Hunyh v Swanson and Anor [1999] NSWSC 72 (17 February 1999)

Last Updated: 18 February 1999

NEW SOUTH WALES SUPREME COURT

CITATION: HUNYH v. SWANSON & ANOR [1999] NSWSC 72

CURRENT JURISDICTION: Common Law

FILE NUMBER(S): 11812/98

HEARING DATE{S): 7 December 1998

JUDGDMENT DATE: 17/02/1999

PARTIES:

Van Tri HUNYH v. James Lawrence SWANSON & ANOR

JUDGMENT OF: Greg James J

LOWER COURT JURISDICTION: Local Court

LOWER COURT FILE NUMBER(S): 1200/97

LOWER COURT JUDICIAL OFFICER: J.L. Swanson

COUNSEL:

Plaintiff: D.J. Fagan, SC/R. Horsley

First Defendant: Excused

Second Defendant: P. Brereton, SC

SOLICITORS:

Plaintiff: Russell McLelland Brown

First Defendant: Excused

Second Defendant: Blake Dawson Waldron

CATCHWORDS:

Local Courts - civil claims - jurisdiction - action for enforcement of right derived from equitable principles - common money counts - availability of contribution at common law and in the Local Courts - contribution between co-guarantors - right at law or in equity.

Appeal - availability of stated case - no judgment or order -alternative of collateral appeal - supervisory orders - alternative to appeal in discretion.

Estoppel - Anschun estoppel - when available - evidence necessary.

"Action", "debt, demands or damages" defined

ACTS CITED:

Local Courts (Civil Claims) Act (1970) - ss.12, 19, 20

Supreme Court Act (1970)

Common Law Procedure Act (1899)

Anschun v. Port of Melbourne Authority [1981] HCA 45; (1981) 147 CLR 589; Johnson v. Gibbins (1985) 11 NW (NSW) 137; Ex parte Hornsby Shire Council; re Crandon (1935) 53 WN (NSW) 22; Hope v. Bathurst Council (1980) 1 NSWLR 535; Re Carter Smith, ex parte Taxation Commissioners (1908) 8 SR (NSW) 246; Webb v. Stenton (1883) 11 QB 518; Ogdens Limited v. Weinberg (1906) 95 LT 567; Hall Bros. SS. Co. Limited v. Young (1939) 1 KB 748 followed.

Albion Insurance Co. Limited v. GIO [1969] HCA 55; (1969) 121 CLR 342; Mahoney v. McManus [1981] HCA 54; (1981) 180 CLR 370; McLean v. Discount & Finance Limited [1939] HCA 38; (1939) 64 CLR 312; McIntosh v. Shashoua [1931] HCA 56; (1931) 46 CLR 494; Abigroup Limited v. Abignano [1992] FCA 567; (1992) 39 FCR 74; Armstrong v. Commissioner of Stamp Duties (1967) 2 NSWLR 63; Morgan Equipment Co. v. Rodgers (No. 2) (1993) 33 NSWLR 467; AGC (Advances) Limited v. West (1984) 5 NSWLR 590 considered

DECISION:

Magistrate erred

JUDGMENT:

HUNYH -30-

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

No. 11812 of 1998

GREG JAMES, J.

WEDNESDAY 17 FEBRUARY 1999

VAN TRI HUNYH v. JAMES LAWRENCE SWANSON & ANOR

JUDGMENT

HIS HONOUR:

1 By summons dated 12 July 1998, the plaintiff sought a declaration that the first named defendant, a magistrate sitting in the Local Court at Parramatta, had jurisdiction sitting as a court under s.6 of the Local Court (Civil Claims) Act (the Act) to hear and determine, pursuant to s.12(1) of that Act, an action brought in that court by the plaintiff against the second defendant, Le Tan Thanh, and also sought consequential orders. In addition to the claim for a declaration, orders were sought quashing the decision that the defendant did not have jurisdiction to determine the claim, to require the defendant to hear and determine the proceedings according to law and further consequential orders, that is, orders in the nature of certiorari and mandamus as provided for in s.69 of the Supreme Court Act or alternatively to the latter an order pursuant to s.65 of the Supreme Court Act.

2 The action in the Local Court was one in which the plaintiff, by the pleadings in his statement of claim, sought judgment for a sum for contribution as and between himself and the second defendant for one-half of monies alleged to have been paid by the plaintiff in satisfaction of certain guarantees given by the plaintiff and the second defendant jointly to a bank in support of a company's indebtedness which indebtedness the plaintiff asserted in his pleadings he had thus discharged. The plaintiff also claimed interest and costs.

3 On 3 December 1997, when the matter came before him, the learned magistrate held there was no jurisdiction under the Act to hear and determine the plaintiff's claim and ordered the plaintiff to pay the defendant's professional costs in the sum of $300.

4 In response to the statement of claim, the second defendant had filed a defence in which it stated that the defendant did not admit that any monies paid by the plaintiff to the bank were paid in respect of any liability the subject of the guarantees referred to, asserting an estoppel by reason that the subject of the claim was not raised in certain complex proceedings in the Equity Division of this court, and further asserting a bar under the Limitation Act 1969.

5 The plaintiff's pleading did not expressly define the nature of the contribution sought and in particular whether it arose by way of express agreement or at law or in equity. The certificate of judgment in evidence does not disclose that the magistrate gave any judgment or made any order as contemplated by Part 4 Division 4 of the Act other than the order for costs, an order which the court was expressly empowered to make under Division 5, s.34(1)(b) of the Act.

6 It is regrettable that we do not have the reasons of the learned magistrate. No reasons for judgment or transcript of the magistrate's decision was tendered in evidence before me. However, there was tendered, without objection, a letter from counsel appearing for the plaintiff, to the instructing solicitor, which recorded that the submissions of counsel for the second defendant when appearing before the learned magistrate, that the Local Court had no jurisdiction to consider the claim because the claim sought equitable relief and the Local Court had no equitable jurisdiction, had succeeded, notwithstanding the submission put by the plaintiff's counsel (ie, that although the right of contribution between co-guarantors was subject to equitable principles, when the guarantee had been paid in full the right of contribution created a debt, and that debt was recoverable under s.12 of the Act). The submission was that in the events that had occurred the plaintiff was suing for a debt at common law. That letter records the magistrate as having accepted the submissions of counsel for the (second) defendant and "accordingly he (the magistrate) indicated that he would mark the papers 'no jurisdiction' and order the plaintiff to pay the defendant's costs of $300". It is on the parties' concessions that letter and the certificate of judgment I have drawn to ascertain the basis for the magistrate's conclusion.

