Yuen v Casini

The appeal

1. Leave to appeal is required because the orders made by the Magistrate in the Local Court were interlocutory: see Cassar v Hans Pet Constructions Pty Ltd [2008] NSWSC 1386 at [37]; Short v Burn [2012] NSWSC 695 at [23] - [24].
2. Section 40(2) of the Local Court Act 2007 (NSW) relevantly provides that a party who is dissatisfied with an interlocutory judgment of the Local Court may appeal to the Supreme Court, but only by leave of the Supreme Court.
3. Section 41 of the Local Court Act provides that this Court may determine an appeal made under s 40 either (a) by varying the terms of the judgment or order; (b) by setting aside the judgment or order; (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.

Whether leave to appeal should be granted

1. The first issue to be determined is whether leave to appeal should be granted.
2. The principles according to which this Court is to decide whether the Magistrate's discretionary decision in striking out the motions constitutes an error of law are set out in the well-known case of House v The King [1936] HCA 40; (1936) 55 CLR 499, where Dixon, Evatt and McTiernan JJ in their joint judgment stated definitively (at 504-505): "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion, which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
3. Most recently, Ward JA (with Gleeson JA agreeing) in Pi v Pierce and Attorney General for NSW [2015] NSWCA 118 at [12] summarised what constitutes an error in the House v The King sense, namely: "[12] …that the primary judge made a material error of principle or fact; that he failed to take into account a relevant consideration or took into account an irrelevant consideration; or that he arrived at a conclusion so unreasonable as to bespeak an error of such a kind."
4. In Be Financial Pty Ltd (as trustee for Be Financial Operations Trust) v Das [2012] NSWCA 164, the Court of Appeal also 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 R [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."
5. Mr Yuen and Ms Edwards referred this Court to the comments of Beech-Jones J in Sayed v Deng [2012] NSWSC 851 from [26], and conceded that they needed to demonstrate more than that the Magistrate erred, and that they must establish that the reversal of the orders would carry practical benefit given the Local Court's limited monetary jurisdiction.
6. In order to determine whether I should grant leave to appeal, I will consider whether Mr Yuen and Ms Edwards have demonstrated something more than that the Magistrate was arguably wrong, whether the reversal of the orders would carry any practical benefit, whether it involves a question of principle or questions of general public importance and whether there would be a substantial injustice if leave were refused. I also take into account that the claim is for the sum of approximately $78,000.
7. My decision as to whether or not leave to appeal should be granted will be made later in this judgment after I have examined the pleadings, submissions and the Magistrate's decision.

The Local Court proceedings

1. On 2 October 2014, Mr and Ms Casini filed an amended statement of claim ("ASC") in the Local Court at Penrith claiming the sum of $77,956 which comprises of mortgage repayments, bills and renovation costs.
2. As best I can understand it, Mr and Mrs Casini allege in the ASC the following.
3. In August 2011, Mr Yuen purchased a property in North St Marys for $300,000. Mr and Mrs Casini allege that the property was purchased pursuant to an agreement between Mr Yuen and them entered into in July 2011. The agreement was that after 30 years, the home would be transferred into their name and that Mr and Mrs Casini were to pay all costs and expenses in maintaining the home during that period.
4. On 29 September 2011, Mr and Mrs Casini moved into the property and commenced renovations.
5. In about October 2013, the relationship between the parties soured. Mr Yuen made an application to the Consumer, Trader and Tenancy Tribunal to evict Mr and Mrs Casini from the property, on the basis that Mr and Mrs Casini were tenants and that he was suffering financial hardship. That application was dismissed on the basis that there was no residential tenancy agreement between them.
6. On 6 December 2013, Mr and Mrs Casini received a letter from Price & Company Lawyers acting on behalf of Mr Yuen containing an offer to resolve the dispute. The offer was to the effect that Mr Yuen would attempt to sell the property for up to $380,000 (allowing Mr and Mrs Casini compensation for the renovations), but that if the property only sold for $350,000 Mr Yuen would retain the entire amount.
7. Sometime after April 2013, Mr and Mrs Casini arrived at the property to find that signage had been erected stating that the property was under video surveillance by Sargeant Security, and that Mr and Mrs Casini would be illegally trespassing if they attempted to enter. The locks had been changed. Mr and Mrs Casini's personal belongings had been taken to Kennards Storage. Mr Yuen advised Mr and Mrs Casini that they were liable for the costs of removal and storage, amounting to $1600. Mr Yuen told Mr and Mrs Casini that if they did not pay by 15 May 2013, their belongings would be sold.
8. In July 2014, the property was sold for $420,000. No moneys have been paid by Mr Yuen to Mr and Mrs Casini.

