Sullivan v Greyfriars Pty Ltd [2015] VSCA 196

1 The respondent to an application for leave to appeal seeks orders that the application be dismissed.

2 The appeal is sought to be brought from orders of an associate judge dismissing the applicant's appeal on a question of law from an order of the Magistrates' Court by which the magistrate ordered the applicant to pay to the respondent the sum of $9,712.30 together with interest in the sum of $3,955.48, and dismissed a much larger counterclaim brought by the applicant.[1] The proceedings arose from a series of disputes between the applicant and the respondent, which is the owner of a company title block of units in which the applicant owns shares entitling him to occupation of one of the units in the block.

3 The claims made by the respondent against the applicant in the Magistrates' Court were the subject of a series of amendments. The respondent originally claimed only $700.50, in respect of the installation of some Venetian blinds and some electrical works in the applicant's unit. The complaint was subsequently amended to claim instead for quarterly maintenance levies alleged to have been determined between April 2009 and July 2011 in the total amount of $2,106.10, special levies alleged to have been determined at a directors' meeting on 19 May 2008 and general meetings on 11 December 2008 and 30 November 2010 in the total amount of $3,482.95, legal fees and other disbursements and charges totalling $14,982.21, plus interest at the rate of 12 per cent.

4 At trial, the last of these sets of claims was abandoned, an expanded claim for maintenance levies was made (in respect of a longer period) and larger special levies were claimed, arising from decisions made at three general meetings (only one of which had been the subject of the previous claim). Interest was sought at the rate of 10 per cent. No amended complaint was provided outlining these changes.

5 In summary, the respondent ultimately sought to recover quarterly maintenance levies from 1 April 2009 to 30 June 2012 in the amount of $4,483 and special levies totalling $5,929.80 said to have been imposed at general meetings held on 30 November 2010, 12 December 2011 and 24 September 2012, together with interest in the amount of $3,955.48.

6 The respondent called one of its directors, Ms Marcia McLennan, as its only witness. Documents were tendered including a draft proposed special resolution to alter the articles of association of the respondent, a schedule of maintenance and other charges said to be due from the applicant to the respondent, and unsigned minutes of general meetings of shareholders of the respondent held on 30 November 2010, 12 December 2011 and 24 September 2012. Invoices to the applicant for maintenance fees in amounts significantly larger than those claimed were also tendered, dated 14 July 2011, 13 October 2011, 13 January 2012 and 13 April 2012.

7 It will be necessary to say more as to the manner in which the respondent's claims were dealt with by the magistrate later in these reasons. For present purposes it is sufficient to note that the claims were upheld to the extent already set out above. It may be noted that the amount awarded was less than that claimed, because the respondent submitted that $700.50 should be deducted by reason of the abandonment of the claim originally made.

8 The applicant filed an extensive counterclaim in the Magistrates' Court seeking, among other things, more than $400,000 in damages for four years of loss of income plus interest, forced eviction, loss of rent, reduced rent, legal expenses and accrued debt. The counterclaim made claims under the Charter of Human Rights and Responsibilities Act 2006 ('the Charter') and the Australian Securities and Investments Commission Act 2001 (Cth) ('ASIC Act') (specifically s 12DJ, which prohibits harassment and coercion), and ss 17, 18, 21A, 99 and 178 of the Crimes Act 1958 which prohibit the causing of serious injury, stalking and the giving of false receipts. The applicant also alleged oppression in that he was a minority shareholder who had been oppressed by the majority shareholders in the respondent. He raised a large number of other claims at and preceding the trial. The magistrate dismissed the counterclaim.

9 Argument both at trial and before the associate judge concentrated on the counterclaim. The associate judge approached the appeal on the basis that the magistrate had summarily dismissed the counterclaim and on the assumption that, if it disclosed any cause of action within the jurisdiction of the Magistrates' Court in respect of which the applicant had an arguable case, then the magistrate had erred in so doing. The associate judge further assumed that the applicant had suffered the losses that he claimed and that those losses were consequent at least in part upon the actions of the respondent or its officers.

10 The associate judge found that the aspects of the Charter, the Crimes Act, the ASIC Act and the law of oppression identified in the counterclaim did not constitute causes of action for suit in civil law, and that neither the counterclaim itself nor other matters raised by the applicant before the magistrate identified any cause of action known to law that could be brought in the Magistrates' Court. Her Honour found accordingly that there was no error in the magistrate summarily dismissing the counterclaim. To explain this conclusion it is convenient to set out her findings in relation to the various aspects of the counterclaim.