7 Here, the plaintiff contends the magistrate fell into jurisdictional error and maintains the submission made below, that is, that ss.12 and 19 of the Act do not result, in their proper construction, in denying to the court the ability to recognise a right which, even if it had its historical origins in equitable principles, nonetheless in modern times, it is submitted, is enforceable in an action for debt, indeed on a common money count, when the co-guarantor claiming contribution has paid more than his just proportion of the principal debt.

8 To that submission, the second named defendant (the first named defendant having appeared and submitted to such order as the court might make except as to costs) responded by asserting (1) there was no error since the jurisdiction was so narrow as not to permit such an action, where, as here, the action relies on contribution by implication of law rather than by express agreement; (2) that in any event, the proceedings in this court should not result in the matter being returned to the magistrate since, before him, the proceedings could not, in any event, succeed as the defendant was entitled to a stay on a basis on which he had sought it below and on which he had defended the proceedings, ie. by reason of the estoppel pleaded as referred to above. The estoppel was said to arise in the circumstances to which I have referred by application of the doctrine in Anschun Pty. Limited v. Port of Melbourne Authority [1981] HCA 45; (1981) 147 CLR 589; (3) it was urged that there had been disqualifying delay in the institution of these proceedings; and (4) that relief if otherwise available should be declined as there was an alternative remedy by way of appeal under s.69 of the Act of which the plaintiff had failed to seek. It was said that particularly by reference to the time limit of some 35 days for the instituting of such an appeal, the delay in the institution of the present proceedings was such that on that ground alone or in combination with the contended availability of the appeal, the court would in its discretion decline to grant the declaration or make the orders sought.

9 On the issue of delay, the affidavit of the plaintiff sworn 7 July 1998 and that of the plaintiff's instructing solicitor sworn 16 July 1998 were read. That evidence was not the subject of cross-examination. What was deposed to was left uncontradicted and unchallenged. The evidence was to the effect that the plaintiff received notice of what the magistrate had done shortly before Christmas in 1997 and sought a conference with his solicitor and counsel which, because of the legal vacation, did not occur until on or about 19 January 1998. At that conference the plaintiff was advised that he should obtain independent legal advice. It would appear that advice was tendered on the basis there may have been some apprehension of a claim against the plaintiff's then solicitors and counsel as a consequence of the magistrate's decision. Subsequently the plaintiff consulted a solicitor whose practice related to matters of a different nature and whom the plaintiff considered might be inappropriate in respect of this sort of matter and the plaintiff then consulted his present firm of solicitors with whom he met on 25 February 1998, that is, a little more than a month after he had received the prior advice.

10 That firm, upon being consulted, was concerned as to whether it might have been retained to advise, in conflict with the interests of another client. The papers and material were delivered to that firm and the instructions to brief counsel confirmed on or about 10 March 1998, the matter being regarded as appropriate for senior counsel, the plaintiff's present senior counsel was retained.

11 The documents relating to the litigation to which the defendant has already adverted to were obtained and in due course senior counsel's advice obtained and proceedings instituted. In that context I do not accept the submission that the lapse of time in itself and in comparison with the time that would have been available for an appeal is such that the plaintiff should be denied relief even if otherwise entitled.

12 Nothing has been put forward by the second defendant to indicate that it is in any way prejudiced by that lapse of time between the magistrate's decision and the commencement of these proceedings. Indeed, none of the matters that the defendant might have raised in the proceedings before the magistrate are in any way prejudiced in the event the matter should be returned there, since it appears that such evidence as might be expected to be tendered before the magistrate is unlikely to be affected by the passing of time considering the issues raised in those proceedings. In any event, no claim for any particular prejudice is raised. Although the plaintiff could have moved faster, the complications presented by the questions involving the legal practitioners are such that I would not, on that ground, deny relief.

13 The comparison between the delay in instituting the proceedings and the time allowed to institute the statutory appeal requires, as does the submission that a discretion should be exercised against the plaintiff by reason of the asserted existence of an alternative remedy by way of the appeal under s.69 of the Act, some further consideration. That appeal is peculiar to matters under the Act. That section provides for the judgments and orders "of a court exercising jurisdiction under this Act" to be "final and conclusive" subject to an appeal to the Supreme Court by a party to proceedings under the Act "who is dissatisfied with the judgment or order of the court as being erroneous in point of law". It is clear from subsection (2A) of that section, inter alia, that the words "erroneous in point of law" are wide enough to embrace a denial of natural justice or error in respect of jurisdiction. To such an appeal the stated case provision of the Justices Act are applied by subsection (3).

14 However, in the absence of a judgment or order, the stated case procedure could not be invoked: Johnson v. Gibbings (1895) 11 WN (NSW) 137; Ex parte Hornsby Shire Council; re Crandon (1935) 53 WN (NSW) 22; Hope v. Bathurst Council [1980] 1 NSWLR 535. The alternative remedy was not available. The time limit provided for seeking it therefore was not particularly relevant except as perhaps a general guide.

15 It was accepted in argument by counsel for the second defendant that what the magistrate did in respect of declining to hear the matter did not amount, in itself, to an order or judgment under the Act but it was urged that as a result of the making of the order for costs, it was open to test whether the basis for that order was erroneous in law and thus the basic question could have been raised on a stated case brought in respect of the costs order. I have grave doubts about this argument on a number of bases. Even if such a review was available and successful without consent, it would not extend to allowing an order reviewing the magistrate's declining of jurisdiction in the principal proceedings, ie. subsequent proceedings would have been necessary relying on an estoppel or res judicata. In any event, it is a matter that goes to discretion to determine as and between a claim for relief in the nature of a prerogative writ or for alternative appellate relief which might be appropriate: Hill v. King (1993) 31 NSWLR 654. I do not regard it as an appropriate matter to operate as a discretionary bar to the plaintiff's claim that he may possibly have been able to have a legal issue incidentally or collaterally determined.