The notices of motion

1. On 14 October 2013, Mr Yuen and Ms Edwards filed two notices of motion:

• (1) The first notice of motion sought an order that Ms Edwards be removed as a party to the proceedings on the grounds that her inclusion as second respondent constituted an abuse of process pursuant to UCPR 14.28.
• (2) The second notice of motion sought an order that Mr and Mrs Casini's amended statement of claim be struck out on the grounds that it failed to comply with UCPR 14.7; and or UCPR 14.8; or further, and in the alternative that Mr and Mrs Casini file a further amended statement of claim in accordance with UCPR Part 14; or further, and in the alternative, that pursuant to UCPR 14.28 paragraphs 2-14 inclusive of the amended statement of claim be struck out by reason of failing to disclose a reasonable cause of action or other case appropriate to the nature of the pleading.

The hearing of the two motions

1. On 26 November 2014, the Magistrate heard both motions. Mr Yuen and Ms Edwards were represented by their solicitor Ms McFarlane. Mr Casini appeared for himself and his wife. They were not legally represented.
2. The Magistrate struck out both motions and made directions. They were that the defence be filed by 17 December 2014; that all parties file all witness statements and documents upon which they intended to rely on by 28 January 2015; and the matter was listed for mention before the Registrar on 4 February 2015. The Magistrate gave ex tempore reasons for striking out the two motions. His Honour stated (T4.44 - T6.3): "HIS HONOUR …In this matter Albert Casini and Tina Casini commenced an action in the Local Court by filing a statement of claim. They are claiming what they say is in excess of $97,000. So a very large amount, particularly in a Local Court claim, and the Court has read the statement of claim. There is also an amended statement of claim. In it, in general terms, Mr Casini says that they were friends with Mr Yuen; there was discussions and negotiations and he claims, or the plaintiffs claim that they viewed a property; negotiated a price; Mr Yuen provided the funds for it. Mr Casini says that he then renovated it; then the agreement between them deteriorated; Mr Yuen wanted his money. There were other proceedings in the Consumer Trading and Tenancy Tribunal to evict them. Mr Yuen then sold the property and has kept all the money. There has been no defence filed but clearly there is a $300,000 purchase price; there is a claim that Mr Casini did renovations; that the property was sold for $420,000. So there is a profit there and Mr Casini is asking for a share of it, pursuant to what he says is a contract or agreement between himself, the plaintiff, and the defendants. The defendants have put on no defence yet at all. They have simply filed a notice of motion, first of all to remove the second defendant, Samantha Edwards, because she is not mentioned in the statement of claim, although Mr Casini has said that it's assertion. He asserts or says in Court that she is involved in it, in a joint manner. In the Courts view it is too early and there is insufficient information from both the plaintiff and the defendant to strike out the amended statement of claims proceedings against the second defendant, Samantha Edwards. In the Courts view, that type of application can be more properly made or might more properly be made after the Court has seen all the pleadings, both the statement of claim, the defence and all the evidence or witness statements, documents et cetera which says, the plaintiff claims makes the defendants liable to them. The Court also takes into account that Mr Casini is unrepresented. In the Court's view the Court is simply not prepared to strike out or accede to the notice of motion to dismiss the proceedings, or should I say to remove Samantha Edwards as the second defendant at this stage of the proceedings. Also, the Court does have the power to strike out the statement of claim if it does not disclose [a cause of action]. Ms McFarlane has helpfully provided copies of the rules that she relies on and the Court, r 14.28, the Court may at any stage of the proceedings order that the whole or any part of the plea can be struck out if it discloses no reasonable cause of action or defence or is an abuse of process. The Court only has a statement of claim. The statement of claim says a house is bought for $300,000. There is some purported agreement between the plaintiffs and the defendants. The house is sold later for a profit of $120,000. The plaintiffs are claiming $97,000 of that profit. The Court is not making any assessment whatsoever on the merits of the claim at this stage, but on a reading of the statement of claim it is not a claim, in the Court's view, that appears on the face of it to be an abuse of process or discloses no reasonable cause of action, given the large sums of money, the time involved and the lengthy details contained in the pleadings as to what the plaintiffs claim is the defendants actions which give rise to a claim for in excess of $97,000. …."
3. His Honour also advised the defendants to obtain legal advice and continued at (T8.50; T9.5): "HIS HONOUR …At this stage I decline to order - the statement of claim has been issued in a narrative form giving an explanation for why they say the defendants are liable to them. It's clear that there is, in the Court's view, from its reading from it, it's clearly a claim in general terms based in terms of an agreement or a contract and alleged breach of contract. At this stage I will not require a further amended statement of claim set out in the proper form. I will require a defence to be filed."

