Zhao v T R and K R Shipton Pty Ltd

[2016] TASSC 54

[2016] TASSC 54

COURT:  SUPREME COURT OF TASMANIA

CITATION:                 Zhao v T R & K R Shipton Pty Ltd [2016] TASSC 54

PARTIES:  ZHAO, Hongbing
  ZHUO, Hanlu
  v
  T R & K R SHIPTON PTY LTD

FILE NOS:  2311/2016

2682/2016

DELIVERED ON:  13 October 2016
DELIVERED AT:  Hobart
HEARING DATE:  10 October 2016
JUDGMENT OF:  Blow CJ

CATCHWORDS:

Procedure – State and Territory courts: jurisdiction, powers and generally – Matters specific to civil jurisdiction of Local or Magistrates' Court – Jurisdiction – Amount – Generally – Counterclaim above jurisdictional monetary limit – Application for transfer to Supreme Court pending – Whether magistrate erred in striking out counterclaim.

Magistrates Court (Civil Division) Act 1992 (Tas), ss 11, 12, 30.
Supreme Court Civil Procedure Act 1932 (Tas), s 183.
Frost v Edwards [2004] TASSC 105, 13 Tas R 155, referred to.
Aust Dig Procedure [1060]

REPRESENTATION:

Counsel:
             Appellants:  In person
             Respondent:  R Gilmour
Solicitors:
             Respondent:  Levis Stace & Cooper

Judgment Number:  [2016] TASSC 54
Number of paragraphs:  36

Serial No 54/2016

File Nos   2311/2016

2682/2016

HONGBING ZHAO and HANLU ZHUO
v T R & K R SHIPTON PTY LTD

REASONS FOR JUDGMENT  BLOW CJ

13 October 2016

1. On 10 October 2016 I made orders allowing an appeal from the Magistrates Court, and transferring proceedings from that court to this Court, deferring the publication of my reasons for those orders until a later date.  These are my reasons. 

2. The appellants, Hongbing Zhao and Hanlu Zhuo, carry on a business at Ranelagh, trading as Hong Lu Organic Farm.  The respondent, T R & K R Shipton Pty Ltd, which is based in Devonport, sold them a tractor last year.  A dispute arose in relation to the quality or condition of the tractor.

3. In March of this year, the respondent sued the appellants in the Magistrates Court for $49,835.  It alleged that the price of the tractor was $54,835, that the appellants had paid a deposit of $5,000, and that the balance of $49,835 was payable by them to it.  Because the amount claimed did not exceed $50,000, it was appropriate for the proceedings to be commenced in the Magistrates Court.

4. Section 7(1) of the Magistrates Court (Civil Division) Act 1992 ("the Act") provides:

   "The Magistrates Court has a civil jurisdiction which is to be limited to actions for an amount not exceeding the prescribed amount."

5. In s 3 of the Act, "prescribed amount" is defined to mean $50,000.

6. The appellants decided to pursue a counterclaim for an amount that exceeded $50,000.  That led to a surprising amount of confusion, and to the institution of the proceedings that came before me.  The history of the litigation can be summarised as follows:

   ·     On 3 March 2016, the respondent filed its claim for $49,835 in the Magistrates Court.

   ·     On 18 April 2016, the appellants filed a defence and counterclaim.  They denied liability on the claim, and counterclaimed $168,372.76 on various grounds that I need not summarise. They did not have legal representation.  Their defence and counterclaim is 47 pages long.

   ·     On 3 May 2016, the solicitors for the respondent filed a defence to the counterclaim, denying liability, and seeking an order for the counterclaim to be struck out.

   ·     On 17 June 2016, a magistrate, Mr C P Webster, conducted a directions hearing. I have a transcript of that hearing. The respondent was represented by counsel.  The appellants were not.  They had the assistance of an interpreter who translated English into Mandarin and vice versa.  There was a discussion as to whether the parties would consent to waiving the jurisdictional limit of $50,000.  It appears that the learned magistrate believed, perhaps incorrectly, that all parties were agreeable to the waiver of the jurisdictional limit.  He made an order saying, "Well, by consent the matter will be heard in this jurisdiction notwithstanding the fact that the counterclaim exceeds $50,000. … I make that order by consent of the parties."