16 In support of the assertion that relief, otherwise available, should be declined in discretion because if the plaintiff succeeds and the matter returns to the magistrate a determination in favour of the second defendant would on the estoppel defence at least be inevitable and thus these proceedings, so it is said would be futile, the defendant tendered the amended statement of claim and defence thereto in proceedings No. 4774 of 1990 in the Equity Division of this court, together with the judgments of his Honour Mr. Justice Young of 20 May 1996, 11 June 1996 and 5 September 1996. In response the plaintiff relied upon a notice of motion in the Local Court seeking the stay of 20 June referred to earlier and the affidavit sworn 21 November 1997, filed in the Local Court in response to that motion, originally to demonstrate that there was before the magistrate at the time of the finding of no jurisdiction, awaiting hearing, the application to have the proceedings stayed because of the application of the Anschun principle. After some debate it was accepted that I could have regard to the material in that affidavit and in particular paragraph 4 thereof as being the material that raised the questions before the magistrate, ie. being the evidence before him on the stay application, on which he would have to determine that question. It was common ground between the parties that the claim in question before the learned magistrate had not been raised in the litigation before Young, J.

17 It was accepted by counsel for the defendant that to succeed in invoking a futility argument to persuade me that the discretion should not be exercised to determine the plaintiff's claim here, it was necessary for him to persuade me that the Anschun point must, inevitably, either on an application for stay or by way of defence succeed and notwithstanding that the application of the doctrine in Anschun is to an extent discretionary.

18 The decision in Anschun (supra) has been the subject of considerable debate and judicial exegesis. The majority of the High Court held that an order staying a common law action in tort was correct where the owner of a crane, against whom damages had been awarded in an action brought by a workman who suffered injury arising out of the use of the crane by a hirer, and had sued the hirer and the owner for damages, had brought separate proceedings against the hirer claiming an indemnity in respect of those damages. It was held that the owner was estopped from raising the indemnity agreement in the separate action on the grounds that, as it had unreasonably refrained from raising it in the initial action (since that agreement was a defence to the hirer's claim for contribution in that action) and it was so closely connected with the subject matter of the first action that it was to be expected the owner would raise it as a defence and as a basis for recovery from the hirer, and that a judgment in the second action on the indemnity would conflict with that on the first action if in favour of the owner. At 602 the majority held:-

"In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter, it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings, eg. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few."

19 Their Honours referred to illustrations of those propositions. The principle here enunciated has been discussed and refined in numerous subsequent cases but the entitlement, justifiably to refrain, remains and the circumstances in which that entitlement might be exercised have not been judicially codified. Thus it would be necessary for a court before it could determine whether an Anschun estoppel arises, in almost any case, to look beyond the pleadings in the original action and the pleadings in a subsequent action to ascertain the basis on which a claim had not previously been litigated. Particularly would this be necessary in a case of this sort where the pleadings and the judgment in the action before Young, J. disclose a complex series of commercial transactions involving a business relationship between the parties concerning the purchase of a 50% interest in a business and contentions that the sale was affected by deceit, concealed insolvency and other matters going to fraud. Complex factual questions involving, in particular, conversations and documents and turning greatly on credibility, were before his Honour. Evidence might well have disclosed some proper basis to avoid inclusion of this claim in that litigation.

20 It sufficiently appears that the proceedings before Young, J. were such as not to put the suggestion, that it might be considered reasonable not to litigate matters that might be dealt with by a magistrate sitting in the Local Court, out of court. Notwithstanding the contention that the guarantees here concerned were given in support of the indebtedness of the company, the shares in which and the business of which was the subject of the proceedings before Young, J., it does not appear to me, certainly in the light of what appears in the affidavit of the plaintiff sworn 26 November 1997 in which he deposes that his solicitor advised him that these proceedings should be separately commenced to avoid them becoming involved in the complicated Supreme Court proceedings, that the magistrate would inevitably or, at least, would have had to, to avoid falling into error, conclude that the subject matter of the plaintiff's claim for contribution was so relevant to the subject matter of the Equity action that it would have been unreasonable for it not to have been raised there, ie. that there was no justifiable basis upon which the plaintiff might have reasonably refrained from litigating the issues posed in the proceedings before the magistrate before Young, J. I do not consider that the magistrate was bound to reach such a decision on the material before me and indeed it is clear that the magistrate would be bound to receive evidence on the matter raised. In those circumstances, I do not consider that it would be futile to determine the question of whether the magistrate wrongly declined jurisdiction on that basis. Thus no occasion, as suggested in any of the arguments, for the exercise of my discretion to decline to grant the plaintiff relief, if otherwise appropriate, arises.

21 I turn then to the principal contentions of the parties. On behalf of the plaintiff it is contended that a general doctrine of contribution has been recognised at common law and in equity since at least the 18th century as applying between co-sureties. But at common law, it would be necessary for the guarantor, claiming contribution to show that he had already paid more than the just proportion of the principal debt, although in equity a declaration could be obtained before payment, provided the necessity for payment was imminent. A claim for contribution could be brought on a common money count claiming money paid for the use of another and thus was cognisable at common law and therefore, even if the statutory jurisdiction of the Local Court does not include an Equity jurisdiction, such a claim could be made in an action for the recovery of any debt, demand or damage "(whether liquidated or unliquidated) in which the amount claimed was not more than $40,000" under s.12(1) of the Act, since such a claim did not fall within the exceptions from jurisdiction provided for by s.19.

22 The defendant, however, contended that the jurisdiction of the Local Court is limited (relevantly) to what are historically common law claims for debt or damages not exceeding $40,000, ie. claims the basis for which does not lie in the enforcement of the principles of equity; that the word "action" as used in the Act and in particular in ss.12 and 19 connotes an action at common law and thus an action in which the principles of equity and rights derived from equitable principles are not given effect to nor is equitable relief available. It is contended that the words "debt, demand or damages" similarly connote a liability exclusively at common law.

23 It is submitted that a claim for contribution against a co-guarantor is not a common law claim for debt but an equitable claim for contribution and that a debt does not arise as on the common money count for money paid to the use of the defendant because where one of several co-guarantors pays off the creditor, then that, so it is submitted, is a payment to the use of the principal debtor not the co-guarantors because the principal debtor is entitled to look to each of the guarantors for the whole of the indebtedness. It is contended that such a payment is exclusively to the use of the principal debtor and should not be categorised as also to the use of the co-guarantor to the extent that payment exceeds the just proportion of the principal debt as the plaintiff contends.

