Yalda v Mshref

Supreme Court of NSW|2021-05-21

JUDGMENT

HER HONOUR: This is an appeal from the whole of the decision of Magistrate Swain dated 4 August 2020 ("the Magistrate"). The verdict, at its highest, involves $20,597.53.
By amended summons filed 14 May 2021, the plaintiff seeks leave to appeal from the whole of the decision of the Magistrate; the appeal be allowed, and the judgment of the Local Court be set aside.
The plaintiff in these proceedings is Munerah Yalda ("Ms Yalda"), the defendant in the Local Court proceedings. The defendant in these proceedings is Tahani Mshref ("Ms Mshref"), the plaintiff the in Local Court proceedings. For convenience, I shall refer to the parties by name. The parties relied upon a joint court book.

Appeal generally

Section 39 of the Local Court Act 2007 (NSW) provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law.
Section 40(1) of the Local Court Act provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court.
Section 40(2) provides that a party who is dissatisfied with an order as to costs or an interlocutory judgment of the Local Court may appeal to the Supreme Court, but only by leave of the Supreme Court.
Section 41(1) of the Local Court Act provides that this Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal.

The first statement of claim

By statement of claim filed 3 May 2019, Ms Mshref as plaintiff, sued Gary Singh as first defendant and Madan Corporation Pty Limited trading as Titan Transport as second defendant ("Madan") seeking damages in the sum of $20,000.
On 27 February 2019, Ms Mshref claims that the vehicle she was driving was damaged by Gary Singh when the truck he was driving collided into the rear of her vehicle ("second vehicle"). It was alleged that the truck Mr Singh was driving was owned by Madan ("first vehicle"). Ms Mshref pleaded that the accident occurred as a result of the negligence of or breach of the duty of care by Mr Singh for the following: 1. that she was either bailee or owner of the second vehicle; 2. that Mr Singh was the driver of the first vehicle; 3. that Mr Singh was an employee, agent, servant or bailee of Madan; 4. that Madan was the employer of Mr Singh; 5. that Madan was the owner of the first vehicle; 6. that Mr Singh's negligence or breach of his duty of care had caused the collision and consequent loss and damage to Ms Mshref; 7. that Madan was vicariously liable for the actions of Mr Singh; and 8. to have suffered loss and damage in the amount of $20,000 as a result of the accident.
On 21 May 2019, Ms Yalda's solicitor wrote to Mr Andrews, the son of Ms Mshref, who is the manager of Madan, advising that he had not had a response to their offer. He asked if a defence was forthcoming and advised that if he did not receive the defence within 14 days he had been instructed to apply for default judgment and proceed with enforcement of action.
On 5 June 2019, Mr Andrews replied to Ms Yalda's solicitor that after investigating the incident, he found that the vehicle was not registered to nor owned by Madan at the time of the accident.
On 7 June 2019, Mr Andrews further advised the plaintiff's solicitor that there had been a bit of confusion and they required a statement of claim sent under the name of Munerah Yalda to proceed.
In accordance with this advice, Ms Yalda's solicitor then commenced the second proceedings with Ms Yalda as plaintiff and Ms Mshref as defendant.
On 27 June 2019, default judgment was entered in favour of Ms Mshref against Mr Singh, inclusive of costs. Default judgment was also obtained against Madan. No enforcement action has taken in relation to the default judgment entered against Madan.

The second statement of claim

On 15 August 2019, Ms Mshref commenced the Local Court proceedings against Ms Yalda by way of second statement of claim. This claim also sought relief for loss and damage to Ms Mshref's motor vehicle caused by the accident.
However, in the statement of claim filed 15 August 2019, Ms Mshref claimed: 1. that Ms Yalda, and not Madan, was the owner of the First Vehicle, contrary to the earlier statement of claim filed 3 May 2019; 2. that Mr Singh was an agent, servant or employee of Ms Yalda, and not Madan, contrary to the earlier statement of claim filed 3 May 2019; and 3. to have suffered loss and damage in the amount of $20,597.53 as a result of the collision, providing the same particulars of loss and damage as in the earlier statement of claim filed 3 May 2019.
On 20 November 2019, Ms Yalda filed an amended defence to this statement of claim.
On 4 August 2020, the Magistrate after hearing the proceedings in dispute (in the general division) entered judgment for Ms Mshref against Mr Singh in the sum of $20,597.53 plus interest from 27 February 2019 to 4 August 2010 in the sum of $1501.90. Costs were ordered against Mr Singh on an indemnity basis from 28 July 2019.

