Cancian Nominees Pty Ltd v Dib Group Pty Ltd

Grounds 1-4 of the Summons

1. Grounds 1 to 4 of Cancian's summons state as follows: "1 The Learned Magistrate erred on a question of law in deciding the matter, pursuant to the direction of his Honour Beech-Jones J made on 10 December 2013 in [49] of his Honour's judgment in [2013] NSWSC 1878 (the Direction), on the basis that Dib had established its ownership and right to possession of the relevant property upon the termination of the 2010 (sic) in that the Direction itself was made under an error of law. 2. The Direction was erroneous in that it failed to take into account that in relation to the 4 fuel pumps, the most valuable items under the claim for conversion, the Learned Magistrate had made the factual finding, not challenged on or set aside on appeal, that such items were the property of Cancian as they had replaced older pumps owned by Cancian under Dib's obligation under the 2003 lease to repair. In the absence of any transfer of ownership of those pumps from Cancian to Dib, the Direction was wrong. 3. The Direction was subject to a further error in law in that a the determination of the ownership of the relevant property required an examination of whether any of the agreements, properly construed, conveyed an intention to transfer title to any party and, if so, whether effect was given to such an intention. The determination of the ownership of the relevant property was not resolved, as it was by reason of the Direction, by acknowledgments by any of the parties as to the title to such property, whether in contractual documents or otherwise, save to the extent that such acknowledgments might constitute evidence, by way of admissions, relevant to an enquiry into the facts giving rise to a conclusion of law as to title. 4. The Direction was founded on the erroneous conclusion of law that Dib had established ownership of the relevant property upon the termination of the 2010 (sic 2003) lease because of the description of such property as being the property of Dib in an agreement between the Cancian and a third party and in the absence of any finding, or basis for finding, that the effect of such a description was to transfer ownership of such property from Cancian to Dib." (emphasis added)
2. The reference to "2010(sic)" in ground 1 of this summons is puzzling in that [49] of the judgment in Dib (No 1) refers correctly to the "2010 lease". Thus, that part of Dib (No 1) referred to in ground 1 did not need any assistance from the drafter of the summons in having its grammar corrected.
3. Counsel for Dib on this application, Mr Moore, intended that each of these grounds expressly contends that the judgment in Dib (No 1) was wrong and seeks to controvert the direction which was binding on the Local Court that required it to determine the matter in a manner consistent with Dib (No 1). He submitted that these grounds seek to relitigate that which was determined by Dib (No 1) and thus are, in effect, an abuse of process.
4. In D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1 ("D'Orta") at [34]-[35] Gleeson CJ, Gummow, Hayne and Heydon JJ stated as follows: "A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances. That tenet finds reflection in the restriction on the reopening of final orders after entry and in the rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud. The tenet also finds reflection in the doctrines of res judicata and issue estoppel. Those doctrines prevent a party to a proceeding raising, in a new proceeding against the party to the original proceeding, a cause of action or issue that was finally decided in the original proceeding. It is a tenet that underpins the extension of principles of preclusion to some circumstances where the issue raised in the later proceeding could have been raised in an earlier proceeding. The principal qualification to the general principle that controversies, once quelled, may not be reopened is provided by the appellate system. But even there, the importance of finality pervades the law."
5. These principles apply with full force to the above circumstances. There arose out of the first Local Court judgment a legal controversy as to whether that judgment was affected by the errors of law alleged by Dib. That controversy was quelled by Dib (No 1). In quelling that legal controversy this Court directed the Local Court to rehear the matter in accordance with a direction that respected the findings in Dib (No 1) on matters of law, including the proper construction of the relevant agreements.
6. The relevant exception to the tenet of finality discussed in D'Orta concerning the judgment in Dib (No 1) was the system of appeals, specifically the potential for either party to apply for leave to appeal to the Court of Appeal. It was open to Cancian to seek leave to appeal against either the orders setting aside the first local judgment, or just the order directing the matter be remitted in accordance with this Court's judgment. However, Cancian did not invoke the appellate system. To the contrary, it did nothing but act consistently with the outcome in Dib (No 1) by not appealing and instead participating in the proceedings when they were reheard in the Local Court.