   ·     On 20 June 2016, the District Registrar of the Magistrates Court signed a formal order under the seal of the court, recording three orders made at the directions hearing, the first of which read, "By consent the matter is to be heard in this Jurisdiction."

   ·     On 15 August 2016, the appellants filed an originating application in this Court, seeking orders that the proceedings be transferred to this Court from the Magistrates Court. 

   ·     On the same day, they filed an application in the Magistrates Court seeking a stay of the proceedings.  It was listed for hearing on 14 September 2016.

   ·     On 9 September 2016, the transfer application came before Holt AsJ.  I have a transcript of the proceedings that day. The respondent was represented by counsel. Again, the appellants/applicants were not represented by counsel, but had the assistance of an interpreter.  Counsel for the respondent said that the matter was listed to come before a magistrate on 14 September, that his client would be seeking a hearing date for the claim and counterclaim, and that his client would not be applying to have the counterclaim struck out.  Through the interpreter, the appellants/applicants said that they had not consented on 17 June to an order for the determination of the counterclaim in the Magistrates Court.  Holt AsJ was reluctant to make an order transferring the matter whilst the order of 17 June remained in force.  He adjourned the transfer application, expecting that the learned magistrate would be asked to decide whether to vacate the order for the matter to be dealt with in the Magistrates Court.

   ·     On 13 September 2016, the respondent filed an application in the Magistrates Court seeking an order that the counterclaim be struck out on the bases that it did not disclose a reasonable cause of action, was frivolous and vexatious, and was embarrassing and prejudicial.

   · On 14 September 2016, the two applications came before the learned magistrate. Again, the respondent was represented by counsel, the appellants were not, and an interpreter was present. The appellants maintained that they had never consented to the order of 17 June. After some discussion, the learned magistrate dismissed the counterclaim. He said that he did so "under s 12 of the Magistrates Court (Civil Division) Act on the basis that the counterclaim exceeds the jurisdiction". 

   ·     On 15 September 2016, the appellants appealed from that order.

   ·     On 23 September 2016, Holt AsJ adjourned the transfer application sine die.

7. The appellants' principal contentions in relation to the appeal were as follows:

   · That on 17 June the learned magistrate erred in making an order that permitted the counterclaim to be determined in the Magistrates Court since they had not signed a written consent as required by s 11(1) of the Act.

   ·     That an extension of time for an appeal against that order should be granted.

   ·     That on 14 September the learned magistrate erred by dismissing the counterclaim because it should have been left on foot so that an order could be made transferring it to this Court.

The order for hearing in the Magistrates Court

1. Section 11 of the Act reads as follows:

   "(1)  The Court has jurisdiction to hear and determine any action without limitation as to the amount of the claim if all parties to the action file with the registrar a consent in writing, signed by them or their practitioners, that the Court is to have such jurisdiction.

   (2)  On the filing of a consent referred to in subsection (1) all proceedings in respect of the action may be taken, and the matter may be heard, determined and enforced by the Court."

2. The parties did not sign or file a consent in writing for the purposes of s 11(1). One might think that it must follow, as night follows day, that the learned magistrate had no power to make an order for the counterclaim to be heard in the Magistrates Court without limitation as to the amount of the claim. But it is not as simple as that. Compliance with a provision like s 11 can be waived by the parties to a proceeding if all of them agree: Eyres v Butt [1986] 2 Qd R 243.

3. The respondent contended that the appellants waived their right to rely on the monetary jurisdictional limit of the Magistrates Court during the hearing on 17 June by consenting to the counterclaim being heard and determined in the Magistrates Court.  The appellants contended that there was no such waiver or consent, and that there had been a misunderstanding.