Grounds of appeal

The plaintiff appeals on the grounds that: 1. The bringing of proceedings by Ms Mshref with respect of the same subject matter amounts to an abuse of process. 2. That the Magistrate made an error of law by dismissing the notice of motion filed on 23 June 2020 and subsequently dismissed on 23 July 2020. 3. That the Magistrate made an error of law by not applying or misapplying s 5(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), which her Honour was required to apply in these circumstances.
I shall deal with appeal grounds 1 and 3 together as they are interrelated.

Appeal ground 1 - Abuse of process and Appeal ground 3 - s 5(1)(b) of the Law Reform (Miscellaneous Provisions) Act

The plaintiff's submissions

Ms Yalda submitted that there was evidence before the Magistrate that Ms Mshref had commenced earlier proceedings in respect of the same accident and obtained default judgment against Mr Singh.
In particular that: 1. There was evidence before the Magistrate that Ms Mshref had previously argued that the first vehicle was owned by a person other than Ms Yalda; 2. the Magistrate erred in law by failing to find that the commencement and carrying on of the Local Court proceedings by Ms Mshref were an abuse of process; and 3. the Magistrate erred in law by failing to apply, or otherwise misapplying, s 5(1)(b) of the Law Reform (Miscellaneous Provisions) Act, which her Honour was required to apply.
Ms Yalda contended that the Magistrate erred by failing to apply or by misapplying s 5(1)(b) of the NSW Law Reform (Miscellaneous Provisions) Act.
Ms Mshref submitted that in some cases it may be an abuse of process to make a claim in later proceedings that could have been raised in earlier proceedings. Whether there is an abuse of process will depend on the particular facts of the case: see UBS AG v Tyne (2018) 265 CLR 77 at [43]; [2018] HCA 45 (Kiefel CJ, Bell and Keane JJ); Rippon v Chilcotin Pty Ltd; (2001) 53 NSWLR 198 at [31]-[33]; [2001] NSWCA 142 per Handley JA (Mason P and Heydon JA agreeing).
There has been a default judgment entered against two joint tortfeasors, and Ms Mshref subsequently commenced proceedings against another tortfeasor.
There was originally a rule at common law that a judgment obtained against one joint tortfeasor was a bar to an action against the others for the same cause of action, even if the judgment remained unsatisfied. Had that rule applied, Ms Mshref would not have been permitted to bring her claim against Ms Yalda. That said, the rule was based not on the doctrine of abuse of process, but on the rationale that there had only been one tort committed and thus there was only one cause of action: see XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 454-456 (Gibbs CJ; Mason and Wilson JJ agreeing) ("XL Petroleum")..
However, the relevant common law rule was abolished by s 5(1) of the Law Reform (Miscellaneous Provisions) Act.
Section 5(1) of the Law Reform (Miscellaneous Provisions) Act reads: "5 Proceedings against and contribution between joint and several tort-feasors (1) Where damage is suffered by any person as a result of a tort (whether a crime or not): (a) judgment recovered against any tort-feasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tort-feasor in respect of the same damage, (b) if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, … by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled to costs unless the court is of opinion that there was reasonable ground for bringing the action, …"
In XL Petroleum at 456, 459-460 per Gibbs CJ his Honour stated that the effect of s 5(1) is: "if a plaintiff takes judgment against one of two defendants for an ascertained sum, and it is not satisfied, it is no bar to his obtaining judgment against another, although the plaintiff cannot recover more under the second judgment than he [or she] could have recovered under the first."
It follows that the bringing of a subsequent action by Ms Mshref against Ms Yalda was something that Ms Mshref was expressly authorised by statute to do. In those circumstances, doing so cannot possibly have been an abuse of the Court's process.
On the topic of s 5(1) of the Law Reform (Miscellaneous Provisions) Act, Ms Mshref submitted that it is incorrect that the Magistrate "was required to apply" s 5(1)(b). That provision was neither pleaded in Ms Yalda's defence nor raised in her submissions. Therefore, there was no requirement for it to be taken into account in the Local Court.
According to Ms Mshref, the application of s 5(1)(b) gives rise to factual questions such as the basis on which damages were awarded in the prior proceedings and the circumstances of the commencement of the subsequent proceedings. Those are matters of which Ms Mshref could have adduced evidence had s 5(1)(b) been raised in the Local Court and it is therefore impermissible for it to be raised on appeal. Ms Yalda should be held to the case she conducted at trial: see Coulton v Holcombe (1986) 162 CLR 1 at 7-8.

