New South Wales Supreme Court CITATION : BSA v Focuson [2005] NSWSC 150 HEARING DATE(S) : 4 March 2005 JUDGMENT DATE : 11 March 2005 JURISDICTION : Common Law Division JUDGMENT OF : Master Malpass at 1 DECISION : 1. Leave to appeal is granted; 2. The orders made by Lulham LCM on 27 September 2004 and which are recorded on p 34 of the transcript are set aside; 3. The defendant is to pay the costs of the proceedings; 4. If so entitled, the defendant is to have a certificate under the Suitors' Fund Act 1951; 5. The exhibits may be returned. CATCHWORDS : Appeal from decision on interlocutory application for summary dismissal - leave - effect of consent orders - meaning of "dismissed" - application of District Court Rules - purported assignment of chose in action and notice - cross-estoppel. LEGISLATION CITED : District Court Rules 1973 Pt 1 r 4, Pt 11A r 3, Pt 26 r 6A and 7 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Minero Pty Ltd v Redero Pty Ltd (unreported, NSWSDC, Santow J 29 July 1998) CASES CITED : Somanader v MIMA (2000) 178 ALR 677 The Indian Grace (1993) AC 410 Broadcast Services Australia Limited (Plaintiff) PARTIES : Focuson Pty Limited (Defendant) FILE NUMBER(S) : SC 13438/04 Mr P Bolster (Plaintiff) COUNSEL : Mr C Carroll (Defendant) Verekers (Plaintiff) SOLICITORS : Dayton Legal (Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 11058 of 2003 LOWER COURT JUDICIAL OFFICER : Lulham LCM - 7 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Master Malpass 11 March 2005 13438 of 2004 Broadcast Services Australia Limited v Focuson Pty Limited JUDGMENT 1 Master: On 4 October 2002, Parramatta Personnel (Aust) Pty Limited (PPA) commenced proceedings in the District Court against the plaintiff (which was then called Comet Satellite & Cable Limited). PPA claimed the sum of $26,842.09 in respect of professional services said to have been provided for the plaintiff. The proceedings were defended by the plaintiff. 2 On 13 February 2003, the proceedings were listed for hearing to take place before Delaney DCJ on 26 March 2003. On 14 February 2003, PPA went into liquidation. On 21 March 2003, PPA entered into an agreement for sale and purchase of business assets (the agreement) with Focuson Pty Limited (Focuson). The agreement was made on behalf of PPA by its liquidators. Focuson was a company that was conducted by those who had previously been in control of PPA (it has been described as a phoenix company). 3 On 24 March 2003, Mr Robinson of Coleman & Greig (who had been the solicitors for PPA prior to the liquidation) wrote a letter (the letter) to Verekers (the solicitors for the plaintiff). It is in the following terms:- I refer to our recent conversation and suggest that the settlement of this matter be finalised by way of Deed of Release given that Focuson Pty Limited has purchased the claim and liabilities surrounding the dispute between Parramatta Personnel (Aust) Pty Limited and your client. I have enclosed a draft Deed of Release for your comments. I look forward to hearing from you as a matter of priority. 4 On 26 March 2003, the proceedings came before Delaney DCJ. PPA was represented by the liquidators. Mr Bolster of counsel appeared for the plaintiff. Mr Robinson was also present. Delaney DCJ was informed that an agreement had been reached in relation to the matter. Consent orders were handed up to his Honour. His Honour made orders in accordance with those consent orders and congratulated the parties. 5 The consent orders were as follows:- 1. The Plaintiff's Amended Statement of Liquidated Claim be dismissed 2. The Cross Claim be dismissed 3. Plaintiff to pay the Defendant's costs of the proceedings as agreed or assessed. 6 On 11 April 2003, a deed of release (the deed) was made between PPA and Focuson. It dealt with the same subject matter as the agreement. It would seem that the intention may have been to remedy what may have been seen as defects in the agreement. On 4 June 2003, Focuson purported to give notice pursuant to s12 of the Conveyancing Act 1919. 7 On 10 July 2003, Focuson commenced proceedings in the Local Court. It is common ground that save for the pleading of the assignment the subject matter of these proceedings was the same as that which was litigated in the District Court. The plaintiff first filed a defence and then sought interlocutory relief. 8 A part of the interlocutory relief sought was an application for summary dismissal. The application was founded on res judicata said to arise from the consent orders. It is said that the chose in action constituted by the claims made by PPA merged into the orders and that thereafter there was nothing that could be assigned by PPA. 9 The application was heard by Lulham LCM on 27 September 2004. He handed his decision down on 27 September 2004. The Magistrate in effect dismissed the application for summary dismissal (the actual orders were that the orders sought by the defendant in paragraphs one and two of its amended notice of motion were dismissed). 10 The determinative issue that led to the dismissal of the application was the view taken by the Magistrate as to the effect to be given to the consent orders. 11 The transcript records the following:- I have come to the view that the use of the word, dismissed, in the orders before Delaney J meant that those proceedings were finally disposed of but without prejudice to the right for the plaintiff or an assignee from the plaintiff commencing fresh proceedings. 12 He later expressed the view that the magical words "judgment for the defendant" should have been used. 13 What brought him to that view was part of the content of Part 1 rule 4 of the District Court Rules 1973. Rule 4 is headed "Interpretation". It commences, "In these rules, unless the context or subject matter otherwise indicates or requires –". It contains a definition of "dismiss". The term is defined as follows:- dismiss , in relation to any proceedings, means finally dispose of the proceedings, but (except where the proceedings consist of an appeal to the Court) without prejudice to any right to commence fresh proceedings seeking the same, or substantially the same, relief. 