings by the District Court, and may give the successful party any advice or assistance as it considers appropriate as to the enforcement of the judgment. There is also a provision, allowing the court to investigate the means of the judgment debtor immediately upon a judgment being pronounced. Right to representation by legal practitioner is curtailed and is not permitted except in the special circumstances defined in s38(4)(a).
In this case, from the transcript of the hearing before the learned trial Magistrate it appears that the conduct of the trial accorded with the requirements of s38. In particular, the learned trial Magistrate interrogated the witnesses himself, and some evidence was admitted which was strictly hearsay, and other evidence was admitted informally.
Against that background, it is necessary to have regard to the respective contentions of the parties on the appeal.
Mr Rocco for the respondent contended that insofar as s8(2) provides that “the parties to an action may waive any monetary limit on the civil jurisdiction of the court”, s3(2), which defines a small claim as a “monetary claim for $5,000 or less” creates a monetary limit on the civil jurisdiction of the court within the meaning of those words in s8(2).
Although the argument is superficially attractive, in my opinion, it does not survive a close analysis of the relevant provisions of the Act.
In particular, in my opinion, there is a difference between “monetary limit on the civil jurisdiction of the court” and a monetary limit which defines whether a particular claim may be heard in one division or another of the court. In my opinion, the words “civil jurisdiction of the court” in s8(2), and in particular the word “jurisdiction” when used in that phrase has the same meaning as the word “jurisdiction” has in s8(1). The effect of s8(2), when viewed in that light, is to enable the Magistrates Court to hear and determine an action of the kind defined in s(8)(1)(a) where the injury, damage or loss is in excess of $60,000, or, when one has regard to s8(1)(a)(ii), where in any other case the amount claimed is in excess of $30,000. Likewise, in my opinion, is has application so as to enable the court to waive the limit of $60,000 where that appears in s8(1)(b) and (c).
But the jurisdiction created in s8(1) with respect to minor civil actions is simply “to grant any form of relief necessary to resolve” such an action. The amount of $5,000 happens to be the amount at or below which a monetary claim is by definition a “small claim”. It is not an amount which defines any “monetary limit on the civil jurisdiction of the court”. The monetary limits to which that description refers are those to be found in s8(1).
Some support for the view which I have expressed is to be derived from the manner in which “minor statutory proceedings and neighbourhood disputes” are dealt with.
In s3(1) the respective definitions of those two classes of proceedings are:
“ ‘minor statutory proceeding’ means-
(a)an application under the Fences Act 1975; or
(b).... an application under Part 4 of the Second-hand Vehicle Dealers Act 1995; or
(ba)an application under the Retail Shop Leases Act 1995, other than an application that involves a monetary claim for more than $10,000; or
(bb).. an application under section 11(8) of the Second-hand Dealers and pawnbrokers Act 1996;
(bc)an application under Part 5 of the Building Work Contractors Act 1995;
(c).... any other proceeding declared by statute to be a minor statutory proceeding;
‘neighbourhood dispute’ means a dispute between neighbours, or the occupiers of properties in close proximity, based on allegations of trespass or nuisance;”
Section 3(4) provides:
“If a neighbourhood dispute or a minor statutory proceeding involves-
(a) a monetary claim for more than $5,000; or
(b) a claim for relief in the nature of an order to carry out work where the value of the work is more than $5,000,
a party may elect, in accordance with the rules, to exclude the dispute or proceeding from the rules governing minor civil actions, and in that case, the dispute or proceeding ceases to be a minor civil action.”
The effect of subs(4) is to allow the parties to elect whether to have a neighbourhood dispute or minor statutory proceeding where the monetary amount involved exceeds $5,000 dealt with either as a minor civil action or in the general civil jurisdiction of the court.
There is no such flexibility built into the Act one way or the other with respect to small claims.
Section 10B of the Act provides:
“If proceedings commenced in one Division of the Court should have been commenced in another Division, the Court may, if it thinks fit, continue to hear and determine the proceedings as if it were sitting as that other Division and as if the proceedings had been commenced in that other Division.”

