Patel v Shukla

Background Facts and History

1. The plaintiff is Bhaveshkumar Bhanubhal Patel and is a student who travelled from India to study in Australia. The first defendant is Alkesh Shukla, and the second defendant is Dilipkumar Chhaganbhai Chauhan.
2. The plaintiff alleges that he first met the first defendant in January 2018. The first defendant is alleged to have been a "promoter" for Plus Gold Union Coin (hereinafter PGUC). The plaintiff attended seminars and was visited by the first defendant regarding promoting and selling PGUC cryptocurrency.
3. The plaintiff alleges that the first defendant asked him to transfer funds into a nominated bank account, ostensibly for the purpose of buying cryptocurrency, although, in the Statement of Claim in the Local Court proceedings, the plaintiff refers to it as lending money for the defendant to invest in his business. The plaintiff alleges that the first defendant made claims that the plaintiff would double his money and that the money would be returned in three months' time.
4. The cryptocurrency has been significantly devalued and the persons who had contributed to PGUC discovered that they could not recoup the money invested. The Court has before it a letter on the letterhead of NSW Police, confirming that Mr Patel is identified as a victim in an investigation regarding a large-scale Ponzi Scheme fraud relating to PGUC cryptocurrency. The letter identifies the defendants as possible suspects. Further material from the Police regarding the alleged Ponzi Scheme appears to have been before the Local Court at the time of its decision.
5. The plaintiff commenced proceedings in the Local Court by way of a Statement of Claim on 18 February 2018. The plaintiff sought, in those proceedings, the repayment of $31,535.61.
6. On 6 December 2019, Magistrate Denes of the Local Court, ordered - on the application of the first defendant by motion on Notice - that the plaintiff pay the sum of $20,000 as security for costs, and ordered, as is usual, a stay of the action until the security had been forthcoming ("the First Decision"). As respondent to that application, the plaintiff was represented by a legal aid solicitor. The plaintiff was unable to pay the security for costs.
7. The plaintiff, by Motion in the Local Court, sought to set aside the security for costs order. On 10 May 2021, Magistrate McCarron dismissed the plaintiff's Motion on the basis that there was no jurisdiction for her Honour to vacate an order of another magistrate.
8. On 24 May 2021, Magistrate Robinson heard and determined a Motion of the defendants, on notice. Her Honour granted the Motion, struck out the plaintiff's Statement of Claim, and ordered the plaintiff to pay the defendants' costs of the proceedings at $3,000 ("the Second Decision"). At the time of the proceedings before Magistrate Robinson, the plaintiff was self-represented. The plaintiff has not yet paid this costs order.

Plaintiff's Evidence

1. The plaintiff relies on his Affidavit of 14 March 2022 (which affidavit bears no filing notation) and the further Affidavit of 12 May 2022, filed on 16 May 2022. Further, the plaintiff has filed written submissions dated 16 May 2022, which refer to and include the plaintiff's submissions of 4 December 2019 on the motions before the Local Court; submissions written by the plaintiff; and a letter, ostensibly from the PGUC members of Sydney.
2. The plaintiff's appeal grounds include the following: 1. On the extension of time, the plaintiff relies on the fact that the plaintiff is self-represented, a student-immigrant, who was unaware and not advised of the relevant appeal deadline. 2. In relation to the First Decision of 6 December 2019, the plaintiff relies upon the assertion that the learned magistrate erred in the application of law by ordering a costs security order against the plaintiff.
3. In relation to the Second Decision of 24 May 2021, the plaintiff relies on the assertion that the learned magistrate erred in the application of law by dismissing the plaintiff's Statement of Claim and making a costs order against the plaintiff. The plaintiff submits that, when making the First Decision, the magistrate did not consider the full facts of the case, including the ongoing police investigation. The plaintiff submits that the order is disproportionate and unfair, which, it is submitted, was not considered in the magistrate's judgment. Further, the plaintiff submits that the learned magistrate's decision not to vacate the order was a denial of procedural fairness. The plaintiff further submits that the magistrate's conclusion that she did not have jurisdiction to vacate the order was an "incorrect decision".
4. Before the Local Court, the plaintiff submitted that he could not afford to pay the security for costs due to his initial loss of $30,000, being the subject of the claim, as well as the necessity to expend approximately $16,000 in legal costs in relation to the matter.

