Bendigo and Adelaide Bank Limited v Jaeger

District Court of NSW|2018-07-20

A. Introduction

Michael Jaeger borrowed funds for investment purposes. He was successfully sued in this Court for debts arising from those loans by Bendigo and Adelaide Bank Limited. Mr Jaeger appealed unsuccessfully. He now makes application in the original proceedings to set aside the District Court judgment under Uniform Civil Procedure Rule 36.15 on the basis that the judgment was irregularly entered. The irregularity is said to be because the Court had no jurisdiction to hear and determine the matter.

B. Issues

The issues that arise are: 1. Did the Court have jurisdiction to decide the claim against Mr Jaeger? 2. Does this Court have the power to set aside the judgment if it was given in excess of jurisdiction? 3. Should the Court set aside the judgment?

C. Jurisdiction

Mr Jaeger asserts an absence of jurisdiction on two bases.
The first is that the proceedings were for "the execution of a trust", and since more than $20,000 was claimed under most of the loans, proceedings were outside the small equity jurisdiction in s 134 of the District Court Act 1973 ("DCA"), in particular s 134(1)(e).
Secondly, Mr Jaeger asserts that the proceedings "arose out of a commercial transaction" and were thus proceedings of a type which would, if commenced in the Supreme Court in February 1998, have been assigned to the Commercial Division under Pt 14 r 2 of the Supreme Court Rules 1970 as they then were. [1] As a result, the actions were not of a kind that would have been assigned to the Common Law Division under s 44(1)(a)(i) of the DCA [2] and so were outside the District Court's jurisdiction.
The circumstance that not all the actions in the proceedings offended the jurisdictional limit in s 134(1)(e) would not appear to be significant. It appears that if one "action" is outside the District Court's jurisdiction, the Court has "no jurisdiction to hear any of the claims in [the] proceeding". [3]

(a) The small equity jurisdiction: s 134(1)(e)

It was common ground that the Bank's pleadings did not raise the questions concerning "the execution of a trust" and neither did the original judgment of this Court. However, it was said that the Court of Appeal found that there was an assignment of the loans in equity, and this resulted in the proceedings being "for the execution of a trust", enlivening the jurisdictional limitations in s 134(1)(e) of the DCA.
In this regard, the judgment of the Court of Appeal stated: "Thereafter, Bendigo and Adelaide Bank became the equitable assignee when the scheme of arrangement was approved. It is not necessary to examine the position after Mr Jaeger received notice, for it was accepted that it was sufficient if Bendigo and Adelaide Bank was an equitable assignee." [4]
Thus, Mr Jaeger's concession appears to have relieved the Court of Appeal of the need to consider whether other matters, subsequent to notice, would have resulted in a legal assignment.
How this decision of the Court of Appeal converted the original proceedings before this Court to constitute "proceedings for the execution of a trust" was not fully developed. It was submitted that proceedings to enforce an assignment in equity required the assignor, the holder of the legal interest, to be a party, [5] and that did not occur in the Court of Appeal. But that point, if correct, did not appear to trouble the Court of Appeal. Given the concession of Mr Jaeger, identified above, it is not apparent why it should concern the Court of Appeal. Less still is it clear why any such alleged procedural irregularity in the Court of Appeal would deny jurisdiction in the District Court proceedings.
If the District Court proceedings were not properly proceedings involving the execution of a trust, but rather a claim for money arising from an equitable assignment, the proceedings appear to be within the jurisdiction conferred on the District Court by s 134(1)(h) of the DCA. This would be sufficient for the District Court to have jurisdiction. In any event, I was not persuaded that the proceedings in the District Court were "proceedings for…the execution of a trust" so as to be outside the jurisdiction of the District Court.