11 In respect of the Charter, the associate judge stated that, while it states a number of human rights, it does not create any avenue of redress in respect of those rights except in relation to the scrutiny of new legislation, the interpretation of legislation and in respect to the actions or decisions of public authorities. Since the respondent is not a public authority, the Charter did not apply to its actions.

12 Sections 232-4 of the Corporations Act 2001 enable a member of a company to bring proceedings against a company alleging that the conduct of the company's affairs, an actual or proposed act or omission by or on behalf of the company or a resolution or a proposed resolution of its members is either contrary to the interests of the members of the company as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members. However, as the associate judge pointed out, an action under these provisions can only be brought in the Supreme Court or the Federal Court (or, in theory at least, in the Family Court[2]).

13 Section 12DJ of the ASIC Act prohibits the use of physical force or undue harassment or coercion in connection with the supply or possible supply of financial services to a consumer or a payment of financial services by a consumer. The associate judge held that reliance on this section by the applicant was misconceived. The provision applied only in respect of 'financial services', which is defined in s 12BAB(1) in terms which do not apply to the circumstances of the present case.

14 The associate judge also held that s 12DC of the ASIC Act, upon which the applicant also relied before the magistrate, did not avail him. That section prohibits certain representations in relation to the sale or possible sale of a 'financial product' which consists of or includes an interest in land. The associate judge held that there were no facts clearly pleaded in the counterclaim or apparent in the applicant's evidence to support the contention that his acquisition of the unit could fall within the terms of s 12DC. In particular, the applicant purchased shares, rather than an interest in land.

15 The associate judge rejected those aspects of the counterclaim which relied on breaches of the criminal law. Her Honour said that those matters could fairly be described as irrelevant to the civil proceeding in the Magistrates' Court. The associate judge held that allegations of 'culpable management with malice [aforethought]' do not constitute a cause of action known to the law.

16 The applicant also included in his counterclaim an assertion that he had been forced to sign the shareholder agreement by which he acknowledged that he would be bound by the rules of the respondent in relation to the block of units. The associate judge said that, to succeed in this aspect of the appeal, the applicant needed to show that there was an arguable claim of 'forced signing', known to the law and disclosed in the counterclaim. The associate judge concluded that the applicant had no real prospect of success in relation to any claim that he should not be bound by his signature. Making the decision to sign the agreement in order to avoid loss of his deposit, as the applicant alleged he had done, constituted a conscious financial decision rather than a basis in law amounting to a claim of duress sounding in damages.

17 The applicant raised a number of other claims before the associate judge, not all of which had clearly been raised before the magistrate. None of them appeared in the counterclaim itself. These claims included an assertion that he had not been made aware of the articles of association of the respondent, a claim that there had been false accounting of an unspecified kind, an assertion that there had been an acquisition of property other than on just terms contrary to s 51(xxxi) of the Constitution, assertions of harassment, invasion of privacy, stalking and victimisation (as to which the associate judge held that there was no general civil right of action arising in relation to the conduct alleged), and a claim of 'blackmail/servitude' and defamation. The associate judge held that none of these claims were clearly articulated before the magistrate and there was no error in her having summarily dismissed them.

18 Finally, the applicant asserted in oral submissions before the associate judge that inadequate notice had been given of the respondent's intention to seek approval of a special levy. The associate judge held that this claim had not been raised either at all or in any event with sufficient specificity in the counterclaim to require the Magistrates' Court to deal with it. There was no indication in the transcript before the magistrate that the applicant had sought to adduce any evidence in support of the contention that inadequate notice was given of the relevant meetings.

19 In circumstances where the counterclaim relied on causes of action not known to law and on allegations which either were not made before the magistrate or were not the subject of specific evidence, it is readily understandable that the associate judge should have rejected the appeal in respect of the counterclaim. On the present application, however, we are not called upon to decide whether or not the associate judge erred in so doing. The question instead is whether the respondent's application to have the application for leave to appeal summarily dismissed should be upheld.

20 The Court is now invited to exercise a discretion, deriving from its inherent jurisdiction, to make that order for summary dismissal.[3] The basis on which the application is made is that the applicant's continued failure to file a draft notice of appeal in compliance with the orders of the Court amounts to a want of prosecution of the application for leave to appeal.

