Lim v Zhou[2022] QCA 60

[2022] QCA 60

COURT OF APPEAL

SOFRONOFF P

Appeal No 1523 of 2022

DC No 415 of 2021

CHENG WAH LIM First Applicant

AH CHOT YONG Second Applicant

v

HONG ZHOU Respondent

BRISBANE

WEDNESDAY, 27 APRIL 2022

JUDGMENT

SOFRONOFF P:  The applicants began proceedings in the District Court by an application for an order relevantly, in the following terms:

“Pursuant to section 12(4) of the Trust Accounts Act 1973 (Qld), an order be made determining the ownership of moneys held in the trust account of Melville McGregor Lawyers, trading as Ownit Conveyancing following a dispute as to the application of those moneys.”

According to the affidavit of the second applicant, Mr Yong, in February 2016, he lent $60,000 to the respondent, Ms Zhou, and to her husband, Mr Lim, who is the first applicant.  Using that money and other funds which they had borrowed from a bank, Mr Lim and Ms Zhou bought a management rights business pertaining to a building on the Gold Coast.  Mr Yong has sworn that the couple promised to repay the money to him from the proceeds of sale of a home unit owned by Ms Zhou in China.  The money was not repaid and Mr Yong took the attitude that the couple had repudiated their obligations to repay the borrowed money.  He learned that Mr Lim and Ms Zhou were going to sell a home unit they owned on the Gold Coast.

He put a caveat upon their title, claiming an interest in the land pursuant to a certain deed.  The deed was not in evidence in the District Court and is not before me.  He says that the net proceeds of the sale of that unit amounted to some $45,372.10 and that he reached an agreement with Mr Lim and Ms Zhou about withdrawing his caveat.

Exhibited to Mr Yong’s affidavit is an email dated 26 November 2020 from Mr Yong to the solicitors for Ms Zhou stating that he had agreed with Mr Lim that he, Mr Lim, would pay to Mr Yong 50 per cent of the proceeds of sale and the other 50 per cent of the proceeds would be paid into the solicitor’s trust account and that in due course, Ms Zhou would instruct the solicitor to release that money to Mr Yong.  Mr Yong also exhibited an email sent on the following day by Ms Zhou to her lawyer, instructing her that:

“If Yong lifts the caveat today – lifts the warning today, please put my 50 per cent of the remaining money from the sale into your lawyer’s account.  I will notify you after receiving the valid documents from Lim and Yong.”

Evidently, the caveat was withdrawn and part of the net proceeds of sale were paid into the lawyer’s trust account.  On 4 February, Ms Zhou’s lawyer wrote to Ms Zhou asking whether it was in order to release the remaining sum in the trust account, an amount of $20,614.85, to Mr Yong.  By an email dated 12 February 2021, Ms Zhou instructed her lawyer not to release the money without a “valid directive of the Courts.”  She denied that she had entered into any agreement with Mr Yong to pay him the money on condition that he withdraw the caveat.  Accordingly, Mr Yong issued his application in the District Court seeking declaratory relief.

Section 12(4) of the Trust Accounts Act provides, relevantly:

“Where, before [paying moneys out of a trust account] a trustee has received notice in writing from any person who was a party to the business, proceeding or transaction in respect of which the moneys were received that the ownership of the moneys is in dispute, the trustee shall not without the written consent of the parties make payment of any such moneys until such time as—

…

2. (b)
   the trustee is advised that legal proceedings have been commenced to determine the ownership of the moneys whereupon the trustee shall forthwith pay the moneys into Court in which the proceedings have been taken to abide the decision of the Court.”

Mr Yong gave the agent the required notice and commenced this proceedings on 2 December 2021.  His claim was supported by an affidavit, from which I have taken the facts to which I have referred, and his evidence was corroborated in material respects by an affidavit of Mr Lim.  Ms Zhou filed no material in response in the District Court.

