Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : DEFENDI ATF THE DEFENDI FAMILY TRUST -v- EDEN HILL PLASTERERS [2008] WADC 70

Application to strike out appeal - Whether likely costs of the appeal to parties would be disproportionate to the amount of the claim in or the nature of the case the subject of the appeal - Section 43(3) Magistrates Court (Civil Proceedings) Act 2005 (WA) - Principles to be applied

Supreme Court Act 1935 (WA), s 58(1)(i)

Magistrates Court (Civil Proceedings) Act 2004 (WA), s 40, s 43(3)

Supreme Court (Fees) Regulations 2002 (WA), div 2 sch 1

1 MARTIN CJ: I agree with Miller JA that this application should be dismissed, for the reasons which he gives. However, I desire to add a few observations of my own.

2 The respondent asks the court to strike out the appeal pursuant to s 43(3) of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (the Act). The range of factors which can be considered by an appellate court under this provision are much more constrained than would be the case if, for example, the court were considering the grant of leave to appeal. Under the current legislative arrangements (s 42 of the Act), no leave is required to appeal to this court from a decision of the District Court dealing with an appeal from the Magistrates Court in a case which is not a 'minor case' (as defined) in the Act. Under s 43(3) the only matter which can be taken into account by the appellate court is the proportion between the likely costs of the appeal to the parties and the amount of the claim or the nature of the case.

3 As Miller JA points out, there is nothing unusual about the nature of this case. The evidence suggests that the likely costs of appeal to the parties will be within the ordinary range which one would expect for an appeal to this court. As the amount of the claim slightly exceeds the current jurisdiction of the Magistrates Court, if the likely costs to the parties to this appeal were held to be disproportionate to the amount of the claim, it would mean that virtually every appeal to this court would be dismissed under s 43(3) of the Act. It seems unlikely that this was the intention of the legislature at the time it provided the right of appeal from the District Court to this court.

4 No doubt the grievance of the respondent, which motivated it to make this application, has been exacerbated by the course of the proceedings to date, and the legal costs which it has been required to pay to date. However, those are not matters which can be taken into account under s 43(3) of the Act. Those costs are sunk or historic costs, whereas s 43(3) of the Act is concerned only with the costs of the appeal.

5 Nevertheless, it should be noted by all civil courts in the curial hierarchy of this state that in s 43(3) of the Act, the legislature has embraced the notion of proportionality. The judges of the Supreme Court have embraced the same notion in their conduct of the civil business of the court, including in particular the interlocutory processes of the court.

6 On the face of it, the conduct of a trial in the Magistrates Court over 11 hearing days when the amount in issue was a little over $50,000

offends this principle. The justice system is brought into disrepute, and can, itself, become the source of injustice, if courts permit civil litigation to be conducted in such a way that the costs incurred by each of the parties, and the public resources of the court consumed by the case are disproportionate to the amount in issue.

7 The principle of proportionality should be borne steadfastly in mind by all the civil courts of the state. The powers available to those courts, under the various Rules of Court, construed by reference to the principle that Rules of Court are to be interpreted and administered in such a way as to enable a court to administer justice, and not in such a way as might result in the court becoming an instrument of injustice (in the context of the Magistrates Court, this is specifically required by s 13(1) of the Act), are quite sufficient to enable the principle of proportionality to be observed. The days when a party could occupy as much as time at trial as it wished, by calling as many witnesses as it wished, and cross-examining as long as it wished, are gone. The courts will and must take control of the pre-trial and trial processes to ensure that each case before the court is resolved as quickly, efficiently and inexpensively as is consistent with the interests of justice in that case.

8 However, in this case, looking only to the future, it cannot be said that the likely costs to the parties to the appeal are disproportionate to the amount or nature of the claim, and the application to strike out the appeal must therefore be refused.

9 McLURE JA: I agree that the respondent's application to strike out the appeal pursuant to s 43(3) of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (the Act) should be dismissed. The facts and relevant statutory background are set out in the reasons of Miller JA.