4. To determine the dispute as to the order of 17 June on its merits, it might have been necessary to have received evidence as to the understanding and intentions of the parties.  I concluded that it was not necessary to decide any question relating to the order of 17 June if the appeal succeeded in relation to the order of 14 September.

The order dismissing the counterclaim

1. When the learned magistrate made the order dismissing the counterclaim on 14 September, he relied on s 12 of the Act. That section reads as follows:

   "(1)   If an action or matter is commenced over which the Court does not have jurisdiction, the Court must, unless a consent is filed under section 11, order it to be struck out and has power to make an order as to costs.

   (2)   Before making an order under subsection (1), the Court must advise the parties to the action or matter that they may make application under section 30 to have the action or matter transferred to the Supreme Court.

   (3)   The Court must not make an order under subsection (1) before the expiration of 28 days from the day on which it advises the parties of their right to make an application under section 30."

2. A counterclaim constitutes an action for the purposes of the Act: Frost v Edwards [2004] TASSC 105, 13 Tas R 155 at [9]-[10].

3. Section 12(2) and (3) refer to s 30 of the Act, which relates to transfers to this Court. Section 30 reads as follows:

   "(1)   A party to a proceeding may apply to the Supreme Court or a judge for the proceeding to be transferred to the Supreme Court.

   (2)   An application may be made under subsection (1) even if the proceeding is wholly or partly beyond the jurisdiction of the Court.

   (3)  On an application under subsection (1), the Supreme Court or a judge may, if in all the circumstances of the case the Supreme Court or the judge considers it fit or desirable to do so, order that the proceedings be transferred to the Supreme Court."

4. At the hearing of the appeal, the respondent's contentions as to s 12 were as follows:

   ·     When the matter came before the learned magistrate on 14 September, the appellants already knew of their right to apply for a transfer.  They had made their transfer application more than 28 days before then.

   · Section 12(2) and (3) therefore did not apply.

   ·     The counterclaim for over $50,000 was an "action" over which the Magistrates Court did not have jurisdiction.

   · No consent had been filed under s 11.

   ·     The appellants were no longer willing to have the counterclaim heard and determined in the Magistrates Court.

   · In those circumstances, s 12(1) required the learned magistrate to order the counterclaim to be struck out. The subsection says that "… the Court must … order it to be struck out …".

5. Before I address the respondent's arguments, I need to say something about s 183 of the Supreme Court Civil Procedure Act 1932. Unfortunately that section also contains provisions as to counterclaims exceeding the jurisdiction of an inferior court, transfers of such counterclaims to this Court, and the consequences of not applying for such a transfer. The relevant parts of s 183 read as follows:

   "(1)  Where in any proceeding before any inferior court of civil jurisdiction having jurisdiction at law and in equity within the meaning of this Part any defence or counter-claim of the defendant involves matter beyond the jurisdiction of the inferior court, such defence or counter-claim shall not affect the competence or the duty of the inferior court to dispose of the whole matter in controversy so far as relates to the demand of the plaintiff and the defence thereto, but no relief exceeding that which the inferior court has jurisdiction to administer shall be given to the defendant upon any such counter-claim: Provided always that in such case it shall be lawful for a judge of the Supreme Court, if he shall think fit, on the application of any party to the proceeding, to order that the whole proceeding be transferred from such inferior court to the Supreme Court, and (if the proceeding is one which can be proceeded with in a district registry) …

   (2)  The jurisdiction of any such inferior court in cases of counter-claim shall not be excluded by reason —

   (a)  …

   (b)  that, where the counter-claim involves more than one cause of action, as to each of which the defendant might have maintained a separate action, each such cause of action being within the jurisdiction of the inferior court, the aggregate amount of the counter-claim exceeds the jurisdiction of the inferior court; or

   (c)  that the counter-claim is for an amount of money exceeding the jurisdiction of the inferior court; provided that the plaintiff does not object in writing (within such time as may be prescribed by Rules of Court) to the inferior court giving relief exceeding that which such court would have had jurisdiction to administer irrespective of the provisions of this section.

