Elzamtar v Bangladesh Islamic Centre of NSW Inc

Whether proceedings could have been commenced in the District Court

1. Initially counsel for Mr Elzamtar argued that the ordinary practice established by sub-r (2) could not apply at all. Counsel pointed out that the proceedings had actually been commenced in the District Court. Counsel argued that the rule was directed to proceedings which were commenced in the Supreme Court. On counsel's argument, proceedings commenced in the District Court were not caught by the language of sub-r (2) and fell outside it.
2. The Civil Procedure Act 2005 (NSW), s 143, however, provides that where proceedings are transferred to this Court they are thereafter deemed to have been commenced in this Court on the date on which they were commenced in the District Court and the statement of claim in the District Court is deemed to have been the originating process. When this was pointed out, counsel for Mr Elzamtar did not press his argument that the rule does not apply to transferred proceedings.
3. Sub-rule 2(a) begins with the words "for proceedings that could have been commenced in the District Court". Grammatically, the effect is to introduce a further requirement, in addition to the requirement that the commencement and continuation of the proceedings in the Supreme Court was warranted, before the ordinary practice in the chapeau of sub-r (2) can operate. Thus in StockCo Agricapital Pty Ltd v Dairy Livestock Services Pty Ltd (No 2) [2020] NSWSC 636, I assumed that the sub-r (2) practice could not apply where the proceedings in question could not have been commenced in the District Court (because of a jurisdictional problem which existed at the time of commencement) even though the problem was later rectified and the proceedings could have been continued in the District Court.
4. The additional words were introduced into the rule in 2016. Prior to the amendment, sub-r (2) provided: An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted.
5. The introduction of a new condition restricting the operation of sub-r (2) may have been unintentional. The explanatory note which accompanied the amendment only referred to the need to accommodate changes to the jurisdiction of this Court and the Local Court as a consequence of the abolition of the Industrial Court. That was referred to in the new sub-para (b); the words "for proceedings that could have been commenced in the District Court" in sub-para (a) might have been intended only to refer in a general way to proceedings in the Court other than proceedings under the new industrial jurisdiction.
6. Most of the authorities to which I was referred for the purposes of the argument pre-date the amendment and none of them discuss the effect of the introduced words. That issue was not debated in StockCo either. But the fact is that the words are there and the presumption is that they were introduced for a reason.
7. I will therefore proceed on the assumption (as I did in StockCo) that the words do have their apparent grammatical effect.
8. As already stated, Mr Elzamtar's equitable claims failed. All of the relief which he ultimately obtained could have been obtained in an ordinary action by way of debt or restitution in the District Court. The question is whether, in those circumstances, the proceedings were "proceedings could have been commenced" in the District Court and the ordinary practice prescribed by sub-r (2) applies.
9. The District Court has an equitable jurisdiction, albeit that it is a limited one. That jurisdiction includes the jurisdiction to grant equitable monetary relief, and the form of a judgment or order for the payment of a sum of money, up to $750,000: District Court Act 1973 (NSW), s 4(1). It might have been argued that the equitable relief sought by Mr Elzamtar could have been framed in pecuniary terms, whether by way of equitable compensation or some sort of account. On that basis the District Court would have had jurisdiction over his equitable claims and transfer to this Court would have been unnecessary.
10. But this was not argued. The debate took place before me on the assumption that the equitable estoppel claim, in particular, could only have been determined in this Court. There is no need to consider whether that assumption was correct.
11. In France v Siekaup [2020] NSWSC 1286 I had to deal with a case in which the plaintiff had entered into a contract to sell land to the defendant. The plaintiff initially made equitable (and statutory) claims for rescission of the contract. At trial, the plaintiff abandoned those claims and simply sought judgment on the contract. The plaintiff succeeded in that contractual claim, but recovered a sum well below the $500,000 provided by r 42.34. The defendant invoked the rule and one of the questions was whether the proceedings were "proceedings which could have been commenced" in the District Court.
12. In my decision I assumed that the question is to be answered by reference to the claim or claims which have succeeded, as determined by the judgment: see [2020] NSWSC 1286 at [48]. I therefore put the rescission claims (which would not have been within the District Court's jurisdiction) to one side. The successful claim could have been brought by way of action in the District Court, so I considered that the rule applied.
13. As will be seen below, White J (as his Honour then was) has said that, for the purpose of determining whether the commencement and continuation of the proceedings was "warranted" within the meaning of sub-r (2), it is too narrow to treat "the proceedings" as confined to the successful claims. Arguably this is not consistent with the assumption I made in France v Siekaup.
14. Rule 42.24 fails to be applied after judgment has been delivered and the result of the case is known. It is thus designed to operate in retrospect: see Norris v Routley [2016] NSWSC 147 per Harrison J at [11] (referred to at [25] below). Furthermore, the general principle is that amendments later made to a statement of claim relate back to the commencement of the proceedings: Baldry v Jackson [1976] 2 NSWLR 415 at 419. This suggests that if the test under sub-r (2) requires attention to the formulation of the proceedings before judgment is delivered, the relevant formulation must be the final one presented to the court.
15. If that were the test, it would not have altered the result in France v Siekaup. The rescission claims which were outside the District Court's jurisdiction were abandoned at the hearing. There was no question, once those claims were abandoned, that the remaining contractual claim could have been brought in the District Court.
16. This point was not the subject of any submissions in France v Siekaup. Nor was it raised by counsel in the present case. In my view it is still open for debate. As will be seen, the answer does not affect the outcome in this case. I propose to proceed on the assumption that these proceedings "could have been commenced in the District Court" for the purposes of sub-r (2)(a).