Defendants' Evidence and Submissions

1. The defendants rely upon an Affidavit of Alkesh Shukla, affirmed 5 May 2022 and filed 16 May 2022, and the Affidavit of Dilipkumar Chaganbhai Chauham, affirmed 16 May 2022, which includes annexures, being the transcript of the Local Court proceedings and the submissions before the Local Court. The defendants object to the Affidavits upon which the plaintiff relies, inter alia, on the ground that they include opinions and submissions, not evidence.
2. The defendants submit that the appeal has little or no merit and that the grounds of appeal do not identify any question of law, nor of any mixed question of fact and law. The defendants assert that there is no explanation given for the delay in filing, and they are prejudiced by the delay and the expense of the appeal.
3. The defendants further submit that Ground 2 is manifestly incorrect, and the Local Court clearly has jurisdiction, and power to exercise its discretion to order security for costs. Further, there is no specification of the error about which the plaintiff complains.
4. It is ultimately submitted by the defendants that the Amended Summons seeking to appeal is fundamentally defective and ought to be dismissed with costs.
5. Before the Local Court, the defendants submitted that the claim arose merely from the plaintiff investing in a scheme, of his own accord, which did not turn out to be to his liking and did not achieve a result that the plaintiff desired. The defendants submit before the Court that the plaintiff has impermissibly altered his allegation from "lending" the defendants money to "investing" it. The defendants maintain that if the plaintiff has received the bitcoin he purchased and merely lost money due to the speculative cryptocurrency market, he is not able to blame the defendants.

