WA Country Builders Pty Ltd v Premium Coastal Property Pty Ltd - [2012] WASC 236

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WA COUNTRY BUILDERS PTY LTD -v- PREMIUM COASTAL PROPERTY PTY LTD [2012] WASC 236

CORAM: MASTER SANDERSON

HEARD: 26 JUNE 2012

DELIVERED : 3 JULY 2012

FILE NO/S: CIV 1932 of 2008

BETWEEN: WA COUNTRY BUILDERS PTY LTD
Plaintiff
AND
PREMIUM COASTAL PROPERTY PTY LTD
First Defendant
SHELLEY ANN SCORER
Second Defendant

Catchwords:

Summary judgment - Whether summary judgment procedure available to a plaintiff who is defendant by counterclaim and who seeks judgment on counterclaim - Whether summary judgment ought be entered

Legislation:

Rules of the Supreme Court 1971 (WA), O 16, O 14 r 6
Supreme Court Act 1935 (WA), s 167(1)(a)
Transfer of Land Act 1893 (WA) , s 140

Result:

Summary judgment application allowed
Application dismissed

Category: A

Representation:

Counsel:

Plaintiff:     Mr A W Buchan
First Defendant             :     Mr A M Prime
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Hotchkin Hanly
First Defendant             :     McCallum Donovan Sweeney
Second Defendant         :     No appearance

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

City of Stirling v Dueschen [2011] WASC 126
Farm Forestry Finance v English (Unreported, WASCA, Library No 970540, 22 October 1997)
Lill v Merchant Capital (WA) Ltd (1996) 15 WAR 536
Re Application by Former Officer of Australian Security Intelligence Organisation [1987] VR 875
TK v Australian Red Cross Society (1989) 1 WAR 335