The grounds of appeal

1. Mr Yuen and Ms Edwards appeal from the decision of the Magistrate on four grounds. They are: 1. That the Magistrate erred in law in maintaining Ms Edwards as a party where no cause of action was pleaded or foreshadowed against her; 2. That the Magistrate took into account irrelevant considerations in declining to dismiss the claim against Ms Edwards; 3. That the Magistrate erred in law in maintaining on foot an amended statement of claim which had not been prepared and/or filed in accordance with the requirements of the UCPR; and did not plead essential elements of the claim including how the contract came into existence, what terms were created or breached and the conduct constituting a breach; and 4. That the Magistrate took into account irrelevant considerations in declining to strike out the amended statement of claim.

Pleadings - the legislation

1. Section 56 of the Civil Procedure Act 2005 (NSW) relevantly reads: "56 Overriding purpose (cf SCR Part 1, rule 3) (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. …"
2. Sections 57 and 58 of the Civil Procedure Act are also relevant but it is not necessary to reproduce them here.
3. Uniform Civil Procedure Rules 14.7, 14.9 and 14.14 relevantly read: "14.7 Pleadings to contain facts, not evidence (cf SCR Part 15, rule 7; DCR Part 9, rule 3) Subject to this Part, Part 6 and Part 15, a party's pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved. … 14.9 References in pleadings to documents and spoken words (cf SCR Part 15, rule 9; DCR Part 9, rule 5) If any documents or spoken words are referred to in a pleading: (a) the effect of the document or spoken words must, so far as material, be stated, and (b) the precise terms of the document or spoken words must not be stated, except so far as those terms are themselves material. … 14.14 General rule as to matters to be pleaded specifically (cf SCR Part 15, rule 13; DCR Part 9, rule 9) (1) In a statement of claim, the plaintiff must plead specifically any matter that, if not pleaded specifically, may take the defendant by surprise. …"
4. The overall function of pleadings is to state, with sufficient clarity, the case that has to be met by the defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her: Banque Commerciale SA En Liquidation v Akhill Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286-287 and 302-3.
5. In so far as the motion seeking Ms Edwards be removed as a defendant is concerned, counsel for the Mr Yuen and Ms Edwards submitted firstly, that the primary judge disregarded the significance attached to the pleading; secondly, that the primary judge's views were irrelevant where there was no postulated case against Ms Edwards and that she ought not be joined as a party without an arguable case being put forward; and finally, that the effect of the primary judge's decision is that it may increase Ms Edwards costs.
6. So far as the second motion is concerned, Mr Yuen and Ms Edwards submitted that the Magistrate seemed to identify three matters which indicated that the claim should not be struck out. Counsel for the Mr Yuen and Ms Edwards submitted that two of those matters, the large sums of money and the time involved, do not provide a good reason for his decision. Rather, Mr Yuen and Ms Edwards argued that those matters indicate that the conventional rules as to pleadings should not be relaxed. Finally, counsel for Mr Yuen and Ms Edwards submitted that the Magistrate did not explain why the notice of motion warranted dismissal.
7. The pleading in the ASC is essentially a descriptive narrative of events. However, it is reasonably clear from that pleading that Mr and Mrs Casini are alleging that in July 2011, there was an agreement between Mr Yuen and the Casinis, that Mr Yuen subsequently breached that agreement and that Mr Yuen is liable to pay them damages. While the actual terms of the agreement are not clear, it appears that the agreement was that Mr Yuen was to purchase the property, Mr and Mrs Casini were to pay back $300,000 over 30 years and during that time undertake renovations to the property, and that then the property would legally be transferred into both Mr and Mrs Casini's names (ASC [1]).