10 The appellant's grounds of appeal do not clearly or succinctly identify the precise questions of fact or law that are the subject of challenge in the appeal to this court. The densely argued written submissions do little to advance the position. However, on my reading of the material the appellant, in addition to challenging findings of fact, also seeks to raise a procedural fairness issue concerning a finding of a contractual variation said to be neither pleaded nor litigated. However, it is unnecessary for the determination of this application to attempt to winkle out and characterise the nature of the issues the appellant intends to raise.

11 The appellant had a right of appeal to the District Court from the decision of the Magistrates Court on his counter-claim which was in excess of the then jurisdiction of the Magistrates Court (s 40 of the Act). The appellant also has a right of appeal to this court against the District Court's judgment on the appeal (s 42 of the Act).

12 However, s 43 of the Act gives this court the power to summarily dismiss an appeal. Section 43 relevantly provides:

(1) ...

(2) ...

(3) The appeal court may strike out the appeal if the likely costs of the appeal to the parties would be disproportionate to the amount of the claim in, or the nature, the case which is the subject of the appeal.

(4) The appeal court may strike out any ground of the appeal if -

(a) there is no reasonable basis for it;

(b) it does not have a reasonable prospect of succeeding;

(c) although it has a reasonable prospect of succeeding, no miscarriage of justice would occur by striking it out; or

(d) it is frivolous, vexatious, scandalous or improper.

(5) The appeal court may make an order under subsection (3) or (4) on its own initiative.

(6) If the appeal court strikes out all of the grounds of the appeal the court may give judgment accordingly without a full hearing of it.

13 Subsection (3) of s 43 has two limbs. The court's power is enlivened if the likely costs of the appeal to the parties would be disproportionate to (1) the amount of the claim in the case which is the subject of the appeal or (2) the nature of the case which is the subject of the appeal.

14 The only relevant costs are the costs of the appeal to this court. The costs incurred at first instance and in the appeal to the District Court are irrelevant. Further, the focus is on the actual costs each party is likely to incur. Ordinarily, those costs will be the legal costs payable to their respective legal representatives.

15 The term disproportionate means out of proportion. That is a question of degree and may involve cases where it is difficult to draw the line. This is not a borderline case. The total estimated likely costs of the

appeal to the parties is in the order of $20,000 which cannot be characterised as disproportionate to the amount of the claim in issue being a net amount of $52,678.

16 The court may also strike out the appeal if the likely costs of the appeal to the parties would be disproportionate to 'the nature of the case'. That expression does not relate to the strength or merits of the appeal. Subsection (4) of s 43 applies to those cases where there is little or no legal merit in the appeal. On my reading of the statutory language and purpose, s 43(3) requires a comparison between the costs of the appeal and the maximum return or benefit from the litigation. In its context 'the nature of the case' is intended to cover claims for non-monetary relief such as, for example, the return of personal property which may be of limited value (see s 6(1)(d) of the Act). Thus, the second limb has no application to this case.

17 MILLER JA: By application dated 27 August 2008, the respondent in this appeal made application to strike out the appeal. The application is made pursuant to s 43(3) of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (the Act).

18 The appeal to this court comes from the District Court. The District Court, in turn, heard an appeal from the Magistrates Court.

19 Part 7 of the Act deals with appeals. Section 40 provides for an appeal from the Magistrates Court to the District Court. It is in the following terms:

1. Appeal from Magistrates Court to District Court

(1) A party to a case that is not a minor case may appeal to the District Court against -

(a) any order made by the Magistrates Court in the course of proceedings in the case; or

(b) the judgment of the Magistrates Court in the case.

20 The present case is not a 'minor case', the definition of which provides that there is a jurisdictional limit of $7,500, with an increase on or after 1 January 2009 to $10,000.