MASTER SANDERSON: This is the plaintiff's application for summary judgment on the second defendant's counterclaim. The first question which arises is whether there is jurisdiction to entertain such an application.
In any proceedings, an application for summary judgment by the plaintiff is governed by the provisions of O 14 of the Rules of the Supreme Court1971 (WA). Order 14 r 6 allows a defendant who has served a counterclaim on a plaintiff to apply for summary judgment on that counterclaim. In any proceedings, a defendant can apply for summary judgment under O 16 against a plaintiff. There is no equivalent of O 14 r 6 in O 16. That is to say, the rule does not specifically authorise an application by a plaintiff for summary judgment against the defendant on the counterclaim. It was the second defendant's position that absent such a provision in O 16, there was no jurisdiction to make the orders sought by the plaintiff.
It must be said the position is not entirely clear. Section 167(1)(a) of the Supreme Court Act1935 (WA) empowers the judges of the court to make rules of court regulating the procedure and practice followed in the Supreme Court. In fact, the first Rules of the Supreme Court were drafted by the judges for the new High Court and Court of Appeal in England and appeared as the first schedule to the Judicature Act 1875 (UK). These rules were, in part, taken from pre‑existing rules of the several courts that were to be combined and they have formed the basis of the rules both in England and in Australia ever since.
It has been consistently held the rules have the force of law as rules of practice and procedure, but they cannot confer or take away any existing jurisdiction. In Re Application by Former Officer of Australian Security Intelligence Organisation [1987] VR 875, Brooking J, dealing with O 70 of the Victorian Supreme Court Rules said (at 876):
Although O 70 does not refer to the prior authorization of a departure from the Rules, in my view I have inherent power to dispense with such of the requirements of the Rules as would prevent the institution of an action by an anonymous plaintiff. When I speak of an anonymous plaintiff, I mean one whose identity is disclosed to the Judge to whom the application is made and will be disclosed to the defendant, although he is not named in the writ.
In TK v Australian Red Cross Society (1989) 1 WAR 335, Malcolm CJ came to the same conclusion. Again, that was a case dealing with an anonymous defendant. I acknowledge it is a somewhat different situation from this case.
There is a difference of judicial opinion as to how closely the requirements of the rules in relation to an application for summary judgment must be followed. This difference of judicial opinion arises from the decision of the Full Court in Lill v Merchant Capital (WA) Ltd (1996) 15 WAR 536. One of the issues before the court was whether a failure to comply with the requirements of O 14 went to the jurisdiction of the court to grant summary judgment. Franklyn J concluded that it did. His Honour was of the view that unless the provisions of O 14 were strictly complied with, the court lacked jurisdiction to grant relief. He went on to find the plaintiff had strictly complied with the requirements of the order and the summary judgment could stand. He made plain that if there had been no such strict compliance, judgment could not have been entered.
Ipp J took a different view. His Honour said (at 550):
It follows that the grant of summary judgment is within the ordinary jurisdiction of this Court. Ordinarily, however, it would only exercise that jurisdiction when there has been strict compliance with O 14 r2(1), that is to say, the filing of an affidavit in the terms required by the sub‑rule will, ordinarily, be required before the court will exercise its jurisdiction to grant summary judgment.
While the ordinary practice undoubtedly is that a failure to comply with O 14 r 2(1) will result an application for summary judgment being dismissed, there is ample and long‑standing authority to the effect that that consequence is not inevitable. It all depends on the circumstances.
His Honour then went on to review a number of authorities. Franklyn J in his judgment referred to a number of the same authorities, but clearly took the view they did not lead to the same result. In my view, it is not possible to reconcile the two decisions. The third judge in the case, Rowland J, did not directly deal with the issue. His Honour simply noted there would be 'grave consequences' should O 14 not be complied with.
In Farm Forestry Finance v English (Unreported, WASCA, Library No 970540, 22 October 1997), I indicated I shared the views of Ipp J. I have proceeded on that basis ever since. However, I have not before encountered the present problem.
Summary judgment, whether it be for the plaintiff or the defendant, is only granted where there is no serious question to be tried. What is assumed is a state of facts most favourable to the party against whom the application is brought. Any court, to ensure the integrity of its processes, must have the capacity to deal summarily with cases which are without merit and have no chance of success, or are so clear there can be no arguable defence. It is a necessary aspect of doing justice between the parties.
For these reasons, I am satisfied it is open to the plaintiff to bring this application.
The facts of the case can be simply summarised. The plaintiff entered into a building contract with the first defendant. That contract appears as annexure TAM 9 to the affidavit of Terence Arthur Meyers, sworn 23 December 2011. It would appear the second defendant signed the contract as a director of the first defendant. The second defendant was not a party to the contract, nor was she a guarantor under the contract.
The plaintiff submitted progress claims to the first defendant from time to time and some of these claims were not paid. The plaintiff then issued proceedings against the first and second defendants. The statement of claim alleged the second defendant was a party to the contract. The second defendant did not enter an appearance to the writ and default judgment was obtained against her. Under the terms of the agreement between the plaintiff and the first defendant, the plaintiff was entitled to lodge an absolute caveat over any property belonging to a party to the contract. Even before obtaining default judgment, the plaintiff lodged a caveat over a property belonging to the second defendant. After default judgment was obtained, caveats were lodged over other properties registered in the name of the second defendant.
In due course, the second defendant applied to set the default judgment aside. Solicitors for the second defendant pointed out to the plaintiff's solicitors the second defendant was not a party to the contract. The default judgment was then set aside. That was done by consent and without a hearing. The second defendant then lodged a counterclaim against the plaintiff. She alleged she was entitled to damages under s 140 of the Transfer of Land Act1893 (WA). She alleged the caveat had been lodged 'without reasonable cause'.
It is the plaintiff's position the second defendant cannot possibly succeed in her counterclaim. The plaintiff submits once default judgment is obtained, a defendant is taken to have admitted each and every aspect of the cause of action the subject of the claim. Reference was made to the judgment of Kenneth Martin J in City of Stirling v Dueschen [2011] WASC 126. It was said, therefore, at the time the caveats were lodged the plaintiff could not have acted in any way but reasonably. It was merely acting on an admission by the second defendant.
On behalf of the second defendant, it was said it was arguable the plaintiff had not acted reasonably. Although the plaintiff had the benefit of the default judgment, that judgment was based on a clear and obvious error. It was submitted no plaintiff properly advised could possibly have thought the second defendant was a party to the contract. It was further submitted it was not enough simply to look at the judgment. It was necessary to examine all of the surrounding circumstances before concluding whether or not the plaintiff had acted reasonably.
In my view, this is not a case where summary judgment ought be ordered. Given there will be a trial of the matter, it is not appropriate I express any concluded views. However, it seems to me arguable the existence of the default judgment is not enough. In my view, all of the surrounding circumstances need to be examined. In the end, a trial judge may come to the conclusion the plaintiff was entitled to rely on the default judgment and did not need to go back to the relevant facts. But because of the nature of the test, all the evidence would need to be considered. For this, there must be a trial.
For these reasons, although I would permit the application for summary judgment to be made, I would dismiss the application. The costs of the application, including reserved costs, ought be costs in the cause.