Lim v Zhou[2022] QCA 99

[2022] QCA 99

COURT OF APPEAL

McMURDO JA

BOND JA

DALTON JA

Appeal No 1523 of 2022

DC No 415 of 2021

CHENG WAH LIMFirst Appellant

AH CHOT YONGSecond Appellant

v

HONG ZHOU Respondent

BRISBANE

MONDAY, 30 MAY 2022

JUDGMENT

1. [1]
   DALTON JA:  On 27 April 2022, President Sofronoff granted the appellants leave to appeal: [2022] QCA 60.  The appeal was heard today and, in my view, this Court should make orders that:

1.  The appeal be allowed.

2.  The orders below be set aside.

3 The application for a certificate under the Appeal Costs Fund Act 1973 is refused.

4.  There be no order as to the costs of this appeal and the reserved costs of the application to appeal.

2. [2]
   Descriptions of the proceeding in the District Court and the facts said to give rise to the claim in the District Court are found in the first seven paragraphs of President Sofronoff’s reasons on the leave application.  Section 12 of the Trust Accounts Act 1973 provides:

“12 Disbursements from trust account

...

3. (3)
   Within 14 days of demand in writing made by the person for whom or on whose behalf trust moneys have been received or are held by a trustee and to which the person is then entitled the trustee shall pay to the person entitled thereto the balance of the moneys to which that person is entitled or as that person may direct in writing unless the trustee has already disposed of the moneys in accordance with a requirement made under section 33, in which case the trustee shall notify the person entitled to the moneys of that fact giving full particulars thereof.

...

3. (4)
   Where, before the making of a payment pursuant to subsection (3), 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 the court in which the proceedings have been taken to abide the decision of the court; or

3. (c)
   where no notice or advice is received by the trustee pursuant to paragraph (a) or (b) within a period of 60 days after the receipt of the notice first mentioned in this subsection, the said period expires.”

3. [3]
   On the leave application, the President did not have the transcript from the District Court, but we have it on this appeal.  The matter came before the primary judge on 17 December 2021.  That was the return date on the originating application, although there seems to have been no prospect of the matter being heard and the date was treated as a directions hearing or review.  Mr Lim appeared in person and Mr Yong appeared by telephone.  A solicitor appeared for the respondent.
4. [4]
   Initially, the primary judge clarified matters as to addresses for service and the exchange of preliminary material.  She then told the parties that she proposed to set dates for a further exchange of affidavit material and submissions.  She then enquired of Mr Lim what the sum of money involved was.  She was told that it was “over 20,000.”
5. [5]
   At that point, the solicitor for the Respondent requested that the matter be transferred to the Magistrates Court: “…because it doesn’t reach the monetary jurisdiction for the District Court.”
6. [6]
   Her Honour said:

“That’s right.  So rather than transferring it, given the fact that this matter is at its infancy, I’m going to – and I’m going to hear from the applicants first, but simply dismiss the application and if they want to bring it again, they bring it in the Magistrates Court ...

...

... There’s just – there’s nothing, really, to transfer at the moment, other than the fact that the application’s been commenced, but there’s – that seems to be the more appropriate way to do it at that stage.”

7. [7]
   In fact, affidavits had been filed by the applicants, as well as their application, although they had not been served.
8. [8]
   The solicitor for the respondent said that she had no objection to the course proposed by the primary judge.
9. [9]
   The respondent in this Court submitted that in saying “That’s right” (above) the primary judge meant that the District Court had no jurisdiction to hear matters which were in the monetary jurisdiction of the Magistrates Court.  There are some later comments during the hearing which might support that idea.  If the primary judge did think that, it would have been an error of law.  However, it is not entirely clear and it is not something this Court needs to determine to dispose of this appeal.
10. [10]
    In my view, the District Court proceeding was one for a declaration.  Although it did not expressly seek any particular relief, it asked for, “…an order ... determining the ownership of moneys held in the trust account ... following a dispute as to the application of those moneys.”  Thus, the proceeding could not have been dealt with in the Magistrates Court, which has no jurisdiction to grant a declaration.
11. [11]
    Before us, it was argued on behalf of the respondent that the proceeding could not be dealt with in the District Court.  Startune Pty Ltd v Ultra-Tune Systems (Aust) Pty Ltd [1991] 1 Qd R 192 establishes the proposition that in the general run of cases (for example, for damages or for money claims), the District Court has jurisdiction to make a declaration or grant an injunction only when the proceeding is otherwise within its jurisdiction.  The facts in Startune illustrate this rule: there was a claim for damages within the jurisdiction of the District Court, so that Court had jurisdiction to make an injunction in that proceeding.
12. [12]
    Here, the applicants only ask for relief in the nature of a declaration.  They do not make a money claim.  Nonetheless, in my opinion, the District Court does have jurisdiction to hear the application because, as President Sofronoff put it in his judgment on the leave application, “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” – p 5.
13. [13]
    Section 68(1)(b)(viii) of the District Court of Queensland Act provides:

“68 Civil jurisdiction

1. (1)
   The District Court has jurisdiction to hear and determine –

...