(b) The Common Law Jurisdiction, DCA, s 44

Mr Jaeger also relied on s 44 of the DCA. His argument was based upon the circumstance that the loans were for the purpose of investment, and that was properly to be described as a "commercial transaction" under the former rule Pt 14 r 2. That rule provided that, generally, proceedings that arise out of a commercial transaction are assigned to the Commercial Division.
Although the Bank argued to the contrary, I accept that loans for investment purposes may well be a "commercial transaction" within the meaning of that phrase in Pt 14 r 2. But there are two other difficulties for Mr Jaeger.
The first is that the applicability of Pt 14 r 2 to the jurisdiction of the District Court is not well established. Statements to that effect in my judgment in Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [6] were clearly obiter observations, [7] and the authority of Parker J's decision in The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [8] must be weighed against the contrary Court of Appeal authorities [9] which deal with the jurisdiction issue, although do not refer to Pt 14 r 2.
Even more significant, jurisdiction is a question that must be found at the outset. [10] As the Court of Appeal dismissed the appeal by Mr Jaeger, the Court of Appeal has implicitly found jurisdiction, especially given that an appeal is by way of re‑hearing. [11] As a matter of substance, the force of the Court of Appeal's decision is unaffected by whether the Court merely dismissed the appeal (as occurred in this case), or made orders to the same effect as the orders made by the District Court. In either case, the orders and judgment have the imprimatur of a Court of Appeal finding and the principle of stare decisis precludes me from making a contrary finding.
Whatever may be said about Pt 14 r 2 and its ambit, the effect of the Court of Appeal's decision is to find jurisdiction in this case.
In case I am wrong, I make the following brief comments on the other issues.

I accept that an absence of jurisdiction is sufficient to constitute an irregularity. The question of an irregularity generally focuses on the steps of giving, entering or making a judgment, rather than on its merits. [12] However, the decision of an inferior court [13] in excess of jurisdiction is a nullity, which a party is entitled, as of right, to have set aside. [14]
If an absence of jurisdiction arose from s 134(1)(e) of the DCA, a question arises as to whether s 144 of the Civil Procedure Act 2005 ("CPA") has application. Section 144 requires the Court to transfer to the Supreme Court proceedings to which s 134(1)(e) of the DCA applies (which in context must mean proceedings to which s 134 of the DCA would apply, but for the monetary limit) if the Court decides that it lacks or may lack jurisdiction. Thus, if Mr Jaeger's jurisdictional argument about s 134(1)(e) is correct, this Court was obliged to transfer the proceedings to the Supreme Court. A decision to dismiss the proceedings would be in error. [15] So also, it would seem, would be a decision now to set aside the judgment. It would seem fairer and more consistent with the evident purpose of s 144 of the CPA [16] that this Court should not make orders in respect of the proceedings but transfer to the Supreme Court the application to set aside the judgment. Thus, if I thought that I may lack jurisdiction to dispose of the application because of the impact of s 134(1)(e) of the DCA, the application should be transferred to the Supreme Court by reason of s 144(2) of the CPA.
In any event, I do not think the power to set aside the judgment in r 36.15 allows this Court to interfere with the effect of a decision of the Court of Appeal. The result of an order would be to set aside a decision which the Court of Appeal has upheld.
The Court cannot find an irregularity in a decision that the Court of Appeal has upheld. The irregularity, if it existed, has either been cured by the Court of Appeal's decision or, so far as this Court is concerned, is a matter for correction by the Court of Appeal or its superior in the appellate hierarchy.