21 The inherent jurisdiction to dismiss a proceeding (including an appeal or an application for leave to appeal) for want of prosecution is well-established[4] and is recognised in r 24.05 of the Supreme Court (General Civil Procedure) Rules 2005 ('the Rules'). It has been held that the power is to be exercised very sparingly and that it must be shown that there has been inordinate and inexcusable delay in complying with the Rules, and that the defendant or respondent is likely to be seriously prejudiced as a result.[5]

22 However, the principles which are described above do not appear to us to be sufficient to deal with the present case, for three reasons. First, the matter being one in the discretion of the Court, the principles cannot in any event be treated as determinative or exhaustive. Secondly, the requirements for summary dismissal of an appeal are of their nature likely to be more stringent than those for summary dismissal of an application for leave to appeal, in respect of which a range of discretionary considerations are potentially relevant. The principles as stated are therefore unlikely to exhaust the matters of which account may be taken in respect of an application for leave to appeal. Thirdly, and most significantly, the Court is now subject, including when exercising its inherent jurisdiction, to the statutory obligation in s 8 of the Civil Procedure Act 2010 to seek to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[6]

23 Section 8 casts a new light on the inherent jurisdiction. It gives statutory emphasis to the importance of the timely resolution of proceedings, which in turn underscores the importance of compliance with orders of the Court for the management of a proceeding. But it also widens the range of matters to which consideration must be given. Even in cases where inordinate, inexcusable and prejudicial delay are not established, failure to comply with the orders of the Court may therefore none the less warrant summary dismissal. In light of s 8, the merits of the proceeding that is sought to be dismissed may bear on the exercise of the Court's discretion. That is especially so in this case because the Court is dealing with an application for leave to appeal rather than an appeal brought as of right.

24 In considering the merits of any proceeding sought summarily to be dismissed, it is appropriate to consider the matters which would be relevant in determining whether the proceeding can be said to have no real prospect of success, that being the standard applied in the provisions concerning summary judgment in Pt 4.4 of the Civil Procedure Act 2010 (albeit that these provisions are not invoked in the present case). That test also mirrors the test the applicant would have to meet in order to obtain leave to appeal.[7]

25 We therefore turn to apply that test to the proposed application for leave to appeal. To do so, it is necessary to outline the history of the matter in this Court.

26 The decision of the associate judge dismissing the applicant's appeal under s 109 of the Magistrates' Court Act 1989 was made on 8 September 2014. Then, as now,[8] leave was required in order to appeal from an order made by the Trial Division on such an appeal.

27 The applicant applied for leave to appeal to this Court on 30 September 2014. Orders were made by the judicial registrar on 6 October 2014 including an order that the applicant file and serve on or before 15 October 2014 an affidavit exhibiting a proposed notice of appeal. The applicant sought an adjournment of these orders on the basis of 'medical needs', which the respondent resisted. At a directions hearing before Nettle JA and Sloss AJA on 17 October 2014, the Court made orders adjourning the application for leave to appeal, extending the dates for compliance with the orders of the judicial registrar, relevantly to 15 January 2015, and directing the applicant to seek the assistance of the Registry to obtain free or low cost legal services.

28 On 20 October 2014, Registry requested the assistance of the Victorian Bar's pro bono scheme on behalf of the applicant and on 28 October 2014 the Court was notified that pro bono counsel (Mr Joseph Carney) had been briefed.

29 Mr Carney communicated with the Registry between November 2014 and January 2015 in relation to his dealings with the applicant. On 14 January 2015, the applicant attended at the Registry with a voluminous document seeking a further adjournment of the timetable. No such adjournment was granted. On 15 January 2015, Mr Carney advised the Registry that he had met with the applicant the previous day. Mr Carney sent to the Registry by email on 15 January 2015 written submissions of the applicant to which were attached two draft grounds of appeal. This document was not filed with the Registry. It was not apparent whether the applicant authorised it to be supplied on his behalf. In saying so, we intend no criticism of Mr Carney, who was plainly doing his best to give the applicant legal assistance in difficult circumstances.

30 Attempts by the Registry to contact the applicant after 15 January 2015 were not successful. On 16 February 2015, Mr Carney suggested to the Registry that it may be possible for the Court to appoint him as amicus curiae and for him to file written submissions on that basis.