Resolution

It is true that s 5(1) of the Law Reform (Miscellaneous Provisions) Act was not raised before the Magistrate. However, in my view, it raises a question of law for which no further evidence is required to be adduced. Section 5(1)(a) expressly permits that a judgment recovered against any tortfeasor liable for damages shall not be a bar to an action against another tortfeasor in respect of the same damages. On this basis, these proceedings cannot be said to be an abuse of process.
However, so far as costs are concerned, s 5(1)(b) states that if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, … by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled unless the court is of the opinion that there was reasonable ground for bringing the action (my emphasis).

Whether there were reasonable grounds to award costs in favour of Ms Yalda

Here Ms Yalda was put on notice that default judgment was to be entered in the first proceedings.
As previously stated, on 5 June 2019, Mr Andrews, the manager of Madan, replied that after investigating the incident, he found that the vehicle was not registered to, nor owned by, Madan at the time of the accident. On 7 June 2019, Mr Andrews further advised the plaintiff's solicitor that there had been a bit of confusion and if the statement of claim could be sent to him under the name Munerah Yalda as they required this to proceed. As a result of this advice, Ms Yalda's solicitor then commenced the second proceedings.
In the light of the above correspondence, there was a reasonable ground for bringing the second proceedings. In these circumstances, it is my view Ms Yalda is entitled to her costs in the first and second proceedings.
Section 5(1) of the Law Reform (Miscellaneous Provisions) Act entitles the plaintiff to take judgment against one or two defendants for an ascertained sum, it is no bar to her obtaining judgment against another, but Ms Yalda cannot recover more under the second judgment that she could have recovered under the first. The Magistrate set out a passage from Scott v Davis (2000) 205 CLR 333 at [253] and [301]; [2000] HCA 52. It is not necessary to repeat here.
The Magistrate stated: "I am satisfied then on the basis of that evidence that Titan Transport did have control over the manner in which Mr Singh carried out his task. As I have said earlier in the judgment, Ms Yalda was the owner of the truck. That truck was used by Madan Corporation Pty Ltd trading as Titan Transport to conduct the business of transporting goods. The defendant Ms Yalda is a shareholder in that company and, as I understand it from the documents in Mr Nerezo's affidavit exhibit 3, is an equal shareholder with one other person. I am satisfied on that basis that in providing the truck owned by Ms Yalda for use by Madan Corporation Pty Ltd trading as Titan Transport is the defendant's agent that the company uses the truck provided by Ms Yalda that Mr Andrews is the managing director and has the day to day running of that company, and therefore Mr Andrews is the defendant's agent in relation to the conduct of the business. Mr Andrews or the company on behalf of the defendant has control over the way in which Mr Singh was to carry out his task particularly by providing Mr Singh with the truck in order to carry out that task, According to Hayne J in para 301, I am satisfied then that the defendant is vicariously responsible for the negligence of Mr Singh. I have taken into the account the evidence Mr Andrews where he says that Mr Singh was a subcontractor. That may or may not be the case, but I am satisfied that it is reasonable to infer from the evidence provided by Mr Andrews that the company on behalf of Ms Yalda the defendant, had control over the matter in which Mr Singh carried out his task and accordingly, I find the defendant vicariously liable."
In other words, Ms Yalda was liable as the owner of the truck. She was the other equal shareholder in Madan. Mr Andrews was also an equal shareholder in Madan. By providing the truck owned by Ms Yalda for use by Mr Andrews on behalf of Madan, Mr Andrews acted as agent for Ms Yalda in relation to the conduct of Madan. Mr Andrews or the company on behalf Madan has control over the way in which Mr Singh was to carry out his task particularly by providing Mr Singh with the truck in order to carry out deliveries. The Magistrate was satisfied that Madan is vicariously responsible for the negligence of Mr Singh.
In these circumstances there is no abuse of process. Appeal grounds 1 and 3 fail.

