District Court New South Wales Medium Neutral Citation: Tonab Investments Pty Ltd & Bechara v Optima Developments Pty Ltd [2014] NSWDC 241 Hearing dates: 19 June, 11 July, 8 August & 9 December 2014 Decision date: 19 December 2014 Before: Levy SC DCJ Decision: 1.Summons appealing from the decision of the Local Court at Woy Woy and Gosford on 18 December 2013 is dismissed; 2.The appellants are to pay the respondent's costs of the appeal on the ordinary basis unless otherwise ordered; 3.The exhibits may be returned; 4.Liberty to apply on 7 days notice if further or other orders are required. Catchwords: APPEAL - appeal from decision of Local Court at Gosford and Woy Woy sitting in Small Claims Division - appeal pursuant to s 39(2) of whether decision of Local Court was within its jurisdiction - whether the appellants were denied procedural fairness - whether slip rule amendments to orders were made ultra vires the jurisdiction of the Local Court Legislation Cited: Civil Procedure Act 2005, s 98 Legal Profession Act 2004, s 208 Local Court Act 2007, s 39 Cases Cited: Richards v Cornford [2010] NSWCA 99 Tugrul v Tarrants Financial Consultants Pty Limited (in liquidation) [2013] NSWSC 1971 Category: Interlocutory applications Parties: Tonab Investments Pty Ltd (First plaintiff/Appellant) Maria Bechara (Second plaintiff/appellant) Optima Developments Pty Ltd (Defendant/respondent) Representation: Ms R Bianchi (Plaintiffs/appellants - 19 June & 11 July 2014) Ms M Bechara (Plaintiffs/appellants - 8 August & 9 December 2014) Mr M Gallego (Solicitor for defendant/ respondent) Maria Bechara (Plaintiffs/appellants) Mark Gallego (Defendant/respondent) File Number(s): 2014/7719 Publication restriction: None Decision under appeal Jurisdiction: 9109 Date of Decision: 2013-12-18 00:00:00 Before: Magistrate Day Magistrate Chicken File Number(s): 2013/22610 Judgment Table of Contents Summons [1] - [6] Jurisdiction for appeal [7] Material considered in the appeal [8] - [9] Underlying proceedings and factual background [10] - [52] Appeal grounds [53] - [54] Relief sought by appellants [55] - [56] Issue 1 - Whether appellants were denied procedural fairness [57] - [65] Issue 2 - Jurisdiction for decision of Local Court [66] - [70] Disposition [71] Costs [72] Orders [73] Summons 1On 9 January 2014, the appellants, Tonab Investments Pty Ltd and Maria Bechara, instituted these proceedings by filing a summons in the District Court, thereby invoking a statutory right of appeal in respect of underlying Local Court proceedings pursuant to s 39(2) of the Local Court Act 2007. On 3 May 2014 the list judge made an order permitting the appellants to proceed upon an amended summons filed on 11 June 2014. 2The appellants are the defendants in underlying proceedings numbered 2013/0022610 in the Local Court at Woy Woy, NSW. 3The respondent is the plaintiff in those underlying proceedings, which were commenced in the Small Claims Division of the Local Court on 25 July 2013, claiming damages from the appellants in the form of a debt in the amount of $8679.80, plus an unspecified claim for interest and costs. 4The first part of the hearing of the summons took place on 19 June 2014. The parties were to arrange for a transcript to be provided that evening in order that judgment could be delivered at the end of the following day before a period of leave was due to commence. 5That did not occur due to successive failures of the parties to adhere to a commitment to make the necessary arrangements for the provision of a transcript, and because of subsequent delays on the part of the second plaintiff to finalise further emergent arguments the appellants wished to make, notwithstanding that counsel had been retained to appear for the appellants at the hearing on 19 June 2014. 6Following those delays, the Court re-listed the matter on 9 December 2014 to seek a conclusion of any outstanding submissions. Jurisdiction for appeal 7The grounds for an appeal to this Court pursuant to s 39(2) of the Local Court Act 2007 are limited to claims of a lack of jurisdiction for the decision under appeal, or a denial of procedural fairness. Material considered in the appeal 8In support of their appeal, the appellants relied upon four affidavits sworn by the second appellant, Maria Bechara, on 9 January 2014, 6 May 2014, 11 June 2014 and 8 August 2014. 