Two weeks later, the matter was mentioned before Judge Holliday.  Mr Yong was not legally represented and he appeared by telephone.  Mr Lim appeared in person.  The respondent, Ms Zhou, was represented by a solicitor.  According to Mr Yong’s affidavit, in the proceedings before me, her Honour inquired why a matter within the monetary jurisdictions of the Magistrates’ Court was before her in the District Court.  Mr Radcliffe, who did not appear below but appears for Ms Zhou today, invited me to ask Mr Lim what happened and Mr Lim explained that he appeared before her Honour and that Ms Zhou’s solicitor submitted that the matter should be before the Magistrates Court.  Her Honour asked Mr Lim whether it was true that the sum in question was in the order of $20,000 and when he agreed, her Honour said that this was a matter that ought to be in the Magistrates Court.  Her Honour dismissed the proceeding.  Mr Lim says that he asked her to transfer it to the Magistrates Court but her Honour refused.

Later that day, Mr Lim approached the registry with a request to have the matter transferred to the Magistrates Court but the registry advised him correctly that the application had been dismissed.  In the result, her Honour had summarily dismissed the application and made no order as to costs.

The written order is before me.  It is dated 17 December 2021, the date of the hearing, and has the hallmarks of a hastily prepared document.  It is in very bad handwriting and has several very untidy handwritten excisions and amendments.  Until the order was taken out, it would have been open to her Honour to reopen the proceeding and if her Honour was minded, to transfer the proceedings to the Magistrates Court.  After the order was taken out, that was no longer possible.  I do not know whether the order was taken out before or after Mr Lim made his request to the registry.

Mr Yong and Mr Lim filed an application for an extension of time within which to appeal.  In that document, they also seek an order remitting the matter to the District Court for a hearing on the merits of the original application.  They also sought an extension of time within which to appeal.

The appeal ought to have been filed by 14 January 2022 but it was not filed until 8 February 2022.  Mr Yong has explained in his affidavit that he needed to get legal advice and tried to get it from a pro bono group of solicitors but they had closed for the Christmas break and were not to reopen their offices until 24 January 2022.  Nevertheless, he obtained the necessary documents on 12 January and sought to file them on 14 January, the due date.  There was a formal defect in his documentation and the registry refused to accept the application but Mr Yong promptly sought and obtained legal advice and filed his documents on 8 February.  There is no material before me to suggest that the respondent has suffered any prejudice because of the delay.

The applicants require an extension of time and leave to appeal pursuant to s 118 of the District Court of Queensland Act.  It is important to identify the substance of the proposed appeal.  The applicants do not seek, in this appeal, to vindicate Mr Yong’s right to the money; they merely seek an order that would require the District Court to hear their application on the merits.

The respondent opposes the grant of leave on the following grounds.  First, she submits that the amount in issue is within the jurisdiction of the Magistrates Court.  That is true but in my respectful opinion, that submission misses the point.  The relief claimed in the original application was for a declaration of right and that is not relief that the Magistrates Court can grant.  Section 12(4) of the Trust Accounts Act 1973 envisages the bringing of proceedings to, quote, “determine the ownership of moneys in question.”

Section 68(1)(b) of the District Court of Queensland Act 1967 confers jurisdiction upon the District Court to hear actions for a declaration that a trust subsists provided that the fund alleged to be subject to the trust does not exceed the monetary jurisdiction of the District Court.  The amount in question in this case does not exceed that limit.  Section 69(1) of the Act confers upon the District Court the powers conferred by any Act upon the Supreme Court so that the District Court can, in any proceeding, in a like manner and to a like extent, grant such relief or remedy as may be done in a like case by the Supreme Court.

Section 10 of the Civil Proceedings Act 2011 confers power on the Supreme Court to entertain an application for declaratory relief only.  That section is expressed to apply only to the Supreme Court but the effect of s 69 of the District Court of Queensland Act is to pick up that provision so that the District Court can exercise the power to grant declaratory relief only.

The Magistrates Court Act 1921 confers no like power upon the Magistrates Court.  Its jurisdiction is relevantly limited to claims for the recovery of sums of money or damages.  It has no power to make a declaration.