21 Section 42 of the Act provides for an appeal from a decision of the District Court to the Court of Appeal. It is in the following terms:

1. Appeal from District Court to Court of Appeal

(1) A party to an appeal made to the District Court under section 40 may appeal to the Court of Appeal against the District Court's judgment on the appeal.

(2) The appeal must -

(a) be commenced within 21 days after the date of the District Court's judgment; and

(b) be conducted in accordance with rules of court made by the Supreme Court.

(3) The Court of Appeal must decide the appeal on -

(a) the material and evidence that were before the Magistrates Court;

(b) the material that was before the District Court and any other evidence that the District Court admitted; and

(c) any other evidence that the Court of Appeal gives leave to be admitted.

22 The jurisdiction of the Court of Appeal to hear appeals under s 42 of the Act is also contained in s 58(1)(i) of the Supreme Court Act 1935 (WA).

23 Section 43 of the Act sets out the powers of the Court of Appeal on the hearing of an appeal under s 42. Relevantly to this appeal, it provides:

(1) ...

(2) ...

(3) The appeal court may strike out the appeal if the likely costs of the appeal to the parties would be disproportionate to the amount of the claim in, or the nature of, the case which is the subject of the appeal.

(4) ...

(5) ...

(6) If the appeal court strikes out all of the grounds of the appeal the court may give judgment accordingly without a full hearing of it.

(7) ...

24 The Magistrates Court (Civil Proceedings) Bill 2003 (WA) was introduced into the Legislative Assembly on 4 December 2003. In the second reading speech, the Attorney General, Mr J A McGinty stated that the Bill was part of a package of legislation to significantly improve the efficiency and effectiveness of Western Australia's court system (Parliamentary Debates, Legislative Assembly, 4 December 2003, 14,277). The Bill was said to implement a number of recommendations from the Western Australian Law Reform Commission contained within its report Review of the Criminal and Civil Justice System in Western Australia (1999).

25 The second reading speech of the Attorney General makes it clear that the intention of the Bill was to amalgamate a number of jurisdictional and procedural provisions which were contained in the Local Courts Act 1904 (WA) and Small Claims Tribunal Act 1974 (WA). In addition, it was to 'enable modern court processes and procedures to be used by the new Magistrates Court (Hansard 14,277). The Bill was also designed to give 'a more accessible justice process that works better for all individuals and small businesses, especially those who require assistance from the court' (Hansard 14,278).

26 The second reading speech says nothing about the system of appeals contained within pt 7 of the Act. The only observation about appeals is as follows:

More generally the new procedures will reduce the number of cases that need to go to trial and the number of unsuccessful appeals to the District Court.

27 These proceedings began in the Magistrates Court (then the Local Court) by action 6730 of 2002. The respondent was the claimant against the appellant for the sum of $5,306.40, being moneys claimed by the respondent against the appellant pursuant to an agreement made in 2001. Under that agreement, the respondent undertook to do certain work for the appellant by plastering walls and hardiboards of the residence of the appellant at 965 Brooking Road, Hovea. The plastering was to be done with a product called 'Monorustic'. This had been imported from Italy.

28 The respondent's claim for $5,136.40 was met with a defence and counterclaim in which the appellant claimed $56,783.63 as the cost of repair of alleged defective plastering work performed by the respondent and for reimbursement of the cost of the Monorustic product. The defence was later amended to admit that the appellant owed the respondent $5,136.40, with the result that the counterclaim was one for $52,678.67.

29 The jurisdictional limit of the Magistrates Court is $50,000, and, on or after 1 January 2009, it will be $75,000 (s 4 of the Act). A counterclaim for an amount in excess of the jurisdictional limit is not outside the Magistrates Court's civil jurisdiction by reason of the fact that it is or includes two or more claims for an amount of money, each of which could be the subject of a separate claim within that jurisdiction, but the total of which is more than the jurisdictional limit: s 9(3) of the Act. It appears that this was such a case.