14 The Rules contain provisions in which "dismissed" and "dismissal" appear (inter alia Pt 11A r 3, Pt 26 r 6A and 7). 15 Before leaving what was said in the judgment, I should mention two other matters. The Magistrate expressed the view that he did not think the agreement effected a legal assignment of the chose in action had by PPA and he had doubts as to whether the letter dated 24 March 2003 effectively gave notice pursuant to s12. 16 On 22 October 2004, the plaintiff filed a summons in this court. It purports to bring an appeal against the decision of the Magistrate. Although it has been brought out of time, the defendant makes no challenge to the competence of the appeal. 17 Because the appeal is brought in respect of an interlocutory matter, it requires the leave of this Court. The plaintiff challenges the view taken as to the effect of the consent orders. It says that there has been error in point of law. 18 The defendant has relied on a notice of contention. It says that the Magistrate erred in respect of the views taken as to the agreement and the letter of 24 March 2003. It contends that the deed and the subsequent notice effectively assigned the chose of action to the defendant. It also seeks to argue a question of cross-estoppel (The Indian Grace (1993) AC 410). 19 The orders made by consent implemented a compromise reached between the liquidators for PPA and the plaintiff. In determining the effect to be given to the consent orders, any construction task involves an exercise in determining the meaning to be given to that compromise. 20 It seems to me that the Magistrate misdirected himself in his approach to the question of the effect to be given to the consent orders. The definition of "dismiss" which was relied on by him to reach his view, is one that is provided by the Rules for the purposes of the construction of those Rules. 21 In my view, it was not intended that the Rules should operate to prevent parties bringing a final resolution to their disputes. I should add that the rule itself contains a qualification ("unless the context or subject matter otherwise indicates or requires"). It seems to me, that even if a different view were taken as to the operation of the rule, the consent orders would fall within the ambit of the qualification. 22 There is abundant authority for the proposition that consent orders made without a hearing on the merits may give rise to res judicata (Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507, Minero Pty Ltd v Redero Pty Ltd (unreported, Supreme Court of NSW, Santow J, 29 July 1998) and Somanader v MIMA (2000) 178 ALR 677 at 686-7). 23 The operation of that doctrine would render ineffective the subsequent purported assignment involving the deed and notice given on 4 June 2003. 24 I shall now turn briefly to the matters that were argued by the defendant. In my view, they were misconceived. 25 To the extent that the Magistrate reached a final view on the matters of the agreement and the letter, it seems to me that any such findings were not erroneous. The arguments presented by the defendant were beset by a variety of problems. A major problem for the defendant was that the submissions were not open to it on the pleadings. The pleadings rely on both the agreement and the deed as effecting the assignment and only on the notice given on 4 June 2003. In these circumstances, it is unnecessary to dwell on the other problems. 26 The alleged cross-estoppel was founded on what was deposed to by Mr Robinson in paragraph 14 of an affidavit sworn by him in the proceedings. The paragraph is in the following terms:- I specifically recall that I said to Ms Turner: Me: You know that Focuson will commence proceedings to pursue this cause of action against your client. K Turner: So be it. 27 This submission is also confronted by a number of problems. What is deposed to by Mr Robinson is disputed by Ms Turner. There has been no adjudication on the conflict between those deponents. Further, any representation that is said to arise from this material does not come from the plaintiff and Mr Robinson was not then acting on behalf of PPA. 28 It seems to me that this is an appropriate case in which leave should be granted. Not only has there been error in point of law, but the failure to give leave may cause the plaintiff to suffer substantial injustice. It may be deprived of an entitlement to have the proceedings summarily disposed of. If the proceedings are not summarily disposed of, the parties may be committed to expensive litigation and if the plaintiff is ultimately successful, it may not recover any costs awarded in its favour (the defendant has been presented as a company which lacks the assets to satisfy any such costs order). 29 The power to grant summary relief is a discretionary one. The discretion is exercised having regard to the particular circumstances of the case before the court and so that justice is best served between the parties. 30 It seems to me that this court should set aside the orders made by the Magistrate and remit the matter back to the Local Court so that the discretion can be re-exercised. 31 The orders of the Court are as follows:- 1. Leave to appeal is granted; 2. The orders made by Lulham LCM on 27 September 2004 and which are recorded on p34 of the transcript are set aside; 3. The defendant is to pay the costs of the proceedings; 4. If so entitled, the defendant is to have a certificate under the Suitors' Fund Act 1951; 5. The exhibits may be returned. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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