Bruscino & Anor v Carbone

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11071/2004 - MARIO BRUSCINO & ANOR v DOMENIC CARBONE

JUDGMENT (Appeal decisions of Local Court Magistrate - stay of proceedings - refused) 1 MASTER: By amended summons filed 21 June 2004 the plaintiffs seeks: firstly, to appeal the decisions of Magistrate AA Spence made on 5 and 14 April 2004 in matter No. 959/2003; secondly, an order that the decisions be set aside; and thirdly, an order that the judgment in the Local Court be stayed pending a judgment of the District Court of New South Wales proceedings No. 1179/2004. The plaintiffs are Mario Bruscino and Josephine Bruscino. They relied on the affidavit of Ross Alexander Ward sworn 16 April 2004. The defendant is Domenic Carbone. He relied upon his affidavits sworn 27 April 2004 and 18 June 2004. On 3 May 2004 Kirby J granted a stay of proceedings in the Local Court and I have extended this stay until judgment is delivered. 2 The matter has a somewhat complicated history and it has been helpfully summarised by Kirby J except to say that the plaintiffs now appeal in relation to two applications for stays of proceedings namely those on 5 and 14 April 2004. 3 On 2 June 1999 Austech Homes filed proceedings against Mr and Mrs Bruscino in the Fair Trading Tribunal (FTT) (as it then was). In those proceedings Dominic Carbone was their legal representative. The proceedings were ultimately determined on 12 February 2002 by the Tribunal ordering Mr and Mrs Bruscino to pay Austech Homes, at that stage in liquidation, the sum of $15,024.00 in full settlement of the claim on or before 30 June 2002. No order of costs was made. 4 The defendant Mr Carbone sought to recover his costs for acting on behalf of the plaintiffs in the FTT. A certificate was issued on 19 August 2003 pursuant to the Legal Profession Act 1987 (NSW) (LPA) in favour of Mr Carbone against Mr and Mrs Bruscino in the sum of $20,722.60. The plaintiffs sought a review. 5 A certificate was issued as a consequence of the review procedure in favour of Mr Carbone such that $29,405.00 was payable to him by Mr and Mrs Bruscino. Surprisingly, the amount of costs payable was increased. On 24 August 2003 judgment was entered in Mr Carbone's favour in the Local Court, Fairfield for his outstanding costs of $29,405.00. 6 On 24 March 2004 an action was commenced in the District Court by a statement of claim on behalf of Mr and Mrs Bruscino against Mr Carbone seeking damages for alleged breaches of contract and for negligence.

Grounds of appeal 7 In their amended grounds of appeal filed 21 June 2004, the plaintiffs plead that the Magistrate erred: firstly, because he failed to exercise his powers under subsection 32(1) of the Local Court (Civil Claims) Act 1970 (NSW) (the Act) to stay the judgment; secondly, that the Magistrate proceeded on a misconception of their notice of motion dated 8 April 2004 in that it rested upon a contention that the decision of the Cost Review Panel was wrong; and thirdly, that the Magistrate misconducted and misapplied subsection 32(3) of the Act. The defendant submitted that the Magistrate's decisions were correct. "32 Power to stay proceedings. (1) A court may order, on such terms as it thinks fit, that any proceedings in any action or matter before that court be stayed at any stage of the proceedings.

(2) The power conferred by subsection (1) to order a stay of proceedings includes power to order a stay of enforcement of a judgment.

(3) Where a court is satisfied that a defendant in an action is maintaining proceedings against the plaintiff in the District Court or the Supreme court and that those proceedings arise out of the same circumstances as the action, the Court shall, on such terms as it thinks fit, order a stay of enforcement of any judgment given or entered up in the action.

(4) A Magistrate who is satisfied that because of urgent circumstances it is not practicable for the powers conferred by subs (1) (2) or (3) to be exercised by the Court on which they are conferred may exercise those powers."