9The respondent relied upon an affidavit sworn by it's director, Mr Christopher John Oliver, on 31 March 2014, and the contents of the Local Court file concerning the underlying proceedings: Exhibit "1". Underlying proceedings and factual background 10That claim was made pursuant to a contract of engagement of the respondent for the provision of expert town planning services to the appellants at their request. Although the respondent's claim was pleaded as a short form of common money count without particulars, the claim was for the value of work carried out by the respondent in accordance with fee disclosure documents which the respondent had beforehand provided to the appellants. The appellants did not at any stage seek particulars or raise objections to the respondent's claim, which was pleaded as follows: " ... 5. The plaintiff's claim is for work done and materials provided to the first and second defendants at the request of the defendants." [Exhibit "1", p 144] 11On 28 August 2013, the defendant filed a defence sworn by Ms Bechara in the following terms: " ... 5. The defendants deny paragraph 5 of the statement of claim." [Exhibit "1", p 135] 12On 28 August 2013, the Local Court Registry notified each of the parties that a pre-trial review of the proceedings was scheduled to be conducted at Woy Woy Local Court at 9.30am on 24 September 2013. That communication included the following warning notice to the parties: "It is in your interests that you attend Court for the Pre Trial Review. If you are not present your claim or defence may be struck out or other orders may be made detrimental to your case." [Exhibit "1", pages 137-139] 13On 17 September 2013, Mr Oliver, the director of the respondent swore an affidavit in the underlying proceedings setting out his dealings with the appellants concerning the subject matter of his claim against them, and his unsuccessful attempts to communicate with them before the issue of the underlying proceedings: Exhibit "1", pages 106-130. 14That affidavit was in support of a notice of motion filed on behalf of the respondent on 13 September 2013 seeking that the defence of the defendants (the appellants in these proceedings) be struck out, with consequential orders for costs: Exhibit "1", p 99. 15On 19 September 2013, the Local Court Registry advised the appellants that the proceedings were listed for the hearing of the notice of motion at 9.30am on 24 September 2013 at Woy Woy. That notice included the warning "If you do not appear at Court, this matter may be dealt with in your absence": Exhibit "1", p 97. 16From those events, it is plain that the appellants were on notice that it was in their interests to appear at the fixture for 24 September 2013. 17On 24 September 2013, Mr Oliver swore an affidavit of debt to support a Notice of Motion of the same date, seeking judgment from the appellants in the amount of $8897.80, which, with costs totalled $9643.16: Exhibit "1", pages 88-94. 18On 24 September 2013, the proceedings were listed before his Honour Magistrate Day. The transcript of that listing comprised 2 pages: Exhibit "1", pages 68-69. On that occasion, the matter was called, following which it was noted that there was no appearance by the appellants. The matter then proceeded ex parte and submissions were made by Mr Gallego, the solicitor for the present respondent, the plaintiff in the Local Court proceedings. 19After some discussion about an unserved affidavit, and a possible further listing on 9 October 2013, his Honour reached a point in his consideration where he was satisfied that the defence filed in the underlying proceedings was totally without merit. That defence was then properly struck out: Exhibit "1", p 69: Affidavit of Mr Oliver sworn 31 March 2014: Exhibit "D", p 2. Relevant to those circumstances was the fact that the defendants in those underlying proceedings had at no stage requested particulars of the claim against them. 20It appears that the order striking out the defence was made primarily having regard to Mr Oliver's served affidavit sworn on 13 September 2013, and also having regard to evidence as to an acknowledgment by Ms Bechara of the debt owed: Exhibit "1", p 66. That acknowledgement of debt was in the form of an email dated 3 June 2013 from Ms Bechara to Mr Oliver in the following terms: "[G]ood morning Chris. I apologise for not being able to speak to you last Friday. I had anticipated receipt of funds to pay your account in full by last week. Unfortunately the funds have not arrived. The funds I am anticipating are separate to those which I refer to below and I am hoping they will be received this week. I am writing to you to assure you of my best intentions by confirming that I accept in full your fees and am prepared to pay you interest in excess of your terms. I have unfortunately been faced with cash flow crisis which I hope to remedy soon. I will email you separately a judgment I obtained against a former client in excess of $200,000.00. I am expecting payment in the near future. I have also last week obtained another judgment against other former clients in the amount of $200,000.00. I do not as yet have a written copy of that judgment. I have provided the above personal details to you to assure you of my intention to pay. I would appreciate your patience a bit longer and I hope to contact you this week to arrange payment. Can you please let me know if Council have decided on the line for the zoning? Regards Maria" [Emphasis added] 21It is plain from the terms of that acknowledgment, that judgment had been properly entered against the appellants in the underlying proceedings. 