Whether commencement and continuation of the proceedings in the Supreme Court was warranted

1. For the purposes of his argument under this heading, counsel for Mr Elzamtar pointed out that BIC had consented to the transfer order made in the District Court. In Milich v The Council of the City of Canterbury (No. 3) [2012] NSWSC 1280, Davies J relied on the defendant's consent for transfer as a relevant factor in determining whether commencement and continuation of the proceedings was warranted. So too did Hoeben CJ at CL in Rodd v Hall (No 2) [2019] NSWSC 1528. But the transfer issue in those cases was different. Both cases involved common law claims where the District Court had jurisdiction but the jurisdiction was limited in amount.
2. In the present case, the factor depriving the District Court of jurisdiction is the presence of equitable claims. In such a case, the District Court has an obligation to transfer the proceedings: Civil Procedure Act, s 144(2). Accepting this, BIC had no real choice. Its position was quite different from the defendants in the common law cases, where the transfer could be seen as having reflected an acceptance on the defendants' part that the claim might exceed the monetary limit of the District Court's jurisdiction. I do not think that BIC's consent to the transfer is of any significance for present purposes.
3. Mr Elzamtar's equitable claims failed as a matter of fact. Judged by the result, they were not justified. But in Norris Harrison J said (at [11]): It is trite to observe that whether or not the commencement and continuation of the proceedings in this Court was justified curiously requires a decision in retrospect about the wisdom of making the same decision looking forward. It is therefore very important to ensure that the benefit of hindsight does not infect a critical analysis of the decision in question, obviously made without the same advantage. The known certainty of what has now transpired should not be used to limit or reduce an appreciation of the very difficult task of assessing or predicting a multifaceted litigious outcome.
4. In Redwood Anti-Ageing Pty Limited v Knowles (No 2) [2013] NSWSC 742 the plaintiffs brought numerous claims against the first defendant. They included claims for damages for breach of contract; a claim under a loan, claims for breach of confidence and participation in breach of fiduciary duty and breach of copyright arising out of the establishment of a competing business. Only the loan claim succeeded and the relevant plaintiff obtained judgment for $42,000.
5. White J concluded that owing to the plaintiffs' lack of overall success a costs order should be made against them. The application of rule 42.24 was therefore not directly in issue. But the rule was referred to and his Honour said (at [19]): Had the claim under the loan agreement been the only claim the plaintiffs made, then I accept that the plaintiffs should not have recovered any of their costs in respect of that claim if brought in this Court as the claim could have been brought in the Local Court. But r 42.34(2) refers to this Court's being satisfied that the commencement and continuation of "the proceedings" in this Court was warranted, not to its being satisfied that the commencement and continuation of the particular claim on which the plaintiff succeeded in this Court was warranted.
6. In Wong v Maroubra Automotive Refinishers Pty Ltd; Ayres v Maroubra Automotive Refinishers Pty Ltd (No 2) [2015] NSWSC 364, two plaintiffs brought claims in detinue against a car repairer. The plaintiffs obtained two judgments totalling approximately $5,000.
7. The defendant relied on r 42.24 (in its old form). Counsel for the plaintiffs contended that commencement in the Supreme Court was "warranted" and referred to the inclusion of a claim for declaratory relief, relying on what White J had said in Redwood. McCallum J (as her Honour then was) said at [15]: [Counsel for the defendant] responded, I think correctly, that the critical question is not whether the relief sought is relief that can only be granted by this court but whether the relief sought was necessary. He submitted that the declaratory aspect of the relief sought by the plaintiffs was not necessary having regard to the remedies available in a claim for detinue listed in s 93 of the Civil Procedure Act 2005 (NSW). It was common ground that the Local Court would have had power to make any of those orders.
