McEvoy v Wagglens Pty Ltd

Judgment

1. THE COURT: Before this Court is an application for leave to appeal brought by Mr Fentin McEvoy (Mr McEvoy) from a decision of Ierace J: see McEvoy v Wagglens Pty Ltd [2020] NSWSC 575. The primary judge refused Mr McEvoy leave to appeal from a decision of the Local Court of New South Wales before Reiss LCM on 4 December 2018.
2. The decision of the Magistrate was one dismissing a notice of motion to vary or set aside a judgment given in favour of Wagglens Pty Ltd (Wagglens) and its director Mr Roderick Marr (Mr Marr) on 23 October 2018 dismissing Mr McEvoy's claim for unpaid or underpaid wages in the sum of $26,494.12. Wagglens is a real estate agency trading as Mosman First National Real Estate.
3. These reasons assume familiarity with the judgment of Ierace J. Some of the background is also summarised in the decision of Basten JA in an interlocutory application for a stay of certain garnishee orders pending the hearing of this application for leave to appeal: see McEvoy v Wagglens Pty Ltd [2020] NSWCA 330.

Background to the proceedings

1. The following short description of the background to the proceedings is taken principally from the decision of Ierace J.
2. On 25 May 2011, Wagglens purchased shares in two companies, John F McEvoy Real Estate Pty Ltd and McEvoy & Bird Pty Ltd. The vendor, Mr John McEvoy, was the applicant's brother. The agreement for sale was executed as a Deed on that date (the Deed), and there were five parties to the Deed: Mr John McEvoy, John F McEvoy Real Estate Pty Ltd, McEvoy & Bird Pty Ltd, Wagglens as guarantor, and Mr Marr. The applicant, Mr McEvoy, was not a party to the deed.
3. Wagglens employed Mr McEvoy and Mr John McEvoy, pursuant to separate contracts of employment, which were referred to in cl 12 of the Deed. Mr McEvoy's employment contract was signed by him and Mr Marr on 25 May 2011, and it contained provisions as to various conditions of employment, including the hours to be worked and the power of the employer to terminate the employment. It provided that Mr McEvoy's salary would be $75,000, inclusive of superannuation.
4. On 19 April 2012, Mr McEvoy ceased to attend the office of Wagglens and did not return. As noted by Ierace J at [3], the circumstances surrounding his doing so, and whether it was in the context of him resigning his employment, or Wagglens repudiating its contractual obligations towards Mr McEvoy, were matters of dispute between the parties, which his Honour summarised in detail at [32]ff of his reasons.