Consideration

1. The parties to proceedings before the Local Court may appeal to the Supreme Court on a question of law. [1] If the matter involves a question of mixed law and fact then a party in the same position may appeal to the Supreme Court, but only by leave of the Court. Further, leave is necessary in order to appeal, relevantly, an interlocutory judgment or order.
2. There can be no doubt that the Local Court of NSW is governed by the terms of the Civil Procedure Act 2005 (NSW). By operation of s 98 of the Civil Procedure Act, the courts bound by the Act, which include the Local Court, may - subject to rules of court or any other statutory provision - order costs, which are in the discretion of the court. The court has full power to determine by whom, to whom, and to what extent costs are to be paid, and at what point in the litigation.
3. The Uniform Civil Procedure Rules 2005 (NSW) (hereinafter "UCPR") are promulgated pursuant to the provisions of s 9 of the Civil Procedure Act and may be made dealing with any matter required or permitted by the Act or any matter that is necessary or convenient to be prescribed by rule. UCPR rule 42.21 provides to the courts governed by the Civil Procedure Act the jurisdiction to order security for costs on the application of the defendant, in circumstances where the plaintiff is ordinarily resident outside Australia and may, in determining whether to order security for costs, take into account the factors prescribed in UCPR rule 42.21(1A). Impecuniosity is not a basis, of itself, to order security for costs, but is a factor that may be considered in exercising the discretion that is otherwise available to the court to order such costs.
4. The submission, if it be a submission, that the Local Court had no power to order security for costs or jurisdictions so to order is manifestly incorrect. It seems, however, from the submissions of the plaintiff that the submission in relation to jurisdiction is dependent upon a failure to apply the provisions of UCPR 42.21.
5. As earlier stated, the plaintiff is a citizen of India in Australia on a student visa. As a consequence, it was open to the Local Court to take the view that the plaintiff was not a person "ordinarily resident" in Australia. As a consequence, the jurisdiction of the Local Court to exercise a discretion under UCPR rule 42.21 was available to it.
6. Whether a person is "ordinarily resident outside Australia" is a fact that, on the proper construction of UCPR rule 42.21, is to be determined by the court exercising jurisdiction and/or power conferred by the rule. [2] In Parisienne Baskets, Dixon J (as his Honour then was) said: "It cannot be denied that, if the legislature see fit to do it, any event or fact or circumstance whatever may be made a condition upon the occurrence or existence of which the jurisdiction of a court shall depend. But, if the legislature does make the jurisdiction of a court contingent upon the actual existence of the state of facts, as distinguished from the court's opinion or determination that the facts do exist, then the validity of the proceedings and orders must always remain an outstanding question until some other court or tribunal, possessing power to determine that question, decides that the requisite state of facts in truth existed and the proceedings of the court were valid. Conceding the abstract possibility of the legislature adopting such a course, nevertheless it produces so inconvenient a result that no enactment dealing with proceedings in any of the ordinary courts of justice should receive such an interpretation unless the intention is clearly expressed." [3]
7. The determination of whether the plaintiff was "ordinarily resident outside Australia" is a question of fact, and is not a question of law or a mixed question of fact and law. The foregoing assumes, as I have determined, that the issue of whether the plaintiff is in that category is not a jurisdictional fact. If it were, it would be determined conclusively by the objective facts, and not by the judgment of the court exercising jurisdiction, in accordance with the extracted comments of Dixon J above.
8. If, on the foregoing basis, the issue raised is purely a question of fact, no appeal lies. If it is a question of mixed fact and law, then an appeal lies only by leave. Further, given that an order for security of costs is an interlocutory order, pursuant to the provisions of s 40(2)(a) of the Local Court Act, even if it were a question of law, it would require the leave of the Court.
9. The issues raised in relation to the judgment and orders issued on 10 May 2021 that the Local Court had no jurisdiction to vacate the order of the First Decision, is in a different category. If the First Decision made final orders, then the Local Court would not have power or jurisdiction to set aside the judgment order which, presumably, had been entered.
10. Even the Supreme Court - which has inherent jurisdiction and the jurisdiction conferred by s 23 of the Supreme Court Act to do all things necessary for the administration of justice - does not have the power to set aside a judgment that is a final judgment determining the rights of the parties, except on extremely limited bases.
11. However, the orders made by the learned magistrate in the First Decision, were not final orders. Plainly, an order for security of costs is an interlocutory order, and does not deal finally with the respective rights and duties of the parties. An interlocutory order is in a very different category.
12. Interlocutory orders dealing with practice and procedure are invariably altered by later determination, which take into account subsequent events or facts not otherwise brought to the attention of the court dealing with the matter. In appropriate circumstances, a court always has the jurisdiction and power to vary an interlocutory order. [4]
13. Orders relating to such things as timetables and the filing of documents or leave to serve interrogatories and the like are often varied. Indeed, this Court has expressed the view that, at common law, an interlocutory order made by one judge could always be varied by another judge where there have been changed circumstances making it just and proper so to do. [5]
14. Further, it has been said that a court has power, and possibly a duty, to review interlocutory orders - other than those that decide the rights of parties - in order to vary or rescind whenever circumstances change sufficiently. [6]
15. The proposition that one judicial officer of a court may vary the orders of another judge of the same court stems from the proposition that, when a single judicial officer exercises jurisdiction, the judicial officer is exercising the jurisdiction of the court as a whole. As was commented, in relation to the Federal Court of Australia and superior courts of record: "The reason for the express provision…that the jurisdiction of each of the courts might be exercised by single judge is the notion which lies deep in history that a superior court of record comprises all its judges who must act collectively in order to constitute the court. Thus at common law, all trials by jury were originally held before the court in banc. When trials at nisi prius before a single judge were introduced, the judge took the verdict but could not enter judgment. He returned the verdicts to the court and the court in banc gave judgment accordingly. This was noted by Windeyer J, in Kotsis v Kotsis where he said that the meaning of the word 'court' has come to us through a long history and observed: 'according to the tradition of the common law, a superior court of record is a court sitting in banc for the administration of justice. In the course of time it became settled that, for some purposes, the jurisdiction of the superior court of common law could be exercised by a single judge.' "But the jurisdiction of a superior court of record exercised by a single judge is still the jurisdiction of the court; there are not two courts, one comprising the single judge and one comprising all the judges. Nor does the provision of an appeal from a single judge to a full court alter the situation for an order made on appeal is made in the exercise of a jurisdiction which is different from that of the judge at first instance." [7]