Mr Yong was within his rights to seek a declaration of right in the lowest Court in the hierarchy of Courts that could give it to him.  That was the District Court and it did not matter that the amount in question was within the jurisdiction or limit of the Magistrates Court.  It was also within the jurisdictional limit of the District Court but importantly, the Magistrates Court has no power to grant the remedy envisaged by the Trust Accounts Act and the remedy that Mr Yong is seeking.

In these circumstances, Mr Yong seeks an extension of time and leave to appeal to the Court of Appeal.  Mr Yong invoked the jurisdiction of the District Court in a regular way and it was the duty of that Court to determine the case.  The Court had no power to dismiss it summarily without a hearing on the merits.  Mr Yong submits that on his appeal, if he was permitted to bring it, he would submit that he has been denied his right to have his case decided by a Court whose jurisdiction he had regularly invoked.  If he is right in that submission, that failure to hear his case would constitute a substantial injustice to Mr Yong despite the small sum involved.  Mr Yong has stated in his evidence that he is a pensioner and that the sum outstanding is significant to him as part of his savings.  Consistently with his status as such, he has claimed a fee reduction in the Court because he is a pensioner holding a concession card.

On the other hand, the respondent has not denied the claim by evidence.  Her assertions in the email to the lawyer to which I have referred are not, on their face, satisfactory and in any case, she has not sworn or affirmed those denials in the proceeding in the District Court or before me.  Instead, she has taken procedural points to resist the claim.  These were valid procedural points and she was entitled to take them but she has not put forward any response on the merits either to the grant of appeal that is sought to be advanced or to the substantive claim for a declaration, nor has she put forward any prejudice that she might suffer by reason of an extension of time being granted.

Ms Zhou also submits that Mr Yong’s claim to the money is weak.  She posits that it is unclear to whom the money is owed and it might be owed to a company and that the borrower might have been a company and not Ms Zhou or Mr Lim.  That is not the issue today.  The issue is whether Mr Yong has had his day in Court.  In any case, the issue on the merits of the claim for a declaration will not be who was the borrower.  It will be whether Ms Zhou did or did not promise to devote the proceeds in the lawyer’s trust account to payment of the debt, whoever owed it, rather than who the borrower might have been.

Ms Yong submits that Mr Lim has no claim but appears, rather, to be a co-obligor.  That, indeed, appears to be part of the case that Mr Yong wants to bring.  That means that Mr Lim ought to be a party to the proceeding.  He has wrongly been joined as a plaintiff rather than as a defendant, but nothing turns on that.  The record can be amended to reflect the true technical legal position so that he appears as a defendant who will take no part in the hearing but will be bound by the outcome.

It is understandable why, in the circumstances before her, Judge Holliday dismissed the application.  The amount in question was small.  A claim for a liquidated sum could be dealt with more cheaply in the Magistrates Court.  Having regard to Mr Yong’s position as a self-represented litigant, he might not have known that.  Taking into account the small sum involved and Mr Yong’s lack of a lawyer, her Honour ameliorated her order by dismissing the application but making no order as to costs.  Her Honour was not assisted by submissions about the lack of jurisdiction of the Magistrates Court to determine an application for a declaration and that is now the issue upon which the present application turns.

Leave to appeal will generally not be granted unless the applicant shows that there is a reasonably arguable error of law in the decision below and that the applicant will suffer a substantial injustice if leave is not granted.  When the amount claimed is as small as it is in this case, it would be a rare case in which the applicant could fulfil the latter condition; however, this is such a case because if Mr Yong sustains his intended contentions, he will have demonstrated that he has suffered a substantial injustice by the refusal of the District Court to hear and determine his case.  For these reasons, I grant an extension of time to file and appeal.

I make the following orders: I grant an extension of time to file an appeal until 27 April 2022.  Second, I grant leave to appeal.  Three, I direct that the application for leave to appeal filed on the 8th of February 2022 be treated as the notice of appeal in this matter and I direct the registrar to make the usual directions relating to an exchange of submissions in preparation of the record.  I propose to make the costs of the application costs in the appeal.

SOFRONOFF P:  Adjourn, for my final time.