7. Counsel for Cancian, Mr Cook, sought to start his submissions by indicating those parts of Dib (No 1) which his client contends were wrongly decided. However, the conduct of such an inquiry is what is expressly excluded by the principles in D'Orta noted above. The relevant principles concern res judicata. It is those principles which give effect to the tenet of finality in this case. Those principles preclude the litigation of "the same question, even though the decision may be wrong" (Crown Estate Commissioners v Dorset County Council [1990] Ch 297, 305 per Millett J).
8. Mr Cook also submitted that the course his client seeks to take in re-agitating Dib (No 1) and the direction pursuant to grounds 1 to 4 of the summons is consistent with the approach that was adopted by McCallum J in Klesteel Pty Ltd v Mantzouranis [2008] NSWSC 194 ("Klesteel No 2"). Klesteel No 2 upheld an appeal in the Local Court judgment that had been entered following an earlier remittal from a judgment of Harrison AsJ in Klesteel v Mantzouranis [2006] NSWSC 915 ("Klesteel No 1"). In doing so McCallum J expressed disagreement with a statement by Harrison AsJ that a particular finding was open to the magistrate who had decided the matter in the first place. In Klesteel No 2 at [33] McCallum J also stated: "33. In my view the second decision of the Magistrate was erroneous in point of law in that her Honour failed to apply the correct test. For the reasons explained above, her Honour approached the matter upon remittal on the basis that she had already decided that Mr Mercado's driving for private purposes was within the course of employment. That approach was consistent with a statement made in the reasons of the Associate Justice but it was the wrong approach. Her Honour should have applied the test whether the act of driving on the occasion of the accident was so closely connected with Mr Mercado's duties of employment as to be in the course of employment or whether it was done in the intended or ostensible performance of his employment contract."
9. Later in Klesteel No 2 at [36] McCallum J rejected a contention that Harrison AsJ had upheld a finding of fact made by the magistrate who decided the matter at first instance. "36. In my view, the proposition that this Court upheld a finding of fact in the first appeal is misconceived. In the first instance, it is no part of the Court's function in an appeal under s 73 of the Local Courts Act to uphold findings of fact. The task for this Court in an appeal under s 73 is to decide whether or not the decision was erroneous in law. In doing so, the Court neither disturbs nor upholds findings of fact. The result of the first appeal was that the judgment appealed from was set aside. The matter was remitted to be decided again, on the facts as found."
10. These passages from the judgment of McCallum J in Klesteel No 2 are consistent with the position that the scope and subject matter of an appeal from the Local Court to this Court are confined to questions of law unless a grant of leave is given (Local Court Act s 39(1)) and that not all questions of fact determined by the Local Court are the subject and scope of any such appeal.
11. Thus, in Klesteel No 2 McCallum J did not contradict any finding on a question of law made by Harrison AsJ in Klesteel No 1, but instead expressed disagreement with an observation made by Harrison AsJ concerning a factual finding that had been made by the magistrate who first determined the matter. In Klesteel No 2 McCallum J confirmed that the factual finding had not been "upheld". It follows that considerations of finality were not engaged by that aspect of Harrison AsJ's judgment. However, in this case, in Dib (No 1) I determined a matter of law concerning the construction of the relevant agreements and that finding of law was embodied by the direction that was given to the Local Court. No equivalent direction was given in Klesteel No 1. The fundamental tenet of finality as embodied by the principles respecting res judicata apply with full force to that finding of law and to the direction.
12. In the event that the Court was minded to strike out grounds 1 to 4 of the summons, Mr Cook sought a stay of that order pending his client making an application for leave to appeal to the Court of Appeal against the judgment in Dib (No 1) and an extension of time in which to make the application.
13. It is over 19 months since the publication of judgment in Dib (No 1). In the meantime Cancian has acquiesced in the redetermination of the matter by the Local Court on the basis that Dib (No 1) was correctly decided. To stay a strikeout order on the basis sought by Mr Cook would in effect be to grant a stay of the orders made in Dib (No 1). The length of the delay and the conduct of Cancian in the meantime tells decisively against the granting of any such stay. There is simply no proper reason why Dib should not be able to continue to defend the proceedings on the basis that the judgment in Dib (No 1) quelled the controversy that was raised by its appeal concerning errors of law in the first Local Court judgment.
14. It follows that grounds 1 to 4 of the summons are untenable and will be stuck out.