22It later transpired that, unbeknown to the respondent, or to the presiding magistrate, at 9.38am on 24 September 2013, which was after the matter had been dealt with by the Local Court as outlined above, a law firm, All Courts Lawyers, the agents of the appellants, on a retainer that had been arranged by Ms Bechara the previous day, belatedly sent a facsimile letter of engagement to the Ettalong firm Cleary Finlay to attend at the pre trial review, to represent the appellants with the following instructions: "please refer to defence - pleading statement of claim not particularised and should be struck out" [Exhibit"1", p 95] 23It should be noted that at that time there was no application filed by the appellants before the Local Court seeking the remedy of striking out the plaintiff's claim. 24According to an affidavit affirmed on 25 September 2013 by Ms Maxine Morris-Corkhill, solicitor, she had received instructions from an entity described as "gotocourt.com.au ... at approximately 9:30am by email" instructing her to attend at what she described in her affidavit as a directions hearing. She stated she had arrived at court at about 9:40am on 24 September 2013 after the ex parte judgment had been entered in favour of the respondent, and that beforehand she had been unable to make telephone contact with the court registry to advise the Court she would be attending to appear in the matter: Exhibit "1", p 82. 25It appears from the timing of the despatch of instructions from the appellants to Ms Morris-Corkhill, that such a telephone call would have been futile in any event. 26It is plain from the time signature on the facsimile header on the letter of instructions to Ms Morris-Corkhill, that for whatever reason, the emailed instructions requesting her to appear at Court to mention the matter were likely to have been sent after the matter had already been dealt with by the Court some time shortly after 9.30am on 24 September 2013, probably around 9.50 am as was estimated by Mr Oliver: Affidavit of Mr Oliver 31 March 2014, para 8. 27Shortly after the entry of judgment, Ms Morris-Corkhill met the solicitor for the respondent in the Local Court Registry. At that time she sought, but was refused, consent to have the matter re-listed before the presiding magistrate: Affidavit of Mr Oliver 31 March 2014, para 9. 28On 4 October 2013, Ms Bechara filed a notice of motion in the Local Court at Woy Woy, returnable on 22 October 2013, seeking a stay of the default judgment entered on 24 September 2013, and an order to set aside that judgment: Exhibit "1", pages 77-80. 29On 9 October 2013, in accordance with the orders made on 24 September 2013, an order of judgment in the amount of $9643.16 was issued by the Local Court Registry against the appellants in favour of the respondent: Exhibit "1", p 53; p 87. 30Having been refused consent to have the matter relisted, the appellants filed a notice of motion in the Local Court seeking to set aside the judgment against them on 24 September 2013. On 22 October 2013, that application was listed before his Honour Magistrate Chicken, who ordered that the matter be listed for determination before his Honour Magistrate Day, who was the magistrate who had made the orders of which the appellants then complained. 31On 5 November 2013, his Honour Magistrate Day heard and considered the arguments of the appellants. He requested a copy of the transcript of the proceedings that were before him on 24 September 2013. He also stood the application over to be heard before him on 18 December 2013. On that date, the application by the appellants seeking to set aside the judgment entered on 24 September 2013 wad listed before his Honour Magistrate Day. Mr Separovic appeared on that application for the present appellants and Mr Gallego appeared for the present respondent, who was the respondent to that application. 32On that occasion, Mr Separovic indicated to the Court he was unable to reach and to obtain instructions from his principal. The unexplained failure of the appellants to properly instruct their legal representative in a timely manner was no fault of the defendant who is the respondent in these proceedings. 