8. In Gladio Pty Ltd v Buckworth (No 2) [2015] NSWSC 1462, the plaintiff made a number of claims arising out of the purchase of a company title unit. These included claims for declaratory relief. The plaintiff also contended that he was entitled to rescission of the purchase contract in equity. The plaintiff's claim for refund of the deposit succeeded and McDougall J entered judgment in the sum of $145,000.
9. Counsel for the plaintiff argued that the inclusion of equitable relief and an equitable basis for the claim meant that proceedings in the Supreme Court had been "warranted". McDougall J rejected this argument, pointing out that the ultimate relief granted, namely the entry of a monetary judgment, could have been given by the District Court, and that was so whether or not equitable rescission was relied upon. This view was upheld by the Court of Appeal: Gladio Pty Ltd v Buckworth [2016] NSWCA 321 at [26].
10. The decisions in Wong and Gladio support the view that inclusion of a claim for equitable relief which only the Supreme Court can give does not make the proceedings "warranted" if the prayer for relief is unnecessary. But otherwise the balance of authority is against the proposition that one determines whether the bringing of proceedings was "warranted" by looking at the result. See, in addition to the cases already referred to, State of New South Wales v Quirk [2012] NSWCA 216.
11. Counsel for BIC, however, went further than pointing out that the equitable claims had failed. Counsel submitted that they had always been doomed to fail, and on that basis the commencement and continuation of the proceedings had not been warranted.
12. For the purposes of Mr Elzamtar's claims equitable relief was put on three bases: a common interest constructive trust; proprietary estoppel; and promissory estoppel. I concluded that the claims based on common interest constructive trust or proprietary estoppel had no substance.
13. But while I ultimately decided that the promissory estoppel claim was not maintainable either, that was not a foregone conclusion. There was no authority directly on point. Dealing with the argument put forward on behalf of Mr Elzamtar required a detailed analysis of the relevant principle.
14. In my view, pursuit of the claim, although ultimately unsuccessful, was reasonable. Accordingly, I consider that the commencement and continuation of the proceedings were warranted for the purposes of sub-r (2).

Conclusion and order

1. I therefore conclude that the general practice established by sub-r (2), namely there be no order as to costs, does not apply. It is unnecessary to consider whether if the general practice did apply, it should be departed from in the circumstances of this case.
2. But this does not mean that Mr Elzamtar should necessarily obtain a full order for costs in his favour. The promissory estoppel claim may have been "warranted" but it was still unsuccessful. The transfer application will have resulted in the incurring of costs, and probably also would have resulted in some delay. Some of the evidence was only relevant because of the equitable claims, for instance evidence of events after 30 August 2009: see my judgment at [145]. Furthermore, counsel's submissions on the equitable claims were lengthy and occupied a significant part of the hearing time.
3. In these circumstances I propose to make an award of costs in favour of Mr Elzamtar but to discount the award so as to reflect his lack of success on the equitable claims. In the exercise of my judgment I fix the discount at one-third.
4. For these reasons, the order of the Court is: 1. Order that the defendant pay two-thirds of the plaintiff's costs of the proceedings.

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: 17 November 2020