Mhanna v Daoud

Judgment 1THE COURT: On 30 October 2014, the Court heard and dismissed with costs an application for leave to appeal relating to an interlocutory order of the District Court dismissing before trial a third cross-claim filed in proceedings commenced by statement of claim on 22 April 2010. 2The Court reserved its reasons and now publishes them. 3It is necessary, at the outset, to describe the pleadings. 4Daoud ("the respondent") sued one Hanna in debt in respect of $120,000 said to have been lent and to be due but unpaid. By his defence, Hanna admitted that the loan had been made but said that this had occurred in the context of a request by the respondent that he should apply the loan proceeds in a particular way related to development of certain real property by a company called Eaglevale; and that the respondent would look only to Eaglevale for payment of the loan principal and interest. As a result, Hanna said, he was not liable to the respondent as alleged. 5Hanna also filed a cross-claim seeking relief under the Contracts Review Act 1980 (NSW) preventing the respondent from enforcing the loan agreement. 6Hanna filed a second cross-claim against the present applicant (who was not, at that point, a party) who, it was said, was an intermediary in the arrangement relieving the respondent pleaded in the defence. This second cross-claim sought relief under the Contracts Review Act. 7The applicant then filed a cross-claim dated 29 March 2012 - the third cross-claim - against the respondent. He sought an order that the respondent indemnify him in respect of any moneys found to be due by him to Hanna, as well as damages under s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) (the "ASIC Act"). There were allegations that the respondent had engaged in unconscionable conduct or misleading or deceptive conduct in contravention of that Act. 8On 15 November 2013, the respondent filed a notice of motion seeking an order against the applicant that the third cross-claim be dismissed pursuant to s 61(3) of the Civil Procedure Act 2005 (NSW) for failure to comply with directions of the court made on 19 April 2013, 31 May 2013 and 16 July 2013. There was an alternative claim for leave to amend the defence to the third cross-claim (a copy of which does not appear to be in the papers before this Court) to add a defence to the effect that the District Court lacked jurisdiction to determine claims under the ASIC Act and to grant equitable relief. 9The notice of motion was heard by Judge Curtis on 22 November 2013. His Honour ordered pursuant to s 61(3) of the Civil Procedure Act that the third cross-claim be dismissed. 10The proceedings as a whole then came before Judge Bozic for trial and were heard over three days, 4 to 6 December 2013. Judge Bozic delivered judgment on 23 May 2014. He ordered a money judgment in favour of the respondent and against Hanna and dismissed the extant cross-claims, being the first and second. 11On 16 May 2014 - that is, almost six months after Judge Curtis's decision and more than five months after the substantive hearing in the District Court (at the end of which Judge Bozic had reserved his decision) - the applicant filed a summons seeking leave to appeal in respect of the order of dismissal made by Judge Curtis on 22 November 2013. An extension of time was granted by the Registrar. 12The respondent opposed the grant of leave to appeal. 13The grounds of appeal foreshadowed by the applicant in his draft notice of appeal were uninformative. It was said merely that Judge Curtis erred in dismissing the third cross-claim, in not vacating the substantive hearing fixed to commence on 4 December 2013, in not allowing the applicant to make an application to transfer the proceedings to the Supreme Court and in not adjourning the hearing of the notice of motion. 14Submissions made in support of the application for leave to appeal were a little more illuminating. Reference was there made to three particular matters. First, the applicant accepted that the District Court lacked jurisdiction to determine the ASIC Act claims raised by the third cross-claim. Secondly, he maintained that that those claims were statute barred by the time Judge Curtis heard the motion on 22 November 2013. Thirdly, the applicant did not dispute that he was, as alleged, in default of directions made by the District Court. 15The applicant said, however, that the circumstances are exceptional in such a way as to warrant the view that dismissal of the third cross-claim was beyond the range of proper exercise of the discretion that Judge Curtis had at his disposal. 16The contention was that, because Judge Curtis's decision to dismiss the third cross-claim was predicated in part on a finding that the District Court lacked jurisdiction, there was, in terms of s 91(2) of the Civil Procedure Act, dismissal "following a determination on the merits", with the result that the dismissal prevents the applicant from claiming any relief in respect of the same cause of action in any subsequent proceedings. 17It is true that Judge Curtis referred in his judgment to the fact that the District Court has no jurisdiction to determine claims brought on statutory causes of action created by the ASIC Act. But the order his Honour made was, by its express and unambiguous terms, an order under s 61(3) of the Civil Procedure Act. In addition, there were, in the judgment, express references to many failures on the applicant's part to comply with directions particularly as to particulars and discovery of documents relevant to the ASIC Act claims, a state of affairs the judge said was similar that referred to by Rothman J in Zhu v Yingle Culture Exchange (Australia) Pty Ltd [2012] NSWSC 1305 at [52] - [57] where pertinent comments were made about the responsibilities of litigants in the light of Division 1 of Part 6 of the Civil Procedure Act. 18As has been said, the applicant accepted that he was in default in respect of directions. The concession is inevitable in light of the evidence that the judge had before him in the affidavit of the respondent's solicitor. To that affidavit was annexed correspondence between the applicant's solicitor and the respondent's solicitor over the period of five months, 18 June 2013 to 14 November 2013, concerning the production of documents. The respondent's solicitor wrote thirteen letters by way of request and reminder. There were four responses from the applicant's solicitor, two of which merely notified requests made of Hanna's solicitor. In the end, only one document was produced. 