The effect of s10B would be that if a claim in excess of $5,000 was inadvertently listed for hearing in the civil (minor claims) division, the Court could continue to hear and determine the proceedings as if they had been commenced in the general civil jurisdiction of the Court. In such a case, the Court would no longer apply the informal procedures appropriate to a minor civil action. What s10B does not do is to sanction a procedure in which a claim in excess of $5,000 could continue to be heard and determined in the civil (minor claims) division.
The construction contended for by Mr Rocco would create a difficulty with respect to the exercise of appeal or review rights.
As I have already pointed out, pursuant to s38(6) the District Court constituted of a single judge has jurisdiction to review the proceedings where a party is dissatisfied with a judgment given in a minor civil action. If Mr Rocco’s contention is correct, a question would arise as to whether or not the District Court constituted of a single judge would have jurisdiction to review in the informal manner set out in s38(7) the proceedings constituted by a minor civil action, when such an action has been the subject of a waiver of the limit, with the result that it involves a claim in excess of $5,000, possibly substantially in excess of that amount.
Mr Rocco’s answer to that question when I put it to him in arguendo, was “the only jurisdictional limit that can be waived under s8 is the Magistrates Court limit; when it comes to appeals there is no right of waiver at all.” As a result he contended that even if the parties had treated a claim in excess of $5,000 as a minor civil action, the dissatisfied party would have a right of appeal under s40 of the Act direct to the Supreme Court and would have no right to seek a review in the District Court. This is despite the words in s40(1) “a party to a civil action (except a minor civil action) may in accordance with the Rules of the Supreme Court appeal against any judgment given in the action.
If Mr Rocco is correct in that contention it would mean that when such an appeal was brought to the Supreme Court, this Court would be obliged to hear and determine the appeal without the benefit of the informal procedures available to the District Court when it deals with the review of the proceedings in a minor civil action, under s38(6), (7), and (8). It seems to me that that would create a thoroughly unsatisfactory situation for this Court.
Interestingly the learned trial Magistrate took a different view. I have already cited the passage at the conclusion of his ex tempore reasons in which he stated that “...any appeal should be as if this were a minor civil action.”
That, however, was not a view shared by Judge Lunn when the application for review came before him in the District Court. Furthermore, consistently with the view expressed by him in this case, he had earlier expressed the same view in the decision in which he had given a considered judgment, namely Raslan and Ors v Commercial Laundry Equipment[3].
[3] Unreported 14 July 1998, Judgment No. D3827.
In that case, the parties agreed to the “transfer” of a claim in excess of $7,000, to the minor civil claims division. It was dealt with coincidentally by the same trial Magistrate as heard this case. The trial was conducted generally in accordance with the procedures laid down by s38 of the Act. But the judgment which was given in that case was for $650 on a claim and $1,081 on the counterclaim, both well within the definition of a minor civil claim.
When a review was brought before Lunn J, he held that in determining whether a matter is a minor civil action within the meaning of the statutory definition to be found in s3, reference is to be made to the pleadings and not to the amount of the judgment ultimately given. He further held:-[4]
“In its context, s8(2) is confined to the monetary limits on the civil jurisdiction in the Magistrates Court as contained in s8(1). The definition of “small claim” in s3(1), which is quoted above, is not a limit on the civil jurisdiction of the Magistrates Court, but a limit on a particular class of actions within the overall civil jurisdiction of the Court. Indeed the existence of the express power to waive the monetary limits in s8(1) contrasts with the failure to include a similar provision for the monetary limit of the small claim, and indicates that Parliament did not intend that there should be any similar power of waiver for a small claim”.
[4] Ibid, p.4
He went on to hold that the judgment in question was not given in a minor civil action for the purposes of s38(6) of the Act, and accordingly the District Court could not entertain the application for review.
In my opinion and with respect to Judge Lunn, he was correct in the view which he came to in that case.
My attention has been drawn to the fact that in the text “Magistrates Court - South Australia”[5] The view is expressed
“the monetary limit on small claims is a ‘monetary limit on a civil jurisdiction of the court’ which can be waived under s8(2)”[6]
[5] The Law Book Co. Ltd., Cannon and Kleinig.
[6] See para[3.5550].

With respect to the authors of that work, in my opinion that assertion, which encapsulates Mr Rocco’s argument in this case, is wrong.
It follows that, in my opinion, the proceedings in the court below miscarried and there was no jurisdiction for the learned trial Magistrate to proceed to hear the case as a minor civil claim. The point is as much a matter of substance as it is of form, as the nature of the proceedings, that is the manner in which they are dealt with in the minor civil claims jurisdiction, is markedly different from that which applies to the trial of an action at law.
It is, of course, axiomatic that the parties cannot, by consent, confer a jurisdiction on the court which it does not otherwise have. The jurisdiction of the Magistrates Court is strictly confined by the statute pursuant to which it is established. The basis of any jurisdiction which it exercises must be found in the Magistrates Court Act.
This has the unfortunate result that proceedings before the learned trial Magistrate miscarried. An interesting question arises as to whether the outcome was a nullity, or simply a judgment tainted by procedural error. Nothing turns on the distinction. In either event, the appeal must be allowed for the purpose of quashing the judgment under appeal.

If the parties are to resolve the matter by litigation the action will have to be reinstated so that it can be brought to trial in the correct division of the Magistrates Court.
For these reasons I would allow the appeal for the purpose of quashing the judgment under appeal. I order the reinstatement of the matter in the Magistrates Court, so that it may proceed to trial in the Civil (General Claims) Division of that Court.

[1998] SASC 6879

2 October 1998