30 The action in the Magistrates Court came on for hearing before Magistrate Cockram in the Magistrates Court at Perth. It was heard between 21 - 24 November 2005 and 20 - 27 March 2006. There had then been 12 days of hearing. While some of these days were not full sitting days, it is, nevertheless, difficult to understand how the case took that amount of time. The case involved only a simple issue which should have been resolved well inside that time frame.

31 The magistrate delivered judgment on 30 March 2006. He gave judgment for the respondent against the respondent in the sum of $5,136.40. The counterclaim of the appellant was dismissed. An order was made that the appellant should pay the respondent's costs of the proceedings in relation to both the claim and counterclaim.

32 The magistrate's reasons were substantial. They are contained in a document of some 35 pages and they review in detail the evidence given for and on behalf of both parties.

33 From the Magistrates Court, the appellant appealed to the District Court. The appeal was heard by Commissioner Herron on 7 May 2008. Judgment was delivered on 19 May 2008 (Defendi atf the Defendi Family Trust v Eden Hill Plasterers [2008] WADC 70) and the appeal was dismissed. The judgment of the commissioner was some 15 pages in length and it contained a review of the decision of the magistrate and conclusions on the four grounds of appeal which were before the District Court.

34 The reasons of the commissioner point out that the claim and counterclaim in the Magistrates Court went beyond the pleadings. The commissioner said that the appellant's claim was based on the proposition that he was to be closely involved in the way in which the respondent was to perform the plastering work and apply the Monorustic at the residence [10]. This was pleaded in par 5(g) of the appellant's counterclaim. The main issue in the proceedings was described by the commissioner in the following terms at [13]:

Therefore, in determining whether there was a breach of the agreement between the parties the main issue was, or at least became, what instructions were given by the appellant, or on behalf of the appellant through Mr Fiore, to Mr Mercuri on behalf of the respondent and did the respondent fail to follow or comply with those instructions.

35 The magistrate's conclusions on this issue were summarised by the commissioner at [24] as follows:

The learned Magistrate appears to have approached his determination of the issues between the parties on the basis that because the appellant alleged it was a term of the contract that the respondent had to follow the instructions of the appellant the appellant bore the onus of proof of establishing what those instructions were. Where there was a conflict of evidence between the appellant's witnesses and the respondent's witnesses the learned Magistrate has generally preferred the evidence of the respondent's witnesses, having made adverse credibility findings against the appellant and finding that Mr Fiore, in relation to the issue of what instructions were given regarding the correct mix of Monorustic and water, was unable to recall whether anything was said.

36 There were four grounds of appeal to the District Court. It is unnecessary to deal with them or the determination of them, other than to say that the commissioner concluded (at [38]) that it was open to him to reach the conclusion that the appellant's supervisor, Mr Fiore, had given instructions to the respondent to add extra water to the Monorustic product and that this, in turn, had caused the problems which had arisen in the house. The commissioner was able to reach this conclusion because there was no conflict in the evidence on the issue. The only evidence relating to it was that given by Mr Mercuri and his employee, Mr Mullumby. Mr Defendi said that he was not present when Monorustic was mixed and he was not often present at the site. He gave no evidence as to what instructions may have been given. Mr Fiore gave evidence that he was present on the site each day. He had no recollection of with Mr Mercuri or Mr Mullumby raising the issue of problems they were experiencing with the Monorustic mixture. Both Mr Mercuri and Mr Mullumby said that they had discussed the matter with Mr Fiore, and it had been agreed by everybody that water should be added to the product. The commissioner concluded at [40]:

Given the evidence is all one way the only finding the learned Magistrate could have made was that Mr Fiore did vary the original instruction.

37 The grounds of appeal to this court contest the commissioner's conclusions. They are seven in number and, in brief summary, they can be stated as follows:

(1) The commissioner erred in concluding that the magistrate had failed to make the necessary determinations on the issues, with the consequence that he ought to have remitted the matter to the magistrate to make those determinations.