Appeal ground 2 - Dismissal of the statement of claim

The first notice of motion

On 23 June 2020, Ms Yalda filed a notice of motion seeking orders that the statement of claim filed on 15 August 2019 be dismissed; and Ms Mshref be liable to pay relevant costs incurred by Ms Yalda.
On 23 July 2020, the notice of motion was dismissed, with the costs of the motion being costs in the cause. This dismissal does not form part of this appeal.
On 4 August 2020, the matter was listed for final hearing, and was heard by the Magistrate. On the day of this hearing, the Magistrate refused an oral application to strike out Ms Mshref's proceedings pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW)("UCPR").
Ms Yalda submitted that the Magistrate erred in law by refusing to hear and determine her application under UCPR 13.4 for the reason that such an application would "revisit [an] earlier ruling" and by proceeding on an erroneous principle that an application under UCPR 14.28 is just"'[an application] under [UCPR 13.4] in another form".

Ms Mshref's submissions

UCPR 13.4(1)(c) permits the Court to order that proceedings be dismissed where it appears to the Court that they are an abuse of the Court's process. UCPR 14.28(1)(c) permits the Court to order that the whole or any part of a pleading be struck out if the pleading is an abuse of the Court's process. Thus, although there are subtle differences between the two rules, both have the same essential purpose which is to provide remedies to prevent abuses of process.
It is true that the tests applying UCPR 13.4 and 14.28 will be different in some cases, but where the contention is that proceedings which have been commenced by statement of claim are an abuse of the Court's process, it is likely that there is no relevant difference. That is certainly the case here. If Ms Yalda is correct that there was an abuse of process then both UCPR 13.4(1)(c) and 14.28(1)(c) would be engaged, and it would be a matter of discretion as to which one the Court should apply.
There was no error in the Magistrate's reasoning. Her Honour applied the correct test and refused the UCPR 14.28 application accordingly.