24 These submissions raise most interesting and important questions for the jurisdiction of the Local Court, as to the ambit of matters which may be pleaded using a common money count and the entitlement to and provenance of the modern right to contribution.

25 It is to be noted that the Act at no point expressly repudiates equitable jurisdiction or expressly adopts a solely common law jurisdiction. Section 12(1) provides:-

"Subject to this Part, a court sitting in its General Division has jurisdiction to hear and determine actions for the recovery of any debt, demand or damage (whether liquidated or unliquidated) in which the amount claimed is not more than $40,000, whether on a balance of account or after an admitted set-off or otherwise.

26 Section 19 provides for exceptions to jurisdiction as follows:-

"(1) A court shall not have jurisdiction under this Act in any of the following cases:-

(a) where the validity or effect of any devise, bequest or limitation under any will or settlement, or under any document in the nature of a settlement, is disputed;

(b) actions for passing-off, wrongful arrest, false imprisonment or malicious prosecution, or for or in the nature of defamation, or for seduction or enticement, or for breach of promise of marriage;

(c) actions for infringement of letters patent or copyright;

(d) actions for the detention of goods, where any such action is for the detention of goods comprised in a hire-purchase agreement, by the owner of those goods, or any person acting on the owner's behalf; or

(e) actions in which the title to land is in question.

(2) If the title to land incidentally comes in question in an action, the court shall have power to decide the claim which it is the immediate object of the action to enforce, but the judgment of the court shall not be evidence of title between the parties or their privies in another action in that court or in any proceedings in any court, whether or not it is a Local Court."

27 Section 20(2) provides for contribution from a joint debtor. Sections 20(1) and (2) read:-

"(1) Where a plaintiff has a cause of action against two or more persons jointly answerable, it shall be sufficient if any one or more of those persons is served with process, and judgment may be given or entered up and enforced against the person or persons so served notwithstanding that others jointly liable have not been served or sued, or are not within the jurisdiction of the court.

(2) A person against whom such a judgment is given or entered up and who satisfies the whole or any part of the judgment shall be entitled to demand and recover contribution from any other person jointly liable with the person."

28 A statutory right for indemnity or contribution between co-sureties or co-debtors and of obtaining the specialty or security surety had existed in New South Wales from well prior to the insertion by the Government Guarantees Act (No. 57 of 1934) in The Usury, Bills of Lading, and Written Memoranda Act (1902) of s.8A which reads as follows:-

"Every person who, being surety for the debt or duty of another or being liable with another for any debt or duty, shall pay such debt or perform such duty, shall be entitled to have assigned to him or to a trustee for him every judgment specialty or other security which shall be held by the creditor in respect of such debt or duty whether such judgment specialty or other security shall or shall not be deemed at law to have been satisfied by the payment of the debt or performance of the duty; and such person shall be entitled to stand in the place of the creditor and to use all the remedies and if need be and upon a proper indemnity to use the name of the creditor in any action or other proceeding at law or in equity in order to obtain from the principal debtor or any co-surety, co-contractor, or co-debtor, as the case may be, indemnification for the advances made and loss sustained by the person who shall have so paid such debt or performed such duty and such payment or performance so made by such surety shall not be pleadable in bar of any such action or other proceedings by him:

Provided always that no co-surety, co-contractor, or co-debtor shall be entitled to recover from any other co-surety, co-contractor, or co-debtor by the means aforesaid more than the just proportion to which as between those parties themselves such last-mentioned person shall be justly liable."

29 That provision had been taken from United Kingdom legislation which had long recognised a right by statute by that means to obtain contribution.

30 The Usury, Bills of Lading, and Written Memoranda Act was, by the Usury, Bills of Lading, and Written Memoranda (Repeal) Act (1990) (No. 7) repealed but by that Act the Law Reform (Miscellaneous Provisions) Act (1965) (No. 32) was amended by omitting s.3 thereof and by inserting after Part 1 a new Part, Part 2, viz:-

"Guarantees

Surety discharging liability to be entitled to securities (see Act No. 43 1902, s.8A)

3(1) A person who, being surety for the debt or duty or another, or being liable with another for a debt or duty, pays that debt, or performs that duty, is entitled:-

(a) to have assigned to that person, or to a trustee for that person, every judgment, specialty or other security held by the creditor in respect of that debt or duty, whether or not that judgment, specialty or other security is taken at law to have been satisfied by the payment of the debt or the performance of the duty; and

(b) to stand in the place of the creditor and to use all the remedies, and, if necessary, and on a proper indemnity, to use the name of the creditor in any proceedings to obtain from the principal debtor or any co-surety, co-contractor or co-debtor (as the case requires) indemnity for the advances made and loss sustained by the person who paid the debt or performed the duty.

2. The payment of the debt or the performance of the duty by a surety is not a defence to any such proceedings referred to in subsection 1.

3. A co-surety, co-contractor or co-debtor is not entitled under this section to recover from another co-surety, co-contractor or co-debtor more than the proportion to which, as between those parties themselves, that person is justly liable."

31 Previously, the Small Debts Court under the Small Debts Recovery Act (1912) and its predecessors of 1905 and 1899, recognised a similar right to contribution by a defendant from other persons jointly liable and the ability to assert that right in those courts. By s.15 of the Small Debts Recovery Act, contribution might be similarly recovered. Thus generally, contribution could be obtained under statute and in the Local Court in particular circumstances. All of which is strongly suggestive that the restriction that counsel for the second defendant contends is inherent in the drafting of the Act is unlikely to be so contained.

32 Further, the drafting of the Act is such that it would seem likely that if contribution could have been obtained, historically on a special assumpsit or if a pleading in quasi contract, as on a special money count for money to the use of another or money paid by the plaintiff for the defendant at his request, might be available (they being common law pleadings) or if the common law itself recognises, whether the origin of the principle was in equity or not, an actionable right to contribution in these circumstances, then such an action would be within jurisdiction even at common law and the magistrate would have fallen into error in declining jurisdiction.