The first decision of the Local Court 8 On 23 March 2004 the plaintiff filed a notice of motion seeking, firstly, that the judgment entered on 25 August 2003 against the defendant in this action be stayed; and secondly, that judgment against the defendants be set aside. On 29 March 2004 the Magistrate, in chambers, made the following determination: "Fairfield Court seems to be the proverbial 'meat in the sandwich.' It is the role of this court to simply be the agent for the enforcement of another tribunal's orders. It is not the proper function of this court to make any assessment of the merits of the decisions of other tribunals. If the decision of other tribunals are sought to be impugned, relevant aggrieved parties are to take action before those tribunals or before the Supreme Court." 9 The orders sought in the notice of motion filed 23 March 2004 were refused. 10 On 30 March 2004, the plaintiffs' solicitor wrote to the Magistrate acknowledging that the notice of motion had been "refused" (solicitor's italics). The solicitor drew the Magistrate's attention to s 32(3) of the Act and stated that the application for a stay relied principally upon s 32(3) of the Act. Alternatively, the plaintiffs' solicitor requested that if the court was against them on this, that they be given an opportunity to be heard. 11 The affidavit of Serena Sefton sworn 24 March 2001 gave a short history of the proceedings in the FTT, the certificates of costs issued by the assessor and the review panel. She deposed that the defendants had instituted proceedings against the plaintiff for loss and damage suffered as a consequence of negligent work provided. A copy of the District Court statement of claim was annexed to her affidavit. She also deposed that there was a writ of execution issued and that the review panellists had not provided reasons for their determination in the review decision. Submissions were made to the effect that the defendants were maintaining proceedings against the plaintiff in the District Court and that those proceedings arose out of the same circumstances as the Local Court proceedings. 12 On 5 April 2004, the Magistrate provided further reasons for refusing to set aside the judgment and stay proceedings. The Magistrate referred to the issue of the certificates of assessment and that the plaintiffs were alleging that the decision of the review panel was defective as proper reasons were not provided and in this regard a letter had been forwarded to the Supreme Court. The Magistrate also referred to the statement of claim filed in the District Court where it was alleged that the plaintiffs were seeking damages from Mr Carbone and Associates for breach of agreement, negligence and failure to perform work on behalf of them in a proper and workmanlike manner. 13 The Magistrate then stated: "It would seem to me that there are some important issues that need to be emphasised: 1. The present Notice of Motion is based entirely on the proposition that the decision of the Costs Review Panel of the Supreme Court of NSW is wrong. This court is not in a position to make any assessment of this contention nor is it in a position to indicate any views in relation to this issue. So far as the Local Court is itself concerned with respect to its own proceedings, Part 26 r 3(1) of the Local Courts (Civil Claims) Rules 1988 provides: 'A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside, on terms, by order of the court, if the judgment was given or entered up, or the order was made, irregularly, illegally or against good faith.' 2. S.32 (3) of the Local Courts (Civil Claims) Act 1970 addresses itself to the aspect of a defendant maintaining proceedings against a plaintiff in the District Court or Supreme Court 'and that those proceedings arise out of the same circumstances as the action …' The proceedings instituted by Mr and Mrs Bruscino in the District Court essentially relate to professional negligence on the part of Carbone. That court will decide that issue. The issue of the costs determination is not the subject of litigation in the District Court as the Supreme Court has that particular jurisdiction and it has already made a determination via the original costs assessor and the Costs Review Panel. The two 'actions' are related, but in my view, the District Court proceedings do not arise out of the same circumstances as the 'action' that gave rise to the costs determination - at least within the meaning of S.32 (3)." 14 It is my view that a fair reading of the decision of the Magistrate demonstrates that he first addressed the issue of whether the judgment should be set aside and second, directed specific remarks to s 32(3) of the Act because of the plaintiffs' solicitor's reference to its import.