History in the Local Court

1. On 24 May 2018, Mr McEvoy filed a Statement of Claim in the Local Court of New South Wales, seeking damages from the respondents in the sum of $26,250.12. The damages were expressed to be "for breach of employment contract dated 25 May 2011 [by] way of under-payment". The pleading identified Mr Marr as the director of Wagglens, but did not identify a cause of action against him.
2. 24 May 2018 was, of course, one day short of the sixth anniversary of the expiry of the employment contract, had it been performed for a full 12 months.
3. By letter dated 7 June 2018, Wagglens' solicitors sought particulars from Mr McEvoy. In that correspondence, Wagglens expressed an assumption that Mr McEvoy would allow 14 days from receipt of his response for them to file a defence or apply to strike out his claim. Exchanges of letters and emails ensued.
4. By email dated 21 June 2018, Mr McEvoy purported to provide particulars and declined to provide an assurance that he would allow a period of 14 days for Wagglens to file a defence.
5. On 22 June 2018, Mr McEvoy filed a motion for default judgment against the respondents, which was entered on the same date.
6. On 26 June 2018, Mr McEvoy sought and was granted a garnishee order by the Local Court against Wagglens, to the amount of $26,494.12.
7. On 28 June 2018, Mr McEvoy was paid $348.70 by Wagglens, consequent to the garnishee order. On the next day, the respondents became aware of the default judgment, and invited Mr McEvoy to consent to it being set aside.
8. By email dated 2 July 2018, Mr McEvoy declined the invitation, expressing the view that the respondents had "sufficient time to file their Defences".
9. On 4 July 2018, the respondents filed a notice of motion seeking orders that the default judgment be set aside, and that Mr McEvoy repay the garnished amount plus costs.
10. On 27 July 2018, the Local Court set aside the default judgment, conditional upon the respondents filing a defence on or before 10 August 2018. The defence was filed on 9 August 2018, with the respondents pleading that Mr McEvoy was barred from bringing the action as the claim was filed more than six years after the cause of action accrued.
11. On 10 September 2018, the respondents filed a notice of motion, seeking orders that Mr McEvoy's Statement of Claim be struck out pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), or that the proceedings be dismissed. Mr McEvoy did not file any material in response.
12. The notice of motion was set down for hearing before Magistrate Reiss on 25 September 2018. At the hearing, Mr McEvoy submitted that: 1. The six year limitation period expired on 25 May 2018, and therefore, the Statement of Claim was filed one day before the expiration of the limitation period; 2. The contract of employment was "embodied in a deed" and therefore, pursuant to the 12-year limitation period applying to actions arising from a cause of action in a deed arising under s 16 of the Limitation Act 1969 (NSW), he was well within the statutory period within which to seek enforcement of a term of it; 3. That Mr Marr was liable pursuant to s 550 of the Fair Work Act 2009 (Cth).
13. The respondents submitted that Mr McEvoy had not given prior notice of any of these contentions, and so the Magistrate stood the hearing over to 23 October 2018, directing that any affidavits in Mr McEvoy's case be filed and served by 16 October 2018.
14. Whilst Mr McEvoy did file an affidavit with 100 pages of annexures by the 16 October 2018 deadline, he did not appear at the hearing on 23 October 2018. The Magistrate dismissed Mr McEvoy's claim, principally on the basis that it was statute barred (the October 2018 judgment).
15. On 6 November 2018, Mr McEvoy filed a notice of motion pursuant to rr 36.15 and 36.16(2)(b) of the UCPR, seeking to stay the orders made in the October 2018 judgment and to set aside or vary those orders. Mr McEvoy filed a supporting affidavit with the notice of motion, in which he explained that he had a hearing disability and, although he heard the Magistrate's direction as to the date by which he was to file an affidavit in reply, he did not hear the date on which the matter was adjourned for hearing and assumed that, based on his past experience with courts, he would receive written advice of the hearing date.
16. On 4 December 2018, the Magistrate heard Mr McEvoy's motion to set aside the October 2018 judgment. His Honour found that Mr McEvoy had been given the opportunity to present his material to the Court, and had done so in affidavit form. Therefore, the Magistrate explained that the judgment was "not a default judgment that was entered in his absence simply because he wasn't here. This was a considered position based on the extensive materials he had filed".
17. It was from this interlocutory decision that Mr McEvoy sought leave to appeal to the Supreme Court of New South Wales. That application was presumably made pursuant to s 40 of the Local Court Act 2007 (NSW), which provides: "(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court. (2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court: (a) an interlocutory judgment or order, (b) a judgment or order made with the consent of the parties, (c) an order as to costs."

Application for leave to appeal to Supreme Court

1. Ierace J refused leave to appeal.
2. In so doing, his Honour held that it was open to the Magistrate to dismiss the proceedings on the basis that it was inevitable that both the factual dispute as to the time of Mr McEvoy's cessation of employment, and his submission that the employment agreement was embodied in a deed, would be resolved in favour of the respondents: at [78]-[79].
3. His Honour concluded at [85] that: "…the ultimate dismissal of the plaintiff's statement of claim is inevitable, when all the material the plaintiff has filed in both the Local Court and in this Court is considered. That being so, there is little utility in addressing that failure by remitting the matter for rehearing of the plaintiff's notice of motion, since the remedy of a re-hearing of the defendants' notice of motion would be futile; the dismissal of the plaintiff's statement of claim is inevitable. In the words of the Court of Appeal in Gibson v Drumm, there is not an 'injustice which is reasonably clear in the sense of going beyond what is merely arguable'. In Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54, the High Court (Mason, Wilson, Brennan, Deane and Dawson JJ) said, at 145: '… an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility. For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial.'" (emphasis in original).