33 A matter of mere history should not fetter the construction of the statute. It is one thing to look to the origin of a principle on which a right to relief may have been based but another entirely to hold that there is no jurisdiction to afford relief now, when the older rigid demarcations of jurisdiction are regarded as arid, on the ground that the origins of the principle defining the liability lie in antiquity in equity, notwithstanding that the product of the application of the principle will enable a finding of liability as and between one party and another in money terms such as to have the form of a judgment for the payment of money from one party to another as is apparently contemplated by the Act and contemplated by the common law. As will later be seen, the origin of the right to contribution was said to be in natural justice, which one in modern times would expect to be recognised in all courts.

34 Insofar as the argument is that so much depends on the word "action", in Volume 37 of Halsbury's Laws (4th ed.), para.17, the word is defined as apt to include any civil proceedings commenced by writ or in any other manner prescribed by rules of court and is described as having a wide signification in its natural meaning extending to any proceedings in the nature of litigation between a plaintiff and a defendant of a civil nature.

35 It has been held in New South Wales in re Carter Smith, ex parte Taxation Commissioners (1908) 8 SR(NSW) 246 at 249 by Street, J. (as he then was) that the word, when being used by the legislature and construing it according to its true legal meaning, "in its proper legal sense it is a generic term of nomen generale, and includes every sort of legal proceeding".

36 The additional words "debt, demand or damages" appear to be used in the sense of limiting the jurisdiction of the court to the recovery of money sums as a result of pre-existing liability. None of these terms preclude proceedings and remedies in which equitable principles are applied.

37 Debts may be both legal and equitable: Webb v. Stenton (1883) 11 QB 518. A debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation: Webb (supra) per Lindley, LJ. at 526-528. It is something recoverable by an action for debt and thus involves a sum that is ascertained or can be ascertained: Ogdens Limited v. Weinberg (1906) 95 LT 567. A demand is simply a clear intimation of a peremptory and unconditional character that payment is required. See re Colonial Finance, Mortgage, Investment and Guarantee Corporation Limited (1905) 6 SR(NSW) at 9. It was held in Hall Brothers SS Co. Limited v. Young (1939) 1 KB 748 at 756 by the Court of Appeal per Green MR., that:-

"'Damages' to an English lawyer imports this idea, that the sums payable by way of damages are sums which fall to be paid by reason of some breach of duty or obligation, whether that duty or obligation is imposed by contract, by the general law, or legislation."

38 In my view, none of these terms carries the inherent limitation for which the second defendant argues.

39 The second defendant in its submissions concedes Buzera Pty. Limited v. Megan Enterprises Pty. Limited (Cohen, J. unreported, 19 March 1998) involved a claim for rent under an equitable lease and while the application of an equitable principle arose, the claim for rent was a common law claim for debt, ie. thus the case supports the view that a common law entitlement to a sum of money ascertained or ascertainable in quantum may proceed out of the application of equitable principles to the relationship between the parties.

40 In order to support the argument that those terms embrace only purely common law concepts, counsel seeks to rely on cases on s.24 of the Common Law Procedure Act which limited the entitlement to the facilitative procedure of the specially endorsed writ to liquidated claims, at a time preceding the Supreme Court Act 1970, when common law and equity were separately administered by this court. The decision of Mr. Justice Brereton in Secretary of the State Advances Recovery Office of the Republic of South Africa v. Fine (1968) 87 WN 1 (NSW) 445 was referred to. In that case the plaintiff sued at common law and purported to rely upon a common money count for money lent but sought to rely upon particulars that the liability arose pursuant to a written agreement requiring the monies lent to be repaid in South African currency in Pretoria. In those circumstances for technical reasons the common money count for debt or on accounts stated was not available. However, his Honour held that the claim was technically a claim for damages rather than debt, but notwithstanding remained liquidated. His Honour was concerned to examine whether the claim was for "a debt or liquidated demand for money arising out of a contract express or implied" as required by s.24(1) of the Common Law Procedure Act (1899). He noted that Mr. Justice Sholl in Alexander v. Ajax Insurance Co. Limited (1956) VLR 436 had held that the phrase "a debt or liquidated demand" in respect of a claim at common law included a claim for which an action in debt would lie, a claim for which an indebitatus count would lie, including those covered by quantum meruit or quantum valebat and a claim for which an action in covenant or special assumpsit would lie, provided, that the claim was for a specific amount, not involving in the calculation thereof, elements, the selection whereof, was dependent on the opinion of a jury.

41 Sholl, J. in Alexander (supra) was concerned to examine the meaning of the expression "debt or liquidated demand" as used in O.XIII, r.3 of the Victorian Supreme Court Rules for the purpose of distinguishing between that concept and damages, since judgment had been signed on a writ of summons which was not "endorsed for a liquidated demand" within the meaning of the Rule and therefore, it was asserted, the judgment had been irregularly entered. In reaching the conclusion to which I have already referred, his Honour referred to Lagos v. Grunwaldt (1910) 1 KB 41 and the views of Cozens Hardy, M.R. and Farwell, LJ. that the phrase "debt or liquidated demand" was intended to refer to everything that could be sued for under the old common law indebitatus counts.

42 He also referred to Finn v. Gavin (1905) VLR 93 in which Madden, CJ., holding that a claim could not be specially endorsed when brought as an action on a covenant of indemnity, held that the remedy lay in damages, the indemnity arising from an express agreement rather than by implication of law.

43 As his Honour's exploration of the history of the phrase discloses, it had long been used, certainly since the first report of the Law Commissioners in the United Kingdom in 1851, as expressing the necessary circumstances in which a specially endorsed writ could be obtained at common law. Not surprisingly, since his Honour was dealing with circumstances prior to the coming into effect of the Judicature Act (1873) (36 and 37 Vict., C. 66) (and hence as applicable in New South Wales before the passing of the Supreme Court Act) his Honour was not concerned to distinguish between liabilities arising at law and in equity. In my view, neither the decision of Brereton, J. nor that of Sholl, J. assist the defendant's submission and insofar as contribution might be obtained at common law by an action on a common money count or on a special assumpsit, they are against it.