Grounds 5 to 8 of the Summons

1. Grounds 5 to 8 of the summons provide as follows "5 The Learned Magistrate erred on a question of law in considering himself bound to find that by reason of the Direction that Cancian had converted the relevant property. 6 The Learned Magistrate erred on a question of law in not considering whether (and finding in fact that), despite the Direction, by reason of subclause 34(3)(e) of the 2003 lease and the failure of Dib to remove the property, Cancian had again become the owner of the property at the time of the alleged conversion. 7 Accordingly, the Learned Magistrate erred on a question of law in failing to find that Dib had not established an immediate right to possession of the relevant property the subject of the claim for conversion by reason of its ownership of such property. 8 The Learned Magistrate erred on a question of law in considering himself bound to find that the supporting structure for the price board was not a fixture by reason of the orders of Beech-Jones J and in failing to determine the matter afresh on the evidence (including the evidence of Mr Makhlouf and Mr Dib) on this issue."
2. Mr Moore contended that these grounds were affected by the same problem as grounds 1 to 4, that is they in effect sought to submit that Dib (No 1), including the Direction, was wrong.
3. Mr Cook explained that grounds 5 to 8 were not disputing the correctness of Dib (No 1) and the direction. Instead he submitted they raised matters which it is contended the presiding magistrate should have addressed when the proceedings were remitted, even though his Honour was bound by the direction. Mr Cook further explained that grounds 5 to 7 related to both Dib's conversion claim and Cancian's conversion claim. He explained that ground 8 related to Cancian's conversion claim only.
4. In response to the submissions Mr Moore submitted that, even if these grounds were not seeking to re-agitate the correctness of Dib (No 1) including the direction, they were nevertheless untenable in light of the narrow issues that were agitated when the matter returned to the Local Court.
5. Even if one accepts that grounds 5 to 7 do not implicitly contend that either Dib (No 1) or the direction that was given was relevantly wrong, then insofar as they relate to Dib's conversion claim they are untenable. The only issue that Cancian raised in relation to Dib's conversion claim once the matter was remitted concerned the quantum of that claim. His Honour addressed the issues that were raised by Cancian on that question and no complaint is made about the manner in which his Honour did so.
6. Insofar as grounds 5 to 8 concern Cancian's conversion claim the position is arguably different. In Dib (No 1) at [49] I explained that the direction required the determination of that claim "in a manner consistent with the construction of the various agreements enunciated in this judgment". The direction did not preclude, for example, Cancian attempting to adduce evidence of any actual damage that had been occasioned by the removal of the price board and supporting structure. Even though Cancian did not in fact do that, I accept that there is some scope for argument that Cancian can agitate grounds concerning the rejection of its conversion claim in a manner consistent with an acceptance of the correction of Dib (No 1) and the direction.
7. The end result is that grounds 5 to 7 will be struck out but Cancian will be granted leave to re-plead those grounds confined to the rejection of its conversion claim. Ground 8 will survive. It appears to raise an arguable ground as to what was required by the direction.

Grounds 9 to 11 of the Summons

1. Grounds 9 and 10 concern the dismissal of Cancian's conversion claim. They are tenable for the reasons just noted. Ground 11 contains an overall allegation that the presiding magistrate erred in not dismissing Dib's claim for conversion and upholding Cancian's conversion claim. As there are no substantive grounds remaining that challenge the upholding of Dib's conversion claim, this ground will be struck out with liberty to re-plead confined to Cancian's conversion claim.

Orders

1. As some parts of the summons survive the motion, it follows that I will refuse the application for summary judgment. Accordingly, the orders of the Court are as follows: 1. Grounds 1 to 7 and 11 of the plaintiff's summons be struck out. 2. The plaintiff be granted leave to re-plead grounds 5 to 7 and 11, but only insofar as they relate to the dismissal of the plaintiff's cross-claim in the Local Court. 3. The defendant's notice of motion filed 25 February 2015 be otherwise dismissed. 4. The proceedings be stood over for further directions before a Registrar on 21 August 2015 at 9:00am. [Counsel addressed on costs.]
2. Mr Moore has sought an order for costs that reflects two considerations. First, in respect of so much of the application as concerns grounds 1 and 4, he points to his client's success and says that in light of the basis upon which his client was successful, costs should be awarded on an indemnity basis. Second, he points to his client's success in respect of grounds 5 to 7 and 11. Mr Cook submitted that, on a true reflection of the relative gains and losses, the matter was evenly balanced and costs should be costs in the cause. However, underlying all this was a question of principle and what I consider to be a reasonably egregious breach of the principles respecting the finality of litigation. The defendant was, in my view, almost obligated to bring this application lest there be any suggestion that it would be put to the inconvenience of having to re-litigate the success it already achieved in Dib (No 1).
3. In my view, even though some of the grounds of the summons will survive, on the real question of principle that was debated, the defendant was successful and was successful in respect of a matter of considerable importance.
4. Had the matter been confined to grounds 1 to 4, I would have had no hesitation in ordering costs on an indemnity basis. However, given the limited success of the plaintiff concerning the balance of the summons, I think the respective positions are best balanced by not making any costs order referable to an indemnity basis, but instead awarding the defendant a reasonably high percentage of the costs of the motion.
5. Accordingly, the Court orders that: 1. The plaintiff pay seventy per cent of the defendant's costs of its notice of motion on the ordinary basis.

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 August 2015