   (3)  In any case where the counter-claim in any action in any such inferior court involves matter which, notwithstanding the provisions of subsections (1) and (2), is beyond the jurisdiction of such court, the inferior court may, on such terms, if any, as it may think just, either adjourn the hearing of the case or stay execution on the judgment for such time as may be necessary to enable any party to apply to remove the proceedings into the Supreme Court, or to enable the defendant to prosecute in a court of competent jurisdiction an action for the purpose of establishing his counter-claim; and in default of any such application being made, or action brought, the inferior court shall, after the expiration of the time limited, have jurisdiction to hear and determine the whole matter in controversy to the same extent as if the whole matter were within the absolute competence of the inferior court."

6. It is not easy to reconcile s 183 with the provisions of the Act. Section 183 existed long before the Act was enacted in 1992, and was neither repealed nor amended at that time. However a later statute can impliedly repeal or supersede a provision in an earlier statute. It is necessary to consider whether the Act had any such impact on s 183.

7. The law relating to implied repeal is as stated by Griffiths CJ in Goodwin v Phillips (1908) 7 CLR 1 at 7, where his Honour said the following:

   "… where the provisions of a particular Act of Parliament dealing with a particular subject matter are wholly inconsistent with the provisions of an earlier Act dealing with the same subject matter, then the earlier Act is repealed by implication.  It is immaterial whether both Acts are penal Acts or both refer to civil rights.  The former must be taken to be repealed by implication.  Another branch of the same proposition is this, that if the provisions are not wholly inconsistent, but may become inconsistent in their application to particular cases, then to that extent the provisions of the former Act are excepted or their operation is excluded with respect to cases falling within the provisions of the later Act."

8. The reference in s 12(1) to "an action or matter … over which the Court does not have jurisdiction" would ordinarily be interpreted as including any action or matter for an amount exceeding the "prescribed amount" as referred to in ss 7 and 3. However, such an interpretation would produce a result inconsistent with s 183 of the Supreme Court Civil Procedure Act. 

9. One could perhaps reason that, if s 183 remains in force, then the institution of a counterclaim for a sum exceeding an inferior court's monetary jurisdictional limit does not deprive that inferior court of jurisdiction – that it either has jurisdiction under s 183(3) to the same extent as if the whole counterclaim were within its "absolute competence", or else it has jurisdiction under s 183(1), subject to a proviso that it may not grant relief exceeding its monetary limit. Section 12 of the Act only applies if, in the words of s 12(1), "an action or matter is commenced over which the [Magistrates] Court does not have jurisdiction". One could reason that s 183 remains in force, and that a counterclaim for over $50,000 is not such an action. However that reasoning seems to me to involve a very strained interpretation of s 12(1).

10. Section 12(1) applies "unless a consent is filed under s 11". Because of the wording of s 11, a consent under that section can only ever be a consent that overrides the statutory limitation as to the amount of a claim or counterclaim. If s 183 applies to counterclaims under the Act, then s 12(1) can apply only to other types of actions and matters, namely claims by claimants as distinct from defendants, and counterclaims seeking some form of relief other than judgment for a sum of money.

11. In a situation where a defendant counterclaims over $50,000 in the Magistrates Court, if the plaintiff does nothing by way of consent, waiver or objection, and a transfer to this Court is either refused or not sought, then the application of the two statutes may produce different results. If s 183 applies, and the plaintiff has taken no objection based on the quantum of the counterclaim, then the jurisdiction of the inferior court is unlimited by reason of s 183(2)(c). But, in the absence of waiver, ss 7 and 11 of the Act suggest that consent is needed in order for the Magistrates Court to have jurisdiction to hear and determine the counterclaim.

12. Without s 183, the relevant provisions of the Act would provide a straightforward system of rules governing situations where claims or counterclaims exceed $50,000. That is to say, there is no longer any need for s 183. There are no longer any inferior courts, other than the Magistrates Court, with jurisdiction over money claims. There is no reason to have one set of rules for plaintiffs' claims exceeding $50,000 and a different set of rules for counterclaims exceeding $50,000.