Application for leave to appeal to this Court

1. Mr McEvoy filed a summons seeking leave to appeal to this Court on 20 October 2020, and an amended summons on 30 April 2021. By his draft notice of appeal, Mr McEvoy seeks to raise the following grounds of appeal: "1 The judgment appealed from contains errors of fact and law 2 The appellant had produced cogent and probative evidence of underpayment of wages pursuant to the contract of employment 3 The appellant had not resigned or repudiated the contract of employment 4 The appellant had arguably been constructively dismissed or wrongfully dismissed 5 The appellant had commenced the action within the time limit required pursuant to the Limitation Act 1969 (NSW) 6 The contract of employment had not been terminated by the employer 7 The contract of employment was repudiated by the employer on multiple occasions, but these repudiations were not accepted by the appellant 8 The contract of employment was a type of deed or part of a deed 9 Important matters of evidence had been overlooked 10 The appellant has at least a fairly arguable case on the standard of balance of probabilities".
2. In his written submissions, Mr McEvoy stated that the "nature of the case" was as follows: "The applicant's case concerns a 12-month written contract of employment between the applicant as employee and the first defendant as his employer. Wages under the contract were intended to be $75,000. When the contract ended, the applicant had received only $48,749.88, leaving a balance owing of $26,250.12, representing the amount of underpaid wages. By Statement of Claim the applicant is suing the defendants for breach of contract to recover the $26,250.12 underpaid. The second defendant is the sole director and shareholder of the employer corporation".
3. As to the reasons why leave should be granted, Mr McEvoy submitted as follows: "The judgment appealed from contains numerous errors of law and fact. Natural justice or procedural fairness would require the applicant be given the opportunity to have his day in court in order to remedy these defects by proving his case. The applicant's case is more than arguable in terms of the factual evidence and the case law in support of the applicant's arguments." (emphasis in original).
4. Mr McEvoy also submitted that: 1. despite the amount in issue falling under the jurisdictional threshold specified under s 101(2)(r) of the Supreme Court Act 1970 (NSW), "[m]atters of legal significance, errors in legal principle, the nature of the points of law involved, injustice to the Applicant and risk of bankruptcy should overcome the value threshold"; 2. there was an injustice which was "more than arguable"; 3. the proceedings dealt with a matter of public interest and was of general importance, in that the "human right to be paid for one's labour is a fundamental human right protected under the rule of law by the Fair Work Act, the National Employment Standards, the system of Modern Awards and the common law, forming a comprehensive framework of labour rights of public interest to all Australian workers"; 4. the proceedings involved issues of principle, due to the "fundamental protection of the human right to be paid for one's labour".
5. The respondents opposed the grant of leave to appeal. First, they argued that leave should be refused to extend the time for filing the summons seeking leave to appeal, pursuant to UCPR r 51.10(2), as "[d]elay has become a regular occurrence on the part of Mr McEvoy".
6. Further, the respondents emphasised that the damages sought by Mr McEvoy fell significantly under the statutory threshold pursuant to s 101(2)(r) of the Supreme Court Act and submitted that, if leave were to be granted, "the legal costs on the part of the Respondents in defending the Appeal would equate to more than three (3) times the amount of Mr McEvoy's alleged claim, possibly more with briefing counsel". Ms MacDonald, who appeared for the respondents, put particular emphasis on this matter in her oral submissions.
7. The respondents also submitted that the case did not involve a matter of principle or public importance, that there was no injustice, and that Mr McEvoy had failed to identify any questions of law or errors of material fact.