(d) Discretion

Even if the jurisdictional error was established and the power to correct it resided in this Court, I would nevertheless not be inclined to exercise it in this case for the reasons which follow. Relevant considerations are mentioned in Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [17] and Dimitrov v Supreme Court of Victoria. [18]
First, an application to set aside an entered judgment of a judge of this Court should, if possible, for reasons of judicial comity, be listed before that judge who made the original decision. If the application otherwise appeared meritorious, I would transfer it to the list judge for hearing by the original judge.
Secondly, the circumstance that the effect of the decision to set aside the judgment would contradict a decision of the Court of Appeal in the proceedings is also a powerful discretionary reason against relief.
Other matters, such as the failure of Mr Jaeger to raise any jurisdictional matter at trial or before the Court of Appeal; the apparent inevitability, because of the Court of Appeal decision, that the same result would occur in subsequent proceedings so there is a lack of utility in an order; and the injustice and waste of resources that would result from the failure of Mr Jaeger to take the point, are additional discretionary matters against an order. Any decision to set aside the judgment would demand terms to remedy the injustice. There was no evidence that Mr Jaeger had either the resources or the inclination to remedy his previous failures to take this point. [19] It was also said that such a decision, as was sought in this case, would set an extraordinary precedent impacting on many other decisions of this Court. That would be a reason for caution in the exercise of a discretionary power.
The power to set aside a decision is not to cure neglect or default of a party, [20] nor to provide a back door method for Mr Jaeger to re‑argue his case. As mentioned above, jurisdictional questions are to be decided at the outset, that is, first. [21] It is not appropriate to allow the jurisdictional question to be raised after, and if all other grounds have failed at a trial and on appeal, in circumstances where it might be inferred that a jurisdictional issue would not have been raised if the applicant had, at an earlier stage, been successful in the proceedings.
The principle of finality of decisions [22] is another reason why the discretion should not be exercised in this Court. So also is the lack of satisfactory explanation as to why an orthodox appeal process, such as seeking leave to reopen the matter in the Court of Appeal, to add a new ground on appeal to the Court of Appeal, or a special leave application to the High Court, should not be undertaken.
Reference to these matters is not to deny the principle identified earlier, that an error of jurisdiction by an inferior court is a nullity to which a party is entitled to have set aside as of right, but rather that the discretion or power in r 36.15 may not be the appropriate avenue to exercise that right, at least where a Court of Appeal decision is being called into question.
The order of this Court is that the notice of motion is dismissed with costs.

Endnotes

See The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194, Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWDC 160, Abbott v Klein [2015] NSWDC 45 at [61]-[62].
See Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531; [2007] HCA 8.
New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 at [63]-[64].
Jaeger v Bendigo and Adelaide Bank Ltd [2018] NSWCA 116 at [44].
Property Builders Pty Ltd v Adelaide Bank Ltd (2011) 15 BPR 29,411 at [33].
[2018] NSWDC 160.
See at [7], [14], and [17].
[2017] NSWSC 1194; see now also Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 at [15]-[36].
See May v Brahmbhatt [2013] NSWCA 309 at [3], [46], [57], Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402 at [48]-[49], [1], [63], New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 at [71].
Eberstaller v Poulos [2014] NSWCA 211 at [1].
See s 75A(5), Supreme Court Act 1970.
Perpetual Trustees Australia Ltd v Heperu Pty Ltd & Ors [No 2] [2009] NSWCA 387 at [16]-[17].
Flo Rida v Mothership Music Pty Ltd [2013] NSWCA 268 at [17], Falls Creek Ski Lifts Pty Ltd v Yee (1995) 37 NSWLR 344 at 345-349 per Gleeson CJ, with whom Rolfe AJA agreed.
Cameron v Cole (1944) 68 CLR 571 at 590, Pelechowski v The Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 445.
Mahommed v Unicomb [2017] NSWCA 65 at [53]-[55].
See Project Blue Sky Inc v Australia Broadcasting Authority (1998) 194 CLR 355, 381 [69], Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross (2012) 248 CLR 378 at [24]; [2012] HCA 56, 248, Deputy Commissioner of Taxation v Zammitt [2014] NSWCA 104 at [67]-[68].
[2016] NSWCA 42 at [6], [7], [25], and [26].
(2017) 250 ALR 191 at [2], [3], [6], [7], [9] and [13].
Zisis v Knighton [2008] NSWCA 42 at [49]-[51].
Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 302-3; [1993] HCA 6.
Eberstaller v Poulos [2014] NSWCA 211 at [1].
See D'Orta Ekenaike v Victorian Legal Aid (2005) 223 CLR 1 at [34]; [2005] HCA 12. 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: 04 September 2018

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