33On 18 December 2013, after reviewing the file and transcript of the earlier listing, his Honour then dismissed the application by the appellants to set aside the judgment entered on 24 September 2013. The transcript of that hearing was annexed as Exhibit "E" to the affidavit of Mr Oliver sworn on 31 March 2014. 34After dismissing the application to set aside judgment, his Honour dealt with an application for an indemnity costs order. In the face of that application, and being unable to obtain instructions, Mr Separovic stated "I am completely in your hands your Honour": T8.6, 18 December 2013. There was no application to adjourn the proceedings in order to obtain instructions with regard to that issue. 35The transcript of 18 December 2013 contained an incomplete, that is, "not transcribable" discussion on the basis for an amount of interest to be added to the judgment amount: T10.41 and following to T15. At one point his Honour raised s 208 of the Legal Profession Act 2004 as the basis of a claim for interest (T10.41 and T11.15) but later referred to the interest rate of 20 per cent as being applicable under the contract between the parties, which he appears to have accepted in the course of submissions: T13.14 to T13.20. 36Consequently, on 18 December 2013, the interim stay of proceedings was dissolved and judgment was entered for the respondent against the appellants in the sum of $10,624.16. That amount comprised damages of $9843.16, plus interest of $781 pursuant to the contract that was found to have existed between the parties. On that occasion, costs were also assessed at $8000, and those costs were stated to have been assessed pursuant to s 208 of the Legal Profession Act 2004, resulting in orders totalling $18,624.16: Exhibit "1", pages 61-64. 37Those orders were made in circumstances where the representative of the present appellants were not sufficiently instructed to make submissions to resist that course. 38On 9 January 2014, the summons commencing this appeal was filed in the District Court: Exhibit "1", pages 2-8. That did not operate as a stay of the underlying proceedings. 39On 24 January 2014, the solicitor for the present respondent wrote to the Local Court Registry pointing out that the notice of order that was issued after the 18 December 2013 hearing did not reflect what had occurred in that the amount claimed should have been $9643.16 rather than $9843.16; that interest should have been identified as being $827.10 rather than $781; that the assessment of costs should have been under s 98 of the Civil Procedure Act 2005 rather than s 208 of the Legal Profession Act 2004, and that the total amount of the judgment should have been $18,470.26 rather than the amount of $18,624.16: Exhibit "1", p 60. 40The amendments referred to in the preceding paragraph were sought by the respondent under the "Slip Rule": UCPR r 36.17, which enables such corrections to be made. An order under that rule may be made by the Court at any stage of the proceedings in order to correct the record and to correctly reflect the intention of the judicial officer making the orders concerning the outcome of the proceedings, including matters of interest and costs. 41The required basis of such an order was that the Court had to be satisfied that there was an error that needed to be corrected. On that occasion, the Court was satisfied a correction needed to be made. 42On 18 February 2014, a registrar of the Local Court at Woy Woy ordered that there be a stay of the Local Court proceedings until the appeal to the District Court had been determined. 43On 11 April 2014, the respondent filed a notice of motion in the Local Court at Woy Woy seeking orders that the proceedings be transferred from the Small Claims List to the General List in that Court; that the Registrar's orders made in chambers on 18 February 2014 be vacated, that the judgment entered on 24 September 2013 be re-instated, and that pursuant to UCPR r 36.17, the judgment for the respondent be entered in the amount of $18,470.26 by an application of the Slip Rule: Exhibit "1", p 48. 44That amended sum sought by the respondent comprised $8679.80 as liquidated damages pursuant to the statement of claim filed, $218 for service and filing fees, $745.36 for solicitor's costs to 24 September 2013, contractual interest of $827.10 to 18 December 2013, and indemnity costs of $8000 to 18 December 2013: Exhibit "1", p 48. 45The purpose of the transfer of the proceedings between divisions related to jurisdictional limits. There was no impediment to entry of judgment beyond the applicable limit, recovery of an amount in excess of the limit is another matter: Richards v Cornford [2010] NSWCA 99. In order for there to be recovery of an amount in excess of the applicable limit, the proceedings had to be transferred to the General Division of the Local Court. That was an extra-curial administrative matter to be determined by the Court. The Magistrate's notes confirms this to be so: Exhibit "1", pages 22-24. 