31 On 2 March 2015, the respondent's solicitor advised the Court that orders were sought reinstating the timetable with liberty to apply to strike out the application for leave to appeal in the event of non-compliance. By letter to the parties on 11 March 2015, the judicial registrar advised that he would re-establish the timetable for the application and directed the applicant to file an amended draft notice of appeal. The judicial registrar advised that the Court would not appoint Mr Carney as amicus curiae but would include him in communications. By order made that day, the date for compliance with the original timetable was relevantly extended to 17 April 2015.

32 On 14 April 2015 the applicant advised the Registry that, in his view, he had already filed an amended notice of appeal in January 2015 and he would not be filing a further notice.

33 On 20 May 2015 the respondent filed the present application by summons for the application for leave to appeal to be dismissed.

34 Despite the assertion of the applicant that he had filed a draft notice of appeal in January 2015, it is plain from the Court file that this is not the case. The applicant sought to file a voluminous affidavit including exhibits on 14 January 2015 but this was not accepted for filing. In the circumstances, the current position is that no draft notice of appeal has been filed.

35 At the hearing of the respondent's application on 24 June 2015, the Court heard submissions by the applicant, counsel for the respondent and Mr Carney appearing as amicus curiae. The submissions of the applicant were directed to his counterclaim rather than the judgment against him in the Magistrates' Court. The submissions of Mr Carney were addressed to possible defects in that judgment, and not the counterclaim. Written submissions were also filed before and after the hearing.

36 Mr Carney's submissions were directed, as we have mentioned, to two draft grounds of appeal. The first ground alleged that the associate judge erred in law in holding that the magistrate was entitled to rely on the oral evidence of Ms McLennan as to the amounts outstanding by way of quarterly maintenance and special levies. Ms McLennan gave evidence that the 'directors have the power to raise levies when required, but usually they're referred to the AGM for the membership to consider'. The argument put forward is that proof of the amounts of the levies in question required proof of a valid resolution of directors of the respondent who imposed the levy in accordance with the respondent's articles of association. It was submitted that there was no evidence of such a resolution.[9] The resolutions which were placed in evidence were resolutions of the annual general meeting of the respondent rather than of a meeting of the directors. Mr Carney submitted, with some force, that if only the directors had power to raise the levies, any resolution of the general meeting purporting to exercise such a power was ineffective.[10] In addition, there was no evidence of any resolution at all determining the maintenance levies. Ms McLennan gave evidence agreeing with the respondent's counsel's suggestion that the amount of maintenance levies outstanding was $4,483, but a collection of invoices and spreadsheets that were tendered did not contain such a figure or make clear how it was calculated.

37 These arguments were not raised before the magistrate and Ms McLennan's evidence was not challenged. It may be, as counsel for the respondent submitted, that the arguments could have been met by evidence had the point been raised. On the other hand, the argument advanced by Mr Carney is, in effect, that the respondent had failed to put forward the evidence necessary to make out its case and that, as a result, the magistrate had no alternative but to dismiss the claims.

38 The second draft ground of appeal asserts that the applicant was denied procedural fairness in the proceeding in the Magistrates' Court in a number of respects. In particular, it is contended that the applicant should have been given time in which to formally raise a defence to the amended claims of the respondent. As already observed, of the three resolutions imposing special levies upon which the respondent relied, only one was alleged in the original claim. In other words, the respondent's case in relation to two of the three resolutions was brought belatedly and without an opportunity for the applicant formally to respond to it.

39 At the hearing on 24 June 2015 the Court asked the applicant whether he embraced the submissions made by Mr Carney as his own. The applicant indicated that he wished to consider the matter and the Court made orders for the filing of short supplementary submissions.

40 The applicant filed a three page document asserting that he had already lodged an amended notice of appeal. For the reasons already given, this is not correct. The document also sought to agitate a number of matters the subject of the counterclaim. The applicant appears to indicate in the document that he had not understood aspects of the hearing in this Court. However, he asserts that he was 'the victim of unaccountable fees' and thereby, it seems, indicates that he wishes to contest the judgment of the Magistrates' Court. While the document states that 'All I want is my counterclaim that I believe to be Rightfully mine', it cannot be said that he has disavowed the arguments put on his behalf by Mr Carney.

41 Nor, however, has the applicant embraced those arguments. As matters presently stand, therefore, there has been repeated non-compliance with the orders of the Court for the filing of a draft notice of appeal and the grounds upon which the applicant seeks to prosecute any appeal are entirely unclear.