(2) In the alternative, the commissioner erred in failing to uphold the appellant's contention that the parties had agreed that the respondent would obey the manufacturer's instructions as to the mixing of Monorustic.

(3) Alternatively, the commissioner erred in failing to uphold the appellant's contention that the respondent's obligation to obey Mr Fiore's instructions were subject to his overriding obligation to obey the manufacturer's.

(4) Alternatively, the commissioner erred in 'stepping outside the bounds of the dispute he was hearing and/or denied the parties procedural fairness' in making certain findings of fact when those facts had not been pleaded, the magistrate had not made findings in relation to them, the commissioner had not been asked to make any such findings, and the commissioner had not disclosed that he might make such findings.

(5) Alternatively, the commissioner erred in making the findings of fact he did, when the magistrate had not made any findings of fact on the relevant issue, there was a conflict in evidence on the issue, and the commissioner had not had the opportunity of seeing and hearing relevant witnesses to enable him to make such findings.

(6) The commissioner erred in failing to hold that the magistrate had erred in failing to find that the respondent had breached the contract between the parties by using more water than the manufacturer's had indicated were to be used.

(7) The commissioner erred in failing to hold that the magistrate had erred in failing to find that the respondent's breach of contract was the cause of the appellant's loss, the subject of the counterclaim.

38 The appellant's case contains some 70 paragraphs of submissions in which detailed criticism is made of the conclusions reached by the commissioner. They require this court to make a close analysis of the evidence in the Magistrates Court, the reasons for judgment of the magistrate and the reasons for judgment of the commissioner in the District Court. What was, in essence, a simple credibility issue has turned into a complex appeal.

39 The Court of Appeal may strike out an appeal if the likely costs of the appeal to the parties would be disproportionate to the amount of the claim in, or the nature of, the case which is the subject of the appeal.

40 The first inquiry relates to the 'likely costs of the appeal to the parties'. The section focuses on the costs of the appeal to the parties, not on the costs which have been incurred in the past. It does not refer to the 'taxed costs', but to costs generally.

41 Court of Appeal costs are governed by the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008. The scale of fees is contained in div 2 of sch 1 to the Supreme Court (Fees) Regulations 2002 (WA). By cl 3(2), the Determination does not apply to the remuneration of practitioners based on a written agreement as to costs under the Legal Practice Act 2003 (WA), or any successor legislation. By cl 3(3), the Determination does not apply to the remuneration of practitioners based on costs incurred before 1 July 2008.

42 The grounds of appeal and the submissions in support of those grounds were filed on 14 July 2008 and, for practical purposes, the 2008 Determination is therefore applicable. Item 22 on the table annexed to the Determination provides for the following relevant costs. The figures shown are maximum amounts:

(a) Appeal Notice, Service Certificate, Notice of Respondent's Intention

(b) Appellant's Case, Respondent's Answer including relevant forms and all annexures

(d) Settling appeal book indexes (including preparation)

(l) Attending on reserved decision (including preparation, consideration of reasons for decision and all necessary work and attendances to obtain final orders)

43 Mr Mercuri, a joint partner in the business of Eden Hill Plasterers, has testified that the respondent's costs of the appeal would be of the order of $10,000. We were informed at the hearing of the appeal that this figure includes both solicitor and counsel work. The total costs for both parties would therefore appear to be approximately $20,000. This figure bears a reasonable relationship to the likely costs calculated pursuant to the 2008 Determination. The case is not one of any complexity.

44 The nature of the case which is the subject of the appeal is what may conveniently be termed a building dispute. What is in issue is whether the commissioner erred in his determination that the appeal from the Magistrates Court should be dismissed. The case turns on an assessment of the evidence of the respective witnesses called in the Magistrates Court, in relation to which the magistrate made firm findings on the issue of credibility.