46On 22 April 2014, Ms Bechara wrote to the Local Court referring to the respondent's motion filed on 11 April 2014: Exhibit "1", pages 41-42. That letter enclosed a long letter in the form of submissions addressed to the solicitor for the respondent arguing, amongst other things, that the respondent's motion in question was an abuse of process, and it also made reference to some related proceedings in the Federal Court concerning a statutory demand issued by the respondent relating to the judgment debt: Exhibit "1", pages 43-45. 47On 27 April 2014, Ms Bechara wrote a letter to his Honour Magistrate Day at Woy Woy Local Court in the following terms: "... I understand from an email received from the Registry on 23 April 2014 that notwithstanding my letter dated 22 April 2014 forwarded to the Registrar (copy attached) the Plaintiff's notice of motion is listed before Your Honour on 28 April 2014 at 9.30 am. I enclose copy of Summons filed in the District Court of New South Wales appealing Your Honour's final judgment delivered in the subject Local Court proceedings on 18 December 2013. Further I note that Your Honour's judgment has been stayed pending the determination of the appeal by the District Court. By the motion which is listed before you on 28 April 2014 the Plaintiff seeks to amend Your Honour's judgment delivered on 18 December 2013 in a material way and to lift the order for stay on Your Honour's judgment. The Defendants respectfully submit that the motion filed by the Plaintiff is an abuse of process, frivolous and vexatious. Further and with respect Your Honour has no jurisdiction to hear and or determine the motion filed by the Plaintiff. Accordingly the Defendants submit that the motion must be dismissed by Your Honour and an order made that the Plaintiff pay the Defendants costs. If Your Honour is not minded to make these orders we respectfully request that Your Honour provide reasons for any order or Judgment that Your Honour may be minded to make contrary to the orders sought by the defendants. For the reasons set out above and in light of the appeal to the District Court, the Defendants consider that it would be prejudicial to their position to appear before Your Honour on 28 April 2014 and accordingly there will be no appearance by or on behalf of either Defendants." [Exhibit "1", pages 27-28 - emphasis added] 48That letter also annexed the correspondence dated 22 April 2014, as cited at paragraph [47] above. 49On 28 April 2014, absent an appearance by the appellants, consistent with the indication given to the Court by the letter dated 27 April 2014, the anticipated orders sought in the notice of motion filed on 11 April 2014 were made. 50On 1 May 2014, the registry issued a letter to Ms Bechara notifying her of orders made in the Local Court on 29 April 2014: Exhibit "1", pages 14-15. On the same date, a letter in identical terms was sent to the respondent: Exhibit "1", pages 18-19. 51Between 11 and 16 May 2014, Ms Bechara engaged in email correspondence with the Local Court at Woy Woy: Exhibit "1", pages 10-13. It is not necessary to here review that correspondence. 52On 12 June 2014, on behalf of the respondent, in preparation for the appeal, Mr Oliver requested access to the Local Court file to prepare his response to the complaint made by the appellants concerning alleged denial of procedural fairness Exhibit "1", p 9. Appeal grounds 53At the hearing of the appeal, the appellants abandoned some of the grounds set out in their amended summons, namely grounds 5, 6 and 11(b). 54The remaining grounds 1, 2, 3, 4, 7, 8, 9, 10, 11(a), 11(c), 11(d), 11(e), 11(f), 12, 13 and 14 were pressed by the appellants. These were prolix, and can be essentially described as comprising first, different variations of a complaint of alleged denial of procedural fairness, and secondly, making an order that was beyond the jurisdiction of the Local Court. Relief sought by appellants 55The appellants claim the appeal should be allowed, with consequential orders setting aside the orders made in the Local Court on 22 October and 18 December 2013, with remittal of the proceedings to the Local Court for determination according to law, and further consequential orders as to costs of the appeal. 