Consideration

1. A grant of leave to appeal generally requires there to be identified an issue of principle, a question of public importance or a reasonably clear injustice going beyond something that is merely arguable: see, for example, Jaycar Pty Limited v Lombardo [2011] NSWCA 284 at [46]; Be Financial Pty Ltd as trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[38] (Be Financial ); The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13]; and Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28].
2. In PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [5], Bell P and Simpson AJA observed that: "Discretionary decisions, whether in the context of substantive or procedural relief, also engage the strictures against over-ready appellate interference and the correlative need for 'added restraint' associated with House v R (1936) 55 CLR 499 with the consequence that a 'heavy burden' lies on an applicant seeking leave to appeal from a discretionary judgment on a question of practice or procedure: see, for example, Oswal v Burrup Fertilisers Pty Ltd (recs and mgrs apptd) [2011] FCAFC 117 at [8] and [11]; see also Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWCA 174 at [6] where the task of an applicant seeking leave to challenge such a decision was described as a 'difficult' one; see also Cicek v The Estate of the Late Mark Solomon [2014] NSWCA 278 at [69]- [70]; Dank v Cronulla Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 at [73]- [75]; Treadtel International Pty Ltd v Cocco [2016] NSWCA 360; 117 ACSR 176 at [29]; Mei Zhang v Ye Cheng [2018] NSWCA 299 at [12]."
3. Questions of discretion were involved both in the context of the Magistrate being asked pursuant to rr 36.15 and 36.16(2)(b) of the UCPR to stay the orders made in the October 2018 judgment and to set aside or vary those orders, as well as in the context of the application for leave to appeal which came before Ierace J pursuant to s 40 of the Local Court Act.
4. As Mr McEvoy also recognised, by s 101(2)(r) of the Supreme Court Act, an appeal does not lie to this Court, without leave, where the value of the matter in issue does not exceed $100,000. The amount in issue in this case lies significantly below this statutory threshold.
5. In this context, even on Mr McEvoy's best argument that he did not in fact resign in April 2012 but affirmed the contract notwithstanding what he characterised as Wagglens' wrongful repudiation, the true value of his claim is probably even lower than the $26,494.12 sought in the Local Court. This is because if, consistent with Mr McEvoy's argument, Wagglens had repudiated its contractual obligations to pay him, it would be in breach of those contractual obligations on each occasion payment was due. Thus, if payment under the contract was made fortnightly in arrears, for example, the only breach of contract which could have occurred after 25 May 2012 was the final fortnightly salary payment. The other breaches would all have occurred prior to that date, all of which would be more than six years prior to the commencement of proceedings, and hence the claim would have been statute barred to that extent. The position would be even more stark if payment was made partly in advance and partly in arrears and/or on a weekly basis.
6. The monetary threshold imposed by s 101(2)(r) of the Supreme Court Act plays an important role in the administration of justice in this State and recognises the large volume of cases that come to the New South Wales Court of Appeal. In Carolan v AMF Bowling Pty Ltd (t/as Bennetts Green Bowl) [1995] NSWCA 69 (Carolan), Kirby P (as his Honour then was) discussed the reasons for the leave requirement in relation to claims falling below the $100,000 threshold as follows: "(1) A respect for the office of a Judge of a District Court who is entitled to determine matters within jurisdiction and to have such determination regarded as final unless for good reason the matter may come to this Court; (2) The respect for, and recognition of, the heavy work load of this Court. It is commonly known that unless appeals are expedited they will normally require a delay, given the state of our list, of eighteen months to two years before they will be heard; (3) The discouragement of unnecessary litigation in small amounts where public costs are necessarily involved including the time of the Judges, court officers, use of court buildings and functions, court reporters and the other expensive features of public litigation; (4) A recognition of the fact that, particularly in small claims, the amount of costs that can be recovered on a party and party costs order, are typically below those which are actually incurred by a party and which, in respect of a small claim, may be completely disproportionate to the amount actually at stake; (5) The need ordinarily to conserve the time of the Court of Appeal in small claims to matters which involve issues of principle, questions of general public importance or an injustice which is reasonably clear, that is to say goes beyond merely being arguable."
7. Carolan was decided 10 years before s 60 of the Civil Procedure Act 2005 (NSW) was enacted. That section is headed "Proportionality of costs" and provides: "In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute."