13. Section 183(2)(a), which I did not set out above, contains redundant provisions about local jurisdictional limits of inferior courts. There have been no such jurisdictional limits since the repeal of the Local Courts Act 1896 by s 41 of the Act.

14. When a defendant pleads more than one cause of action in a counterclaim, if s 183(2)(b) is still in force, the jurisdictional limit applicable to the counterclaim would be $50,000 for each separate cause of action, not $50,000 for the total counterclaim. That result would be absolutely inconsistent with s 7 of the Act, under which the "prescribed amount" is the limit for an action. That is to say, s 7 provides for $50,000 to be the jurisdictional limit for the total counterclaim.

15. Having regard to all these matters, I consider that there is a general inconsistency between s 183 and the provisions of the Act relating to the same subject matter. It must follow that the Act impliedly repealed s 183. In determining whether the learned magistrate fell into error on 14 September, that section must be ignored.

16. On 14 September the learned magistrate knew that the transfer application was pending in this Court, and that the appellants wished to pursue that application.  He could have adjourned the proceedings before him to await the outcome of the transfer application.

17. It is necessary to apply the principles relating to appeals from discretionary decisions that were summarised in House v The King (1936) 55 CLR 499 by Dixon, Evatt and McTiernan JJ at 504-505, where their Honours said:

    "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance."

1. An order striking out or dismissing the counterclaim would result in the proceedings that were the subject of the transfer application being converted into a claim for under $50,000 with no counterclaim.  If the transfer application were refused, the appellants would then have to decide whether to commence a fresh action against the respondent in this Court, or whether to seek an extension of time for the filing of a new counterclaim in the Magistrates Court.  The latter course would have been problematic because of the jurisdictional limit of $50,000.

2. From the transcript of the proceedings on 14 September, it appears that the learned magistrate had the impression that, when there is a counterclaim for more than $50,000, the appropriate course is to strike out the counterclaim and to leave it to the defendants to persuade this Court that they have a claim of sufficient size and merit to warrant ordering a transfer of the plaintiff's claim, even though that claim does not exceed $50,000.  If that were correct, then perfectly pleaded counterclaims would sometimes have to be struck out and later recreated, and transfer applications would routinely have to be determined on the basis of what might be pleaded in the future, rather than pleadings already on foot. 

3. There is nothing in s 12 to warrant such an inflexible approach. In my view the learned magistrate erred in law by taking the view that s 12(1) left him no choice, and that resulted in him making an order that was unreasonable.

4. It is true that s 12(1) of the Act uses mandatory language, providing that the Magistrates Court "must" make a striking out order if an action or matter has been commenced for an amount exceeding that court's jurisdiction. It is true that s 12(3) precludes that court from making such an order only for 28 days after advice about a transfer application has been given. However it does not follow that when s 12(3) does not apply and the matter comes before a magistrate, then s 12(1) compels the magistrate to strike out the "action or matter" immediately, whether or not a transfer application is then pending.

5. On 14 September the only reasonable course was to adjourn the matter and thus give the appellants an opportunity to pursue the transfer application.  I therefore concluded that I should allow the appeal and quash the order for the dismissal of the counterclaim.

The transfer application

1. The transfer application was not listed before me.  However counsel for the respondent agreed that, if I decided to allow the appeal and quash the order for the dismissal of the counterclaim, it would be appropriate for me to grant the transfer application.

2. I decided to do that without interfering with the order of 17 June.  I did so on the basis that the transfer order would supersede that order.  I saw no need to determine whether the learned magistrate erred in any way in making that order.

Conclusion

1. For the reasons stated, I made orders as follows:

   ·     That the appeal be allowed.

   ·     That the order of 14 September 2016 be set aside.

   ·     That the claim and the counterclaim be transferred to this Court.

   ·     That the respondent pay the appellants' costs of and incidental to the appeal.

   ·     That the respondent be granted an indemnity certificate pursuant to the Appeal Costs Fund Act 1968.