44 Even before the "fusion" (pace Meagher, Gummow & Lehane Equity (1992) [220] et. seq.) occasioned by the Judicature Act, Bullen & Leake's Pleadings (3rd ed.) (Precedents of pleadings in personal actions in the superior courts of common law ... by Edward Bullen, Esq. and Stephen Martin Leake, Esq. at p.43), notes the common indebitatus count for monies paid as being available, where a surety pays the debt of the principal debtor or where one of several co-contractors pays the whole debt for which the other co-contractors are jointly liable with him, in an action for contribution in this form. Similarly, an action brought pursuant to a statutory right for payment of monies might appropriately be brought at common law on a common money count.

45 As to the argument for unavailability of the money paid count on the basis that in the contribution context the money was paid solely for the benefit of the principal debtor or the creditor, the passage in the judgment of Mr. Justice Brennan (as he then was) in Mahoney v. McManus [1981] HCA 54; (1981) 180 CLR 370 at 386, whilst clearly enough confirming the entitlement of a co-surety who has paid the debt to recovery by way of contribution of his just proportion, does not support the proposition that the payment of the entire debt is solely for the purpose of the creditor (and it follows for the purpose of the principal debtor). His Honour is there discussing the application of the equitable principle that a creditor ought not to exercise his legal rights inequitably, enforcing disproportionate contributions from co-sureties. That case concerned the appropriateness of contributions in equity. The trial judge had declared payments by the company, which had gone into liquidation, to its creditors as having to be treated as if they had been made by a co-guarantor. In such circumstances in equity there would be an entitlement to contribution. The case was merely concerned with the proposition of whether an equity arose. His Honour's reasons do not support the unavailability of the common money count or a common law remedy.

46 Whatever may be the origin of the right of contribution, it is discussed in great detail in the judgment of Giles, J. (as he then was) in Morgan Equipment Company & Ors v. Rodgers (No. 2) (1993) 33 NSWLR 467 at 481D-486A in a most instructive review of the authorities. What his Honour was concerned to examine in that case was not whether the common law gave a right of contribution or whether the right exclusively lay in equity. That latter proposition, of course, was not what he held to be the case in the passage at p.482 where his Honour expressly acknowledged the right to obtain contribution between co-sureties in an action at law in assumpsit as referred to in Knight v. Hughes [1828] EngR 917; (1828) 3 Car & P. 467; 172 ER 504. He was concerned to consider whether in such an action there should be an equitable division of the costs of obtaining the contribution. His Honour said:-

"... equity was not confined by the form of action but could develop its own principles according to the basic concept of natural justice described by Kitto, J. in Albion Insurance Co. Limited v. Government Insurance Office (NSW) [1969] HCA 55; (1969) 121 CLR 342 at 350-352. There may not have been a clear dividing line between contribution at law and contribution in equity, and the same basic concept underlay both: see Manufacturers Mutual Insurance Limited v. GIO (1993) 7 ANZ Insurance Cases 61-158. But at the present day the rights of sureties inter-se are substantially equitable rather than contractual (see AGC (Advances) Limited v. West (1984) 5 NSWLR 590 at 604) and I should act accordingly."

47 What his Honour there says is in the context of looking at the question of whether the sureties should between themselves bear equally the burden and benefit of obtaining contribution by contributing equally to the costs as the balance of his judgment makes clear. He was not concerned in the last sentence quoted to assert that contribution, well recognised as a legal remedy in the 19th and early 20th century had evolved to being an entitlement which lies solely in equitable principles. Indeed many of the cases cited by his Honour for the availability of an action for contribution were common law cases.

48 Similarly Hodgson, J. (as he then was) in AGC (Advances) Limited v. West (supra) in the passage at 664, commencing at B-F, was concerned to examine the origins and nature of the right of contribution arising as between co-sureties and whether such a right depended upon an implied contract or upon principles of equity rather than whether the right was enforceable at common law or in equity. His Honour was concerned to undertake that task since in that case he said:-

"However, in a case such as the present, I do not think that such an implied contract would arise, or at least if there were such an implied contract, I do not think it would prevail over any equitable principles relating to contribution and indemnity which conflicted with it."

49 Thus, his Honour was concerned with the prospect of conflict between those principles, the operation of which would lead to the implication of a contract and its particular terms and the principles of equity relating to contribution and indemnity.

50 It was for that reason his Honour reached his conclusion:-

"In my view in this case, equitable principals relating to contribution of indemnity should be applied having regard to the substance of the transaction as I have found it, and I do not think that any implied contract which might be thought to arise between the parties would prevent the application of such principals."

51 His Honour was concerned to ascertain whether or not the prima facie equitable principle of equal contribution between sureties who had co-ordinate liabilities should or should not be departed from, not whether each could enforce an obligation to contribute at common law.

52 There is nothing in the equitable principles which would operate to bar a common law remedy, nor do any of the cases support such a bar.

53 It is to be noted that the judgment of Kitto, J. in Albion Insurance Co. Limited v. Government Insurance Office (NSW) [1969] HCA 55; (1969) 121 CLR 342 in dealing with contribution between insurers, points out that Lord Mansfield in such cases as Godin v. London Assurance Company [1758] EngR 138; (1758) 1 Burr. 489; (97) ER 419 was sitting at common law and simply brought together the two principles applicable at law no less than equity that persons who are under co-ordinate liabilities to make good the one loss (eg. sureties), must share the burden pro rata; the second being that the policies of marine insurance being contracts of indemnity, the relationship between insurers in such a case is analogous to the relationship between several sureties for a debt. In examining this question, his Honour held:-

"The general doctrine of contribution, as I have said, forms part of the common law. It was applicable by Lord Mansfield in Godin v. London Assurance Co. (178) 1 Burr.489; [1758] EngR 138; [97 ER 419] and Newby v. Reed[1746] EngR 596; (1763) Bl. W. 416 [96 ER 237] no less than by Lord Chief Baron Eyre when exercising the equitable jurisdiction of the Court of Exchequer in Dering v. Winchelsea (Earl) (1787) 1 Cox Eq. Cas. 318 [ 29 ER 1184]. This was because the basic concept was accepted by both law and equity as one of natural justice, as indeed it had been by the law of other countries since ancient times"

54 His Honour illustrated that proposition with numerous examples including referring to the judgment in Dering v. Winchelsea (1787) 1 Cox Eq. Cas. 318 and cited the passage from 321:-

"If we take a view of the cases both in law and equity we shall find that contribution is bottomed and fixed on general principles of justice. ... founded on equality, and established by the law of all nations ..."