8. In Be Financial at [39], Basten JA (with whom Tobias AJA agreed) said: "This direction has an important operation in respect of leave applications involving amounts below the statutory threshold. Where, as in the present case, the costs of the trial are disproportionate to the amount in dispute, the incurring of additional costs, for a potentially uncertain return, will be a factor weighing heavily against a grant of leave." See also Cooper v Atkin [2021] NSWCA 82 at [31]-[32].
9. Carolan was recently applied by this Court in Gaynor v Attorney General of New South Wales (2020) 102 NSWLR 123; [2020] NSWCA 48. In that case, Bell P made reference to the fact that, in Carolan, Cole JA noted the desirability that, where small claims are involved, there be "early finality and determination of litigation otherwise the costs which will be involved are likely to swamp the money sum involved in the dispute"; see also Berry v Nicholls [2016] NSWCA 272 at [7]; Lukaszewicz v Polish Club Ltd [2020] NSWCA 99 at [20]-[21] (Lukaszewicz); NRMA Insurance for the Nominal Defendant v Al-Bayati [2018] NSWCA 258 at [13]; Nguyen v Tran [2018] NSWCA 215 at [6]; Yuen v Chan [2019] NSWCA 63 at [19]; and Giles v La Rosa (No 2) [2018] NSWCA 297 at [19].
10. Further, as White JA (with whom Ward JA, as her Honour then was, and Emmett AJA agreed) outlined in Lukaszewicz at [20], disproportion between the amount of costs incurred in the litigation and the amount in dispute can itself be a reason for refusing leave, particularly having regard to case management principles and the appropriate allocation of court resources, there citing Carolan and Gibson v Drumm [2016] NSWCA 206 at [19]-[20]; see also Girgis v Oueik [2018] NSWCA 314 at [54].
11. It should be observed that whilst this Court does not ordinarily grant leave to appeal against an order when the amount involved is substantially less than the $100,000 threshold, in some circumstances, the proper administration of justice does require a grant of leave: see, for example, Price v Price [2020] NSWCA 312; and Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84. That, however, is not this case.
12. Leave to appeal should be refused for the following reasons: (i) the ultimate decision which is sought to be challenged was one involving a discretionary decision to stay and/or set aside orders that had been made; (ii) decisions of that kind face a very high hurdle when sought to be challenged directly in this Court. That hurdle is even higher when the challenge is sought to be made, in effect, for a second time in circumstances where the applicant has already sought leave to appeal from a single Supreme Court Justice and that application has been refused; (iii) the amount in issue in these proceedings falls far below the $100,000 threshold referred to in s 101(2)(r) of the Supreme Court Act. That threshold implicitly recognises the need for proportionality of legal expenditure relative to amounts in issue, a consideration that has also been recognised in the jurisprudence of this Court in relation to applications for leave to proceed; (iv) in truth, the value of Mr McEvoy's claim, even assuming the correctness of his contention that he never in fact resigned from his position (a matter evidently not accepted by the Magistrate), would amount to one week or one fortnight's wage, a small fraction of the $26,494.12 claimed; (v) no issue of principle is raised by the application or the underlying dispute. The claim was for damages for breach of contract and the issue which led to the entry of judgment by the Magistrate related to the expiry of a limitation period. Neither of these issues, still less the Magistrate's discretionary decision not to vary or set aside his judgment raised any issue of principle, raise some question of human rights concerned with a living wage; (vi) a substantial part of Mr McEvoy's argument turned on what appeared to be disputed questions of fact.
13. The very small amount in issue does not warrant the time, cost and expense of a further hearing before this Court, in circumstances where there is no issue of principle, question of general public importance or injustice which is reasonably clear. Mr McEvoy's reliance on his possible bankruptcy if leave to appeal were not granted does not alter the analysis or our assessment as to whether or not leave should be granted. The application does not satisfy any of the well-established criteria for the grant of leave to appeal to the Court of Appeal.
14. Although the application for leave to appeal appeared to have been filed significantly out of time, we have not rested our decision on that matter or taken it into account in circumstances where Mr McEvoy sought to explain the delay by reference to various matters associated with the COVID-19 pandemic and his inability to obtain sealed copies of court documents from the Registry. It is not necessary to engage with those matters or the merits of the position as to delay, as those matters have not affected our decision as to whether to grant leave to appeal.
15. The application for leave to appeal is dismissed with costs.

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