45 The Court of Appeal will, however, be required to conduct a detailed review of the trial in the Magistrates Court and a review of the commissioner's judgment. The principles to be applied are those set out by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [25].

Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in many cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of 'weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect'. (Footnotes omitted).

46 The comprehensive judgments of the magistrate and of the commissioner indicate that there is a substantial body of evidence which the Court of Appeal would be required to consider on the hearing of this appeal. The District Court appeal book comprised 579 pages of documents, including the relevant passage of transcript and various documents and reports. The submissions which have been filed on behalf of the appellant and the responding submissions are detailed and comprehensive. However, in its essence, the nature of the case which is the subject of the appeal is a basic building dispute. The relevant issue is whether the respondent properly applied the Monorustic product at the residence of the appellant. This includes the question whether the Monorustic product was properly mixed, whether instructions from the manufacturer were followed, whether those instructions were varied on specific instruction from the appellant's building supervisor, and whether the job completed by the respondent was acceptable.

47 The Act provides the appellant with a right of appeal to the Court of Appeal against the District Court judgment (s 42(1)). However, s 43(3) is a provision which is based on the concept of proportionality. Section 43(3) provides that the court may strike out the appeal if the likely costs of the appeal to the parties would be disproportionate (my emphasis) to the amount of the claim in, or the nature of, the case which is the subject of the appeal.

48 The concept of proportionality was articulated by the Right Hon Lord Woolf MR: Access to Justice: Final Report to the Lord Chancellor on the civil justice system in England and Wales (Department of Constitutional Affairs, UK: July 1996). At [19], Lord Woolf said:

My proposals for proportionality for the system of civil justice overall are underpinned by Rule 1 of the new rules which requires the court to deal with cases in ways proportionate to the amount involved, the importance or complexity of the issues, and the parties' financial position. Proportionality underlies the whole concept of the fast track.

49 Section 43(3) is not concerned with proportionality in the sense of case management and the resources of the court: (cf Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 per Martin CJ at [59]. The section is concerned only with the resources of the parties.

50 It cannot be said that costs of the appeal to the parties amounting to approximately $20,000 would be disproportionate to the amount of the claim in the appeal. The amount of the claim is just in excess of the Magistrates Court's jurisdictional limit. To suggest that combined costs to the parties of $20,000 would be disproportionate to the amount of the claim in the appeal would mean that in almost every case which came from the Magistrates Court the costs to the parties of the appeal would be disproportionate to the amount of the claim in the appeal. Clearly, s 43(3) was not aimed at precluding appeals generally in such cases. In my opinion, the first limb s 43(3) is aimed at a case in which the amount of the claim in the appeal is in a small amount and is outweighed by the likely costs to the parties of the appeal. This is not such a case.

51 The second limb of s 43(3) refers to the nature of the case which is the subject of the appeal. If the likely costs of the appeal to the parties is disproportionate to the nature of the case, the Court of Appeal may strike out the appeal.

52 The nature of the case here is a building dispute. I have already identified the issue, which is a simple one. The evidence relating to that issue was far from simple. Many witnesses were called, including expert witnesses whose testimony was relevant to various aspects of the appellant's counterclaim.

53 It cannot be the case that s 43(3) is to be read as meaning that if the nature of the case is a simple dispute and if the likely costs of the appeal would be disproportionate to it, the court should strike out the appeal. If this were so, many appeals originating from the Magistrates Court could never be heard. Neither can the second limb of the section mean that, unless there is a point of law of general application, the nature of the case is such that where the likely costs of the appeal to the parties would be disproportionate, it should be struck out. Many cases on appeal from the Magistrates Court (via the District Court) will be cases in which there is no point of law of general application. The majority of the cases are likely to be fact-specific. The section would appear to be aimed at appeals in which the nature of the case is such that it involves a minor issue that does not justify consideration by the Court of Appeal.

54 For these reasons, I am of the opinion that the respondent's application to strike out the appeal should be dismissed.