55 His Honour went on:-

"And it had gone on to show that law and equity were at one as to the nature of the right, though the doctrine of equality operated more effectually in a court of equity than in a court of law, and there were differences as to the mode and conditions of its application; see generally Halsbury's Laws of England (3rd ed.), Vol.14, pp.492, 493, paras.394, 395; Vol.22, pp.266-268, paras.527, 528. The right arises at law when 'one of several persons had paid more than his proper share towards discharging a common obligation': Davies v. Humphries [1840] EngR 223; (1840) 6 M & W 153 at 168-169 [1840] EngR 223; (151 ER 361 at 367-368)."

56 Windeyer, J. agreed. Barwick, CJ., McTiernan and Menzies, JJ. noted the origin of the right as arising from the common law decisions of Lord Mansfield but did not find it necessary to discuss the history in such detail. The reasoning of Kitto, J. was accepted by Gibbs, CJ. with whom Murphy and Aitken, JJ. agreed, as authority for the general principles as to entitlement to contribution from co-sureties in Mahoney v. McManus (supra) at 376, although his Honour was not concerned in that case to distinguish between an entitlement at law or in equity.

57 It must be remembered that there were distinctions between the right of contribution as in equity or in law. At law, as and between several co-sureties where one became insolvent, the right to contribution differed from that provided in equity. At law the proportion recoverable was taken according to the whole number of sureties, no account being taken of the fact that one surety was no longer available for contribution: Cowell v. Edwards [1800] EngR 234; (1800) 2 B & P 268. Equity, on the other hand, did take account of this fact and allowed the recovery of a proportion according to the number remaining available for contribution without the insolvent co-surety.

58 Following the passing of the Judicature Act (36 and 37 Vict., C. 66) (and in New South Wales, The Supreme Court Act 1970 and in particular Part 4) in the event of conflict equitable rules generally prevail so that it was rarely necessary nor as efficacious to invoke the common law. Further, at common law, it was as the plaintiff submitted, necessary for the party claiming contribution to show that they had already paid more than the just proportion in order to recover their loss. This distinction is noted by Starke, J. in McLean v. Discount and Finance Limited [1939] HCA 38; (1939) 64 CLR 312 at 341, when noting the right to contribution at law.

59 In any event, nowadays damages, whether legal or equitable, are damages and a debt, whether at law or in equity, is a debt. The Act refers to "damages" and damages or "debt". It does not seek to distinguish expressly between legal and equitable debts. Although the question was not decisive of the appeal, these concepts were discussed in McIntosh v. Shashoua [1931] HCA 56; (1931) 46 CLR 494, in particular in the context of bankruptcy legislation as the Federal Bankruptcy Act, in dealing with a debt, had omitted the formula used in former legislation "in law or equity". Both Gavan Duffy, CJ. and Dixon, J. categorised an equitable liability for contribution to a co-surety as a debt. Starke, J., after a review of authority, was of the view that debts, whether due at law or in equity, were debts sufficient to ground a bankruptcy petition against a debtor and that the Federal Bankruptcy Act in which the words "whether due at law or in equity" were omitted in conformity with the Western Australian Bankruptcy Act of 1892 where the Judicature Act was in force, so that the language of the Federal Bankruptcy Act should be construed consistently with that in the then United Kingdom Bankruptcy Act and the bankruptcy law previously enforced in all the States of Australia, so that for that purpose the word "debt" had this broader meaning. On this issue, Evatt, J. differed since at that time, the judicature system which now prevails with its fusion of law and equity in New South Wales, was not then in force and because, in his view, the omission of the words "due at law or in equity" from the stated requirement for a petitioner's debt left to such jurisdictions as New South Wales, the question of determination as to whether what was recovered was or was not a debt.

60 In the context of discussing the right of the guarantor to an indemnity against the principal debtor and in particular the rights peculiar to equity, the Federal Court in Abigroup Limited v. Abignano [1992] FCA 567; (1992) 39 FCR 74 at 83 following an extensive review of authority, noted that a merely equitable right to enforcing an indemnity does not constitute a debt and that until the guarantor had paid up he had no debt or right at law at all. But, their Honours were not there concerned to distinguish between the debt that arose at common law when a surety paid more than the just proportion of the principal debt and equitable entitlements. They were dealing with the position when only the equitable pre-conditions to relief were satisfied. Their Honours referred to the very passages in the judgment of Starke, J. in McLean (supra) and that of Gibbs, J. in Mahoney (supra) to which I have referred. They concluded that there would in the instant case be a debt when the appellant had discharged the relevant claim.

61 It was no doubt because of the recognition by the Bankruptcy Act (UK 1883) in s.37 of equitable debts as capable of supporting a petition that it was held in Wolmershausen v. Gullick (1893) 2 Ch. 514 that the liability of a bankrupt co-surety to contribution, though unascertained at the time of the bankruptcy proceedings, is a debt provable in a bankruptcy. In that often cited decision, Wright, J. traced the history both at common law and in equity of the right to contribution and noted the right at common law as existing when there had been actual payment by the plaintiff of more than his share.

62 In Armstrong v. Commissioner of Stamp Duties (1967) 2 NSWLR 63 although the President, Mr. Justice Wallace did not find it necessary to distinguish between equitable or legal rights as to contribution, Mr. Justice Walsh held, commencing at 70:-

"The other point upon which I wish to make some comment concerns the question whether a claim made for contribution, by a donor who has paid the whole of the duty, would be enforceable at common law or only in equity and the further question whether, if the claim is an equitable one, this makes any difference which for present purposes is relevant. In the cases there are statements to the effect that the right depends upon equitable principles and 'is founded in doctrines of equity'. See Ruabon Steamship Co. v. London Assurance [1900] AC 6 at 11, citing Stirling v. Forrester (1821) 3 Bli. 575. But, although the doctrine of contribution originated in equity, it was at a later time recognised and applied in the common law action for money paid, although these actions were 'almost always accompanied by the suggestion of being a sort of importation from equity' (Stoljar, p.148). I think it must be accepted that, as between two co-debtors who are both directly liable for the debt to the same creditor, one of them who has paid more than his proper share may sue at common law for contribution. It may be true, as Vaughan Williams, LJ. said in Bonner v. Tottenham and Edmonton Permanent Investment Building Society (1899) 1 QB 161 at 174-176; [1895-9] All ER Rep. 549; that there are two separate and distinct principles of liability, one at common law and the other in equity. But, upon his analysis of those principles, the present case would be within the common law principle. It seems, however, that in England a claim for contribution of a type which can be brought at common law may be defeated if the circumstances are such that in equity the claim for contribution would fail. See Cunningham-Reid v. Public Trustee [1944] KB 602; [1944] 2 All ER 6."