The second decision in the Local Court 15 Undeterred by the Magistrate's decision, on 8 April 2004 the plaintiffs filed a further notice of motion seeking a stay of proceedings together with an affidavit of Serena Sefton sworn 8 April 2004. The application to set aside judgment was no longer pursued. Once again, the solicitors, by covering letter made the same comments as referred to earlier in relation to s 32(3) of the Act. On 14 April 2004, the court advised the parties that at a hearing on that day in Chambers the court made an order that the stay was refused for the same reasons as set out in the Magistrate's file note of 5 April 2004. The hearing on 11 May 2004 was cancelled. 16 It is common ground that the operation of s 32(3) of the Act is unlike any usual stay procedure because the grant of a stay is mandatory once certain factors are established. According to the defendant, s 32(3) of the Act is a machinery provision not one intended for use inter partes. It is intended to prevent a splitting of actions and to prevent the matter being litigated in different jurisdictions. According to the defendant it is inconceivable that a stay would otherwise be compulsory, because to deprive a party of the benefits of an order of the court is a serious step, which would require judicial supervision in the form of an exercise of discretion upon application. 17 The issue is whether the Magistrate was right when he stated that the 'two' actions are related but that the District Court proceedings do not arise out of the same circumstances as the 'action' that gave rise to the costs determination. The legal work that the defendant performed on behalf of the plaintiffs in the CTTT is that which gives rise to the current District Court proceedings. 18 It is necessary to consider whether the filing of a certificate in the Local Court constituted an "action". 19 It is clear that an assessment of costs under Part 11 Division 6 of the LPA is not a proceeding in the Supreme Court - see Minerals Corporation Ltd v Anthony Norman Abbot t/as Piper Alderman Lawyers [2004] NSWSC 246 per Bell J at [12] and Ryan v Hansen t/as Hansens Solicitors [2002] NSWSC 354; 49 NSWLR 184 per Kirby J at 192 [32]. 20 The defendant submitted that the enforcement of a costs certificate is not an action. 21 The defendant submitted that there is no commencement of proceedings by way of statement claim, no pleadings or facts in issue, and there is nothing other than the filing of a certificate which constitutes a judgment, not "an action" and therefore there is nothing that the Local Court can transfer to the District Court. The defendant also submitted that the suggestion that filing of a certificate of determination "is an action" ignores the definition of an action and the prescribed rule Part 5 r 1 requires commencement of court process in the Local Court by way of either a statement or claim or an ordinary statement of claim. This submission was not put before the Magistrate. 22 "An action" is not defined in Part 3 r 1 of the Act. Section 22 of the Act provides that "An action in a Court and any proceedings ancillary to an action shall be commenced and the manner prescribed by the Rules". 23 Part 5 r 1 of the Local Court (Civil Claims) Rules 1988 (NSW) provides that: "1 Statement of claim (1) An action shall be commenced by the lodging by the plaintiff with a registrar: (a) except in the case of an action for the recovery of a debt or liquidated demand - of an ordinary statement of claim, or (b) In the case of an action for the recovery of a debt or a liquidated demand - of an ordinary statement of claim or a statement of liquidated claim." 24 In Fraser Credits Pty Ltd v Osterberg-Olsen (1978) 1 NSWLR 121 the New South Wales Court of Appeal considered whether a notice of motion was considered "an action". Like the current r 5(1) of the Local Court (Civil Claims) Rules s 52 of the District Court Act provides that a statement of claim or a statement of liquidated claim commences an action. Like s 22 of the Local Court (Civil Claims) Act, s 53(1) of the District Court Act provides that proceedings ancillary to an action be commenced in the prescribed manner. 25 In Fraser Credits the New South Wales Court of Appeal held, that as a matter of construction, the decision appealed from was not "in an action" but proceedings ancillary to an action. The court concluded that the legislature had been careful to ensure that the rights of appeal are confined to rules in the court of the hearing or in the ultimate decision, in an action properly so called and as defined - see also Martin v O'Reilly (1914) 12 SR NSW 277. 26 I would have applied the same reasoning as in Fraser Credits here except that s 208J(3) of the LPA provides that upon filing of a certificate in the office or registry of a court having jurisdiction to order payment of that amount of money, and with no further action is taken to be a judgment of the court. As s 208J(3) of the LPA refers to no further action, that presupposes that the filing of a certificate constitutes an "action". 27 Hence the filing of the certificate in the registry could arguably be considered an action. Thus the Magistrate reached the correct conclusion when he held that the District Court proceedings did not arise out of the same circumstances as the action. The action is no more than the filing of the certificate in the registry. 28 The next issue that arises is whether the Magistrate exercised his general discretion pursuant to s 32(1) of the Act. The defendant submitted that he did not need to do so because s 32(3) of the Act was the only basis put forward as giving rise to a stay. I do not think that approach is correct. The letters state that the motion's application for a stay relied principally upon s 32(3) of the Act. When matters are dealt with in chambers in the absence of either party, it is incumbent on the presiding judicial officer to properly consider the relevant legislation which would involve s 32 of the Act. 29 It is my view that the Magistrate did consider factors other than that which the District Court proceedings raised such as the correspondence to the Supreme Court and the matters raised in the affidavit in support of the motion. As he referred to that affidavit in his judgment. It is my view that the Magistrate did exercise his discretion properly in accordance with s 32(1) of the Act. 30 The appeal is dismissed. The orders of 5 and 14 April 2004 are affirmed. The amended summons is dismissed. 31 Costs are discretionary. Costs normally follow the event. The plaintiffs are to pay the defendant's costs as agreed or assessed. 32 The stay of execution of the judgment as ordered by Kirby J on 3 May 2004 is dissolved.

(2) The orders of Magistrate A A Spence dated 5 and 14 April 2004 are affirmed.

(3) The amended summons filed 21 June 2004 is dismissed.

(4) The plaintiffs are to pay the defendant's costs as agreed or assessed.

(5) The stay of execution of the judgment as ordered by Kirby J on 3 May 2004 is dissolved. **********

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