19There were ample grounds for the judge to act under s 61(3). 20Given the express terms of the order made by the judge, it is not possible to say that the third cross-claim was dismissed because of a finding that the District Court lacked jurisdiction, although it must be accepted that his Honour did refer to that matter. But even if a finding of lack of jurisdiction had been the basis of the order, any contention that there was, in terms of s 91(2), a "determination on the merits" would not be supportable. In Minogue v Williams [2000] FCA 125; 60 ALD 366, to quote only one relevant authority, it was said by the Full Federal Court (at [18]) that dismissal because of lack of jurisdiction produces a judgment which has not, in any legal sense, determined the rights of the parties in issue in the proceedings and that the substantive claims remain undetermined. There is, in short, no determination on the merits. The matter is explained in Chapter 6 of George Spencer Bower and K R Handley, Res Judicata (4th ed 2009, Lexis Nexis). 21Dismissal under s 61(3) of the Civil Procedure Act - as in fact occurred - is of the same quality. The assumption by White J in Greywolf Resources NL v Wilkinson [2011] NSWSC 1604 that dismissal under that section, which is wholly concerned with the procedural matter of compliance with directions, does not occur after determination on the merits is plainly correct. Reference may again be made to Chapter 6 of Spencer Bower and Handley (above). 22The applicant should therefore be regarded as in a position to pursue his ASIC Act claims in a court of competent jurisdiction should he choose to do so and if those claims are not time barred. As to that issue, the applicant says that the six year limitation period fixed by s 12GF(2) of the ASIC Act has expired but the respondent does not accept that is so. This Court is not in a position to make any assessment on the matter. This is because it is unable to judge when, in terms of s 12GF(2), the statutory cause of action accrued. The third cross-claim filed by the applicant does not identify any date in relation to any pleaded matter. 23The real complaint of the applicant about the decision of Judge Curtis on 22 November 2013 seems to be that his Honour refused to vacate the impending hearing dates of 4 to 6 December 2013 to enable the applicant to apply to have the proceedings transferred to the Supreme Court which, of course, does have jurisdiction under the ASIC Act. His Honour gave an ex tempore judgment on the application to vacate. No copy of that judgment has been put before this Court but the basis for the refusal emerges sufficiently from exchanges in the course of submissions. 24It was made clear in those submissions that the lack of jurisdiction in the District Court had been ventilated at a hearing on 13 March 2013. It was put to Judge Curtis by counsel for the respondent that, if the applicant wished to pursue the ASIC Act claims, he had had more than ample time - from March to November 2013 - in which to seek transfer to the Supreme Court but had taken no step in that direction. It is pertinent to quote part of what counsel said in that respect: "So it ill behoves the third cross-claimant to now come to court on the eve of the trial and say for two years I've been running on a claim that the court can't hear. I've never responded to discovery orders or the cross-defendant's follow up. I now need some more time to deal with something over which the court doesn't have jurisdiction." 25The legal representative of the applicant did not take issue with that statement. 26The judge said, after submissions: "No, I think that this has just gone too far ... No, it's got to come to an end ... This matter has now been on foot for over three years." 27His Honour then delivered a judgment which refused an adjournment of the motion before him and vacation of the hearing dates. It was after further submissions that he made the order of dismissal under s 61(3). 28It is relevant to observe that the applicant did not at any point see fit to take any step towards obtaining removal of the proceedings to a court having jurisdiction under the ASIC Act or commencing new proceedings in such a court; and this was despite his having been on notice of the jurisdictional issue since at least March 2013. 29If leave to appeal had granted as sought in the summons that was before us on 30 October 2014, this Court would be invited to reverse a decision that was obviously discretionary, so that appellate intervention would be warranted only upon the principles stated in House v R [1936] HCA 40; 55 CLR 499 at 505. The fact that the decision was a decision on a matter of practice and procedure would mean that this Court would be slow to interfere and would not reverse the judge's decision unless convinced that it was plainly erroneous: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170. As Bryson JA said in State of New South Wales v Mulcahy [2006] NSWCA 303 at [3], "such appeals are, appropriately, kept on a tight rein". 30The provisions in Division 1of Part 6 of the Civil Procedure Act were binding on Judge Curtis. His Honour recognised this and referred to the observations of Rothman J already mentioned. In accordance with s 58, he was bound to seek to act in accordance with the dictates of justice and, in so doing, to have regard to s 56 concerning the "overriding purpose" of the Act and rules of court in their application to civil proceedings; also that, in addressing the amendment application in the particular statutory context, his Honour was required to take into account a combination of factors identified by the High Court in Aon Risk Services Pty Ltd v Australian National University [2009] HCA 27; 239 CLR 175. 31Given the particular context in which the appeal that the applicant sought to pursue would have fallen to be determined, that appeal would have enjoyed no prospects of success. The applicant put forward no cogent argument that the relevant judicial discretion miscarried, that the decision was plainly wrong or as to any basis on which this Court could properly interfere with the exercise of discretion as to practice and procedure that commended itself to Judge Curtis. 32Finally, counsel for the respondent made the telling point that, following dismissal of the second cross-claim by Judge Bozic, the third cross-claim was academic, given that its purpose was to afford protection to the applicant in respect of any liability he might be found to have to Hanna under the second cross-claim.