63 Thus, the case law does not support the defendant's submission. Neither do the texts. In Restitution Law in Australia, by Mason and Carter, the learned authors at para.609 express the view:-

"A general doctrine of contribution has been recognised at common law and in equity since at least the eighteenth century (see Albion Insurance Co. Limited v. Government Insurance Office (NSW) [1969] HCA 55; (1969) 121 CLR 342 at 350-32). There used to be differences between law and equity where one of several co-obligors became insolvent or died (see Phillips and O'Donovan, pp.525-526; Meagher, Gummow and Lenane, 1003). However, the equitable principles flowing from Dering v. Earl of Winchelsea (1787) 2 Box & Pul 270; [1787] EngR 40; 126 ER 1276 now prevail (Armstrong v. Commissioner of Stamp Duties (1967) 69 SR (NSW) 38 at 48). The essence of the right to contribution lies in the payment of more than (P's) 'proper share towards discharging a common obligation' (Didmore v. Leventhal (1936) 36 SR (NSW) 378 at 385 per Jordan, CJ.

Despite the clear analysis in Dering's case itself, nineteenth century cases explained contribution on the basis of implied contract (Craythorne v. Swinburne [1807] EngR 343; (1807) 14 Ves Jun 160 at 164, 169; [1807] EngR 343; 33 ER 482 at 483-484; Shire of Windsor v. Enoggera Divisional Board [1902] St. R. Qd. 23 at 30 per Griffith, CJ). This is now seen as a fiction. Other grounds such as 'equitable principles' (see, eg. Moulton v. Roberts [1977] Qd. R. 135 at 139), 'natural justice' (see, eg. Albion Insurance Co. Limited v. Government Insurance Office (NSW) (1969) 12 CLR 342 at 350-351; Mahoney v. McManus [1981] HCA 54; (1981) 180 CLR 370 at 385) and 'doctrines of equity' in the sense of 'reason, justice and law' (Marsack v. Webber [1860] EngR 966; (1860) 6 H & N 1 at 6; [1860] EngR 966; 158 ER 1 at 3; Borg Warner (Aust) Limited v. Switzerland General Insurance Co. Limited (1989) 16 NSWLR 421 at 432) are, we suggest, unhelpful except as a pointer to a non-contractual analysis.

The leading authority on the doctrine of contribution is the judgment of Kitto, J. in Albion Insurance Co. Limited v. Government Insurance Office (NSW) [1969] HCA 55; (1969) 121 CLR 342. After tracing the historical origins, he drew attention to the underlying doctrine of equality as the basis of the common law and equitable rules."

64 (As I have shown, the remarks there made as to equitable principles prevailing merely relate to post-Judicature Act resolution of conflict, the distinction being drawn by the learned authors in order to lay to rest the necessity for reliance on the fiction of a contract.)

65 The learned authors of Equity, Doctrines and Remedies by Meagher, Gummow and Lehane (3rd ed.) in their chapter dealing with the topic commencing at p.286 recognise that that right of contribution was available both at law and in equity, going on to discuss the difference between the modes of exercise of that right in the two different jurisdictions and explaining the remarks noted above in AGC Advances Limited v. West (1984) 5 NSWLR 590 at 604 in the context of the lesser restrictions and greater availability of the remedy in equity.

66 Similarly, the common law action is noted in the Modern Law of Contract (3rd ed.) O'Donovan and Phillips at 614 to very much the same effect. At 632-635, the learned authors explore the modes of enforcement and their Honours note that it was as a result of the Judicature Act that it was not necessary to distinguish between an action at law or an action in equity and the greater facilitation of a just result available in equity became generally available. But they note that the action might properly be brought as a claim at law for a simple contract debt in quasi-contract, relying on the old common law cases.

67 In my view the analogy from the enactment of the Federal bankruptcy legislation referred to in McIntosh v. Shashoua (supra) is clear and the words employed in s.12 of the Act, particularly in the context where specific exceptions are made in s.19, apt to include a claim for contribution which would result in a judgment in money terms. The words, "action", "debt", "demand" or "damages" and the word "judgment" (often as it is associated with common law claims) do not carry such significance as to indicate that the Local Court, unlike any other court, should have no cognisance of matters where the origin of a claim for liability for money might lie in an equitable doctrine. The sections should be construed widely in my view and not to import the restriction asserted. This view accords with that of Bruce, J. in Batley & Anor v. Local Court of New South Wales & Anor (unreported 4 February 1999 at 4-6). In any event the right was and is enforceable at common law. Whether the right to contribution was adopted by the common law from equity or whether it became available simply because it was embraced within a common money count, or whether it also remained in equity, in my view, there is nothing in the Act which would exclude such a claim from the jurisdiction of the Local Court.

68 I therefore conclude that the right to seek contribution was and is available in the action. The present proceedings did not rely on a money count or on its face, directly on a pleading of a special assumpsit. In accordance with the modern practice the facts were pleaded. It was necessary, therefore, to identify the causes of action. The magistrate, as best one can ascertain, did not do so. Had he sought to do so, he may have identified a cause of action in equity but he could not have done so without identifying also a common law claim, without falling into error. There was available on the facts pleaded a concurrent, though not co-extensive cause of action at common law and, if the evidence disclosed full payment, it may be that the plaintiff was entitled to recover fully.

69 The magistrate, in my view, wrongly declined jurisdiction. That is a jurisdictional error. There was no suggestion in the argument before me, but that error of that kind in this case is of such a nature as is amenable to relief by orders in lieu of the prerogative writs. I am of the view that the plaintiff is entitled to the declaration in the appropriate terms and the appropriate consequential orders.

70 The matter will be re-listed so that I might hear counsel on the appropriate form of orders and as to costs.

LAST UPDATED: 17/02/1999