8. In October 2013, Mr Yuen took steps to have the Casinis evicted from the property. The appellants moved out in April 2013 and allege that they "are at a loss financially due the breach by [Mr Yuen] of our Agreement." (ASC [13]).
9. The damages claim is particularised as $49,013 ($2,131 x 23 months) for mortgage repayments from October 2011 to August 2013 inclusive; less $27,600 ($1,200 per month x 23 months) for "rent" paid; $7,097 for miscellaneous payments to Mr Yuen or direct to the Council, GIO etc; $7,155 for kitchen renovations; $7,450 for internal renovations; and $34,841 for external renovations. The damages total $77,956.
10. The Local Court (General Division) is one of pleading to which both the UCPR and Civil Procedure Act applies (see Schedule 1 UCPR).
11. The main reason that the Magistrate decided to strike out Mr Yuen and Ms Edwards' notices of motion was because he took the view that they were premature. At the time, there was insufficient information to strike out the ASC and remove Ms Edwards as a defendant.
12. Even with only the information that was available, the Magistrate decided that the pleading did not constitute an abuse of process, and it did disclose a reasonable cause of action. His Honour accepted that while Ms Edwards was not mentioned in the statement of claim, Mr Casini asserted that she is "involved in it in a joint manner".
13. Mr and Mrs Casini are unrepresented and are unable to afford legal representation to assist them in drafting a further amended statement of claim. Central to these proceedings are the oral conversations that are alleged to form an agreement between the parties. While UCPR 14.9(a) requires that effect of spoken words must so far as material be stated in the pleadings, the Magistrate decided that exchanging statements by the parties would elucidate the terms of the alleged agreement and also reveal whether or not there was a cause of action against Ms Edwards. Although not specifically stated, it appears that the Magistrate took into account the objects of s 56 of the Civil Procedure Act when he concluded that the exchange of statements was the best way to facilitate the just, quick and cheap resolution of the real issues in dispute between the parties.
14. If after the statements are exchanged, the appellants (or more accurately Ms Edwards) is of the opinion there is no case against her, she can file a notice of motion seeking to have herself removed as a defendant. If after the exchange of statements, Mr Yuen and Ms Edwards do not know the case they have to meet, they can file a further notice of motion seeking that the proceedings be struck out or dismissed, or in the alternative, a further amended statement of claim be filed.
15. Overall, this is not a matter where leave to appeal should be granted. In my view, the appellants have not demonstrated something more than that the Magistrate was arguably wrong, nor would the reversal of the orders carry any practical benefit. This appeal does not involve a question of principle nor questions of public importance. The refusal to grant leave to appeal does not create a substantial injustice to the appellant. Taking these considerations into account and in the exercise of my discretion, I refuse to grant leave to appeal.
16. The result is that leave to appeal is refused.
17. Costs are discretionary. Costs usually follow the event. The appellants are to pay the respondents' costs as agreed or assessed.

The Court orders that: (1) Leave to appeal is refused. (2) The orders made by his Honour Magistrate Van Zuylen in the Penrith Local Court on 26 November 2014 are affirmed. (3) The appellants are to pay the respondents' costs as agreed or assessed on an ordinary basis. ******** 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: 20 May 2015