56In the paragraphs that follow, I set out my consideration of the grounds of appeal pressed by the appellants. In doing so, it is convenient to first consider the appellant's claim of alleged denial of procedural fairness (Issue 1), before going on to consider the appellant's claim of lack of jurisdiction (Issue 2). Issue 1 - Whether appellants were denied procedural fairness 57The claim by the appellants of alleged denial of procedural fairness is contained in grounds 1, 2, 3, 4, 7 and 13 of the Amended Summons filed on 12 June 2014. 58In my view, for the reasons that follow, those complaints are without merit. 59The genesis of those complaints is that on 24 September 2013, when the appellant's agent arrived at Woy Woy Local Court after the proceedings, then before the Court, had already been dealt with in a regular manner in the absence of the appellants, who had beforehand been given proper notice to attend. Those events occurred because the appellants had left it too late to arrange timely representation. They should therefore not be heard to here complain about the consequences of an untimely attendance at Court after the matter had concluded. 60When the respondent's solicitor understandably declined to have the matter revisited, the appellants pursued their available legal remedy of filing a notice of motion seeking to set aside the orders that had been entered ex parte. 61On 18 December 2013, the motion to set aside judgment was dismissed with consequential orders for costs because of a lack of supporting evidence and argument for the application. This was due to the failure of the appellants to instruct their legal representative on such matters. Those circumstances should not be properly characterised as demonstrating a denial of procedural fairness to the appellants, as is now claimed. 62The listing of the underlying proceedings before his Honour Magistrate Day on 28 April 2014 was for the consideration of correction of the orders made on 18 December 2013 pursuant to the Slip Rule: UCPR r 36.17. 63In advance of that listing, the appellants sent the letter cited at paragraph [47] above. Putting to one side the discourteous nature of that communication, it is evident that it contained contentious statements that were not appropriately addressed to the Court by those means. Correspondence of that kind should be discouraged, as was observed by Kunc J in Tugrul v Tarrants Financial Consultants Pty Limited (in liquidation) [2013] NSWSC 1971, at [21]. 64In considering the complaint of denial of procedural fairness, in my view an inconsistency is revealed. On the one hand, the appellants advised the judicial officer that they did not intend to attend the slip rule hearing listed for 28 April 2014. It is therefore inconsistent that they should later in these proceedings complain of a lack of procedural fairness when the matter was dealt with in their absence, and according to law. 65For the above reasons, I dismiss the grounds of appeal raising allegations of denial of procedural fairness. Issue 2 - Jurisdiction for decision of Local Court 66The jurisdictional questions that arise for consideration in the appeal are contained in grounds 8, 9, 10, 11(a), 11(c), 11(d), 11(e), 11(f), 12, 13 and 14 of the amended summons filed on 12 June 2014. 67Those grounds all relate to the procedural steps taken by the Court to correct matters of record relating to the orders made on 18 December 2014. 68The jurisdiction of the Court to make such orders is founded upon UCPR r 36.17. The Court had power to transfer proceedings before it from one Division of the Court to another. The presiding Magistrate determined that such a transfer was necessary to give effect to the orders that had been made. 69That was a mechanical exercise that did not affect the validity of the orders made. I do not accept the submission that the transfer represented a material change that was ultra vires and void ab initio, as contended by the appellants. The transfer orders made on 29 April 2014, which corrected the amounts involved to reflect the orders that were intended, was clearly within the power of the Court conferred by UCPR r 36.17. 70For the above reasons, the grounds of appeal raising jurisdictional issues should be dismissed. Disposition 71As the appellants have failed to make good any of the grounds of the appeal, the summons must therefore be dismissed. Costs 72The respondent is entitled to have it's costs of the dismissed summons paid by the appellants unless a party can show an entitlement to some other costs order. Orders 73I make the following orders: (1)The summons is dismissed; (2)The appellants are to pay the respondent's costs of the dismissed summons on the ordinary basis unless either party can show an entitlement to some other order for costs; (3)The exhibits may be returned; (4)Liberty to apply on 7 days notice if further or other orders are required. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 December 2014