16. The foregoing comments are made in relation to a superior court of record. Different issues may arise in relation to the Local Court. Nevertheless, a judicial officer in the Local Court is capable, and has the jurisdiction, to vary or set aside an earlier interlocutory order in appropriate circumstances. Appropriate circumstances would occur when circumstances have changed sufficiently to warrant an alteration.
17. Generally, the courts do not set aside an interlocutory order if the application to set aside the order amounts to an appeal against the original decision or a re-agitation of the same issues without any alteration in the facts upon which that agitation depends.
18. Having made the foregoing principles clear, the Court is not in a position to be able to deal with any error, if there were error, in the decision of her Honour Magistrate McCarron, as the summons instituting the appeal does not seek a remedy against the judgment of the Local Court of 10 May 2021. The only remedy sought in the summons, filed 3 December 2021, are appeals against orders made on 6 December 2019 (the First Decision) and 24 May 2021 (the Second Decision).
19. It is then necessary to deal with the appeal against the orders of the Second Decision. The learned magistrate was exercising the jurisdiction and, to some extent, a discretion relating to the proceedings before the Local Court.
20. The uncontroverted facts before the Local Court at the time of the hearing on 24 May 2021 were that, by order of 6 December 2019 (approximately 17 months prior) against which no appeal had been lodged, the plaintiff had been ordered to lodge security for costs and the proceedings stayed pending compliance with that order.
21. As stated, no appeal was, at the time on 24 May 2021, lodged against the First Decision. Nor had any earlier application been made to vary the orders before the Local Court on 24 May 2021. The foregoing does not imply that an application of that kind could have been made.
22. The Local Court, like all courts in NSW, is required to give effect to the overriding purpose of the Civil Procedure Act. By operation of s 56 of the Civil Procedure Act, the learned magistrate was required to facilitate the just, quick and cheap resolution of the real issues between the parties. Case management is, in the context of a proceeding in the Local Court and elsewhere, an important aspect of the achievement of justice.
23. The defendants had, by 24 May 2021 been subject to proceedings hanging over their heads for over two-and-a-half years, for an amount of $31,535, initially. A two-and-a-half year delay in the prosecution of the claim would be, in and of itself, sufficient, in the circumstances of these proceedings, to exercise the discretion to dismiss the proceedings. The plaintiff had not agitated the claim in any meaningful way.
24. I accept that the plaintiff was not represented. However, by 24 May 2021, the plaintiff would have been sufficiently familiar with the procedures of the Local Court, which are readily available in electronic form and upon which advice from the Chamber Magistrate can be sought, to have processed the proceedings in a meaningful way.
25. While the Court accepts, for present purposes, that the plaintiff did not have the assets or means by which he could afford the security for costs, such a proposition has, like a double-edged sword, advantages and disadvantages. No party should be excluded from enforcing their rights merely because of their impecuniosity.
26. On the other hand, no defendant should be forced through the procedures of the court without any chance to obtain proper compensation for their costs, should the proceedings be unsuccessfully concluded for the plaintiff. The jurisdiction and power to order security for costs depends upon the determination by the Local Court that the plaintiff was not ordinarily resident in Australia or, more accurately, was ordinarily resident outside Australia.
27. The Local Court has jurisdiction to determine that issue. If the Local Court were incorrect in that determination, it was an error of fact, not an error of law.
28. The dismissal of the proceeding is not one in which the Court, as presently constituted, would suggest that it should be treated the same way as other interlocutory orders. The dismissal of the proceedings in the Second Decision finally determined the respective rights of the parties. Notwithstanding that it was, in every practical sense, a final determination of the rights of the parties, at least in these proceedings, it is technically an interlocutory order.
29. No error has been disclosed in the exercise of the discretion by the learned magistrate on 24 May 2021, given the facts and material that were before the Local Court. In the absence of an appeal against the refusal to exercise the jurisdiction of the Local Court on 10 May 2021 and the manifest delay - which is largely unexplained except by reference to the fact that the plaintiff is unrepresented - any attempt to appeal the orders made in the First Decision, on 6 December 2019, is barely arguable, and significantly out of time.
30. I would refuse leave to appeal the orders of 6 December 2019. In those circumstances, it is even more appropriate to comment that no error has been disclosed and no arguable error has been disclosed in the orders of the Local Court made on 24 May 2021.
31. The proceedings having been dismissed, and an order for costs of $3,000 having been made, it is now unnecessary for the plaintiff to comply with the orders for security of costs, being the First Decision. Again, in relation to the order of 24 May 2021, it being an appeal against a question of mixed fact and law and an appeal against an interlocutory order, I would deny leave to the plaintiff.
32. For the foregoing reasons, the Court makes the following orders: 1. The Court refuses leave to appeal; 2. The Court dismisses the proceedings; 3. The plaintiff shall pay the defendant's costs of and incidental to these proceedings.

Endnotes

1. Local Court Act 2007 (NSW), s 39(1).
2. Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369; [1938] HCA 7.
3. Ibid, at CLR 391 (Dixon J).
4. Hutchinson v Nominal Defendant [1972] 1 NSWLR 443.
5. Douglas v John Fairfax & Sons Ltd [1983] 3 NSWLR 126 at 134.
6. Wilkshire and Coffey v Commonwealth of Australia (1976) 9 ALR 325 at 331-332 (NT Supreme Court, Muirhead J)
7. Re Jarman; ex parte Cook [No 1] (1997)188 CLR 595 at 609-610; [1997] HCA 13 (Dawson J). 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: 02 December 2022