Resolution

UCPR 13.4 and 14.28 read: "13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings - (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). 14.28 Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading- (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)."
As explained by Lindsay J in Steiner v Strang [2016] NSWSC 9 at [10]-[11] UCPR 14.28 enunciates grounds, upon which a defective pleading may be struck out. UCPR 13.4 focuses on the weakness of a party's case rather than defect of pleadings: Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937. The two rules are generally relied upon in tandem.
In relation to the oral application to dismiss Ms Mshref's statement of claim pursuant to UCPR 14.28, the Magistrate had this to say: "The application to dismiss the proceeding pursuant of s 14.28 that these proceedings are an abuse of process is refused, and the reason for that is this: l am not satisfied it is an abuse of process. These issues are determined in any event it seems to me subject to a notice of motion which was determined by this Court constituted differently on 23 July 2020. I am not satisfied it is an abuse of process because the defendant in these proceedings is the owner of the motor vehicle. As I understand it, that is not in dispute in these proceedings. Although in fairness, I do not have a statement of agreed facts. There is a default judgment as I understand it against Madan Corporation Pty Ltd. The defendant in these proceedings is a shareholder in that company but not a director, and as I understand it, as I said, the motor vehicle in question involved in these proceedings is owned, or at least the registered proprietor is the defendant. That Ms Yalda was not included in the litigation against Mr Singh, the driver, and Madan Corporation Pty Ltd for whom Mr Singh worked, is a shame, but that does not preclude the plaintiff in my view from proceeding against Ms Yalda separately. The other proceedings were not judicially determined The statement of claim was issued, and a default judgment was entered against Mr Singh, the driver, and Madan Corporation Pty Ltd. Whilst the judgment in those matters arises out of the same set of circumstances, I am not satisfied that these proceedings amount to an abuse of process because the plaintiff asserts that the owner of the vehicle, Ms Yalda, is also liable of course. In any proceeding, the onus rests on the plaintiff to prove on the balance on probability that liability is made out. The plaintiff where there may be an issue % proving liability in relation to other parties should not be precluded in my view I from proceeding against another party who may be also liable either jointly or severally. I am not satisfied on that basis that these proceedings amount to an abuse of process and on that basis, I decline to dismiss the proceedings or strike out the pleadings. The other issue I should discuss is the invitation by, as I understand it, a director of Madan Corporation Pty Ltd to the plaintiffs to proceed against Munerah Yalda. I am not satisfied that that in itself is a basis upon which to find there is no abuse of process. The cause of action the plaintiff asserts relies against Ms Yalda and that will stand or fall regardless of any invitation by the director of Madan Corporation Pty Ltd. In the matter where there is default judgment against the driver, I understand the plaintiff has tried to enforce the proceeding or to enforce the judgment without success, there has been no attempt as I understand it, to enforce the judgment against the company, but it is the plaintiff's assertion in any event that all the parties including the defendant in these proceedings are jointly or severally liable. On that basis again, I am not satisfied that these proceedings amount to an abuse of process. The application is refused."
The Magistrate had a discretion as to whether she should entertain an oral application to strike out the pleadings on the day of the hearing. It is usually not appropriate to seek to strike out pleadings on the first day of the trial and by way of oral application. Witnesses were at court to give evidence, both parties had prepared for trial. Further, it is even more inappropriate to make a further application to strike out proceedings on the basis of abuse of process when Ms Mshref had already sought summary relief alleging the second proceedings were an abuse of process. That application had been dismissed. Both UCPR 13.4 and 14.28 refer to an abuse of process and Ms Yalda sought a strike out on the basis of an abuse of process on both occasions,
In order to be successful on this ground of appeal, Ms Yalda, pursuant to s 40(2) of the Local Court Act, needs to establish that leave to appeal should be granted. Her submissions do not address this topic.
In Be Financial Pty Ltd v Das [2012] NSWCA 164 ("Das"), the Court of Appeal set out the principles to be considered in deciding whether leave to appeal should be granted. At [32], [33] and [35] Basten JA stated: "32 The principles governing cases such as these have recently been restated in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56. As Campbell JA noted (with the agreement of Young JA) at [22]: "It is of some importance to reiterate the principles that were stated in Carolan v AMF Bowling Pty Limited [1995] NSWCA 69, where Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute." 33 In Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Campbell JA, with the agreement of Young and Meagher JJA, expanded on his summary of Carolan, noting that Kirby P had recognised "that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable": at [46]. … 35 In Coulter v The Queen [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure "recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention": at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction."
In Lee v New South Wales Crime Commission (2012) 224 A Crim R 94; [2012] NSWCA 262, the Court of Appeal considered the principles governing leave. Bathurst CJ (with Macfarlan and Barrett JJA agreeing) at [12] stated: "The principles upon which leave to appeal is granted are well established. Ordinarily it is only appropriate to grant leave concerning matters that involve issues of principle, questions of general public importance or where it is reasonably clear there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69, Zelden v Sewell [2011] NSWCA 56 at [22] Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46], GKD v Director-General Attorney-General v Department [2012] NSWCA 219 at [10], Be Financial Pty Ltd v Das [2012] NSWCA 164 at [32]-[34]."
It is important to bear in mind that the requirement that an appellant seeking leave to appeal is intended to act as a filter to ensure that unsuitable appellate proceedings are not permitted to run where it would place an undue burden on the other parties, delays to other litigants and disproportionate demands on the resources of the court. In other words, it is a "control device": see Coulter v R (1988) 164 CLR 350; (1988) 76 ALR 365 at 371-372 per Deane and Gauldron JJ.
In Das, the Court of Appeal at [38] also noted the importance of s 60 of the Civil Procedure Act 2005 (NSW), which deals with proportionality of costs.
Whether the Magistrate mistakenly referred to UCPR 13.4 in lieu of UCPR 14.28, does not raise a question of public importance, nor is it reasonably clear that there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error. Further, at the hearing in the Local Court and in this Court, the amount in dispute is a modest sum of $20,000. The legal costs of both parties would far outweigh the judgment amount.
In these circumstances, leave to appeal should be refused.

Result

In accordance with s 5(1) of the Law Reform (Miscellaneous Provisions) Act, Ms Yalda cannot exceed the amount of damages awarded in the first proceedings, and can only recover damages of $20,000 in the second set of proceedings, In accordance with s 41 of the Local Court Act, I vary the amount of damages awarded in the second proceedings. In lieu of the sum of $20,597.93 for damages I reduce that sum to $20,000, otherwise the appeal is dismissed. Ms Yalda is entitled to her costs. The costs order made by the Magistrate dated 4 August 2020 is affirmed.

The Court orders that: 1. In accordance with s 41 of the Local Court Act 2007 (NSW), the amount of damages awarded in the second proceedings is varied from $20,597.93 to $20,000. Otherwise the appeal is dismissed. 2. The costs order made by the Magistrate dated 4 August 2020 is affirmed. 3. Costs are reserved.

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 June 2021

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