42 Although the defaults of the applicant in the present case are serious, in our opinion they are not appropriately described as inordinate. The applicant's difficult personal circumstances, to which it is not necessary to refer in any detail, may also mean that the defaults are not inexcusable. Nor did the respondent seek to establish any serious prejudice. However, as explained above, these conclusions do not dispose of the matter.

43 In relation to the counterclaim, we have reviewed the reasons of the associate judge for dismissing the appeal and it is clear that the proposed appeal in respect of the counterclaim is fanciful and enjoys no real prospect of success.[11] The applicant's repeated failure to advance tenable grounds of appeal in respect of it makes it clear that it is just, efficient and cost-effective to resolve the issues in dispute by acceding to the application for summary dismissal in respect of the counterclaim.

44 In light of the way in which the matter has proceeded, it does not necessarily follow that the whole proceeding should be summarily dismissed. That result follows only in respect of the grounds upon which the applicant has expressly sought to rely. As noted, other grounds have been raised before the Court which may, or may not, be embraced by the applicant.

45 In our opinion, the grounds put before the Court by Mr Carney cannot be dismissed as fanciful. As we have explained, it would not be just to prevent the application for leave to appeal from proceeding on those foreshadowed grounds simply on the basis of the non-compliance with the Court's orders to date. In circumstances where the Court considers that there are real prospects of success in grounds which the applicant may yet seek to raise by way of appeal, one final chance should therefore be given to him to decide whether or not to pursue those matters. It should be emphasised, however, that the time has come for it to be finally determined whether or not this application for leave to appeal will proceed. It is therefore appropriate to give the applicant a last opportunity to remedy his non-compliance with the Court's orders.

46 Orders should be made permitting the applicant, if he wishes, to file a draft notice of appeal containing the two grounds formulated by Mr Carney, but no other ground. If he does not do so, we intend to dismiss the application for leave to appeal. It is implicit in what we have said that we do not permit the filing of any notice of appeal raising complaint about the manner in which the associate judge dealt with the counterclaim.

47 If the matter does not proceed, subject to anything the parties may wish to submit, we contemplate that the costs of the respondent's present application will be payable by the applicant as part of the costs of the dismissed application for leave.

48 We will adjourn the respondent's application to enable orders to be made once the position regarding any draft notice of appeal is made clear.

(i) The applicant for leave to appeal have leave to file on or before [7 days after the delivery of these reasons] a draft notice of appeal in the form attached to the submissions provided to the Registry by Mr Carney on 15 January 2015.

(ii) The application for summary dismissal is adjourned to [14 days after the delivery of these reasons].

[1] [2014] VSC 422.

[2] See the definition of 'Court' in the Corporations Act 2001 (Cth), s 58AA.

[3] The Court was not invited to exercise the express power in r 64.46 to dismiss an application or an appeal for failure to comply with an order or direction of the Court or for want of prosecution. Although it is therefore unnecessary to consider whether the principles stated below govern the exercise of this specific power, it is not apparent why any different result should follow.

[4] Muto v Faul [1980] VicRp 3; [1980] VR 26. The court likewise has inherent jurisdiction to dismiss cases that are frivolous or vexatious or an abuse of process of the court: at 30. See also, in relation to an application for relief from the automatic abandonment of an appeal under former r 64.16(2), Jorgensen v Slater & Gordon Pty Ltd [2009] VSCA 39.

[5] Muto v Faul [1980] VicRp 3; [1980] VR 26, 30-1, citing Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229, 268. See also Re Velissaris [2014] VSCA 153, [13]; R V Investments (Aust) Pty Ltd v ACN 110 769 929 Pty Ltd [2014] VSCA 210, [9].

[6] See also Chan v Chen [2013] VSC 538, [39]-[46].

[7] See paragraph 43 below.

[8] See Supreme Court Act 1986, s 17A(3A)(b).

[9] A document was tendered before the magistrate and described as the articles of association. However, as the magistrate noted, the document was in fact a proposed resolution to alter the articles. The state of the evidence was unsatisfactory in so far as the document that was tendered was only a notice of proposed resolution to amend the articles. However, it may well be that it was plain enough from the evidence what the articles required to be done in order for the levies in question to be imposed.

[10] John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113, 134; Ford's Principles of Corporations Law (electronic edition, LexisNexis Butterworths) at [7.070.3].

[11] Kennedy v Shire of Campaspe [2015] VSCA 47, [13], [19]; Note Printing Australia Ltd v Leckenby [2015] VSCA 105, [78]-[82].