2. (b)
   the following actions and matters –

...

8. (viii)
   for the execution of a trust or a declaration that a trust subsists, where the estate or fund subject or alleged to be subject to the trust does not exceed in amount or value the monetary limit [of the District Court];

…”

14. [14]
    Subsection (viii) expressly gives the District Court jurisdiction to hear a proceeding for a declaration that a trust subsists, and in those circumstances, there is no necessity for, say, a money claim in the amount of the trust fund, to give the Court jurisdiction before it may entertain the proceeding for a declaration.  I note that subsection (viii) is not alone in this regard; subsection (v), for example, gives the District Court jurisdiction to make a declaration of partnership or dissolution or of winding up where the property of the partnership does not exceed the monetary jurisdiction of the District Court.
15. [15]
    It was argued on behalf of the respondents that in this case, there is no dispute that the money is held on trust.  It is in a solicitor’s trust account.  Therefore, it was argued the proceeding could not be characterised as one for a declaration that a trust subsists.  It is certainly true that the money is in a solicitor’s trust account, but there is a dispute as to who is the beneficiary of that trust.  The respondent, Ms Zhou, claims that it is her, while Mr Yong claims that the trust subsists in his favour.  In my opinion, this is a claim for a declaration that a trust subsists in favour of Mr Yong in circumstances where that fact is disputed.
16. [16]
    In my opinion, then, the proceeding brought by the appellants was within the jurisdiction of the District Court and was not within the jurisdiction of the Magistrates Court.  The proceeding in the District Court should not have been transferred to the Magistrates Court, nor should it have been dismissed on the basis that that was an efficient mechanism, in effect, to achieve a transfer.
17. [17]
    As to this latter point, the Uniform Civil Procedure Rules do provide for proceedings to be dismissed without a hearing in various circumstances.  Some examples are:

• On a summary judgment application where there is no real prospect of success – r 291.
• Judgment for default where a defendant has not filed a defence – r 281.
• More broadly, where a party has not complied with the rules or an order of the Court – r 280.

18. [18]
    The District Court, like the Supreme Court, has power to dismiss a proceeding as an abuse of its process.
19. [19]
    However, to dismiss a proceeding without a hearing is a drastic step, and I cannot think that there would be many occasions where it should be used as an alternative to a transfer of proceedings between courts.
20. [20]
    In this case, there was a further reason not to dismiss the proceeding even if it were (wrongly) thought desirable to transfer it to the Magistrates Court.  Section 12(4) of the Trust Accounts Act allows for a person who claims monies held on trust to commence a proceeding and then give notice of that proceeding to the trustee.  After the notice is given, the trustee is bound to deal with the disputed monies only in a way consistent with that section.
21. [21]
    At the time the proceeding was reviewed by the primary judge, the trustee was obliged to pay the disputed monies into Court to abide the decision of the Court.  This had not been done.  To dismiss the proceeding would arguably have put an end to that obligation on the part of the trustee, and it would also create difficulties if the appellants wished to commence in the Magistrates Court: they were out of time to give the notice required by s 12(4)(b) of the Trust Accounts Act.
22. [22]
    The respondent on this appeal raised matters which, it was submitted, are faults in the way the appellants have constituted the proceeding in the District Court.  It was said, for example, that the claim is one which belongs to Mr Yong, and while Mr Lim ought to be a party, he ought to be a respondent.  I am not sure this is correct.  Mr Lim joins with Mr Yong in attempting to see that the trust they both allege is recognised.  It seems to me that Mr Lim has a sufficient interest to be an applicant in the District Court.
23. [23]
    It was also said that the legal person who Mr Yong asserts to be a trustee should be joined to the proceeding.  The procedure established by s 12(4) of the Trust Accounts Act is designed so that the trustee is not needed as a party to the litigation: Re Burman [1993] 1 Qd R 49, 55.  Perhaps if the solicitors who are alleged to be the trustees here do not pay the disputed trust monies into Court as required by s 12(4)(b), it will be necessary to join them as parties to the litigation.  In any event, these are matters which can be addressed with the parties, either on application or review in the District Court.  They are not reasons why this Court should not allow the appeal.
24. [24]
    Where parties act for themselves and are obviously struggling with difficult procedural matters, as the appellants are here, the Court has a duty to explain procedural matters to those parties; explain to them the methods by which they might achieve procedural outcomes, and explain the likely consequences if procedural matters are not attended to: Markham Wayne Moore-McQuillan v Police [1998] 196 LSJS 488 p 11, Lee v Cha & Ors [2008] NSWCA 13, [48], Platcher v Joseph [2004] FCAFC 68, [104].  This is quite a different thing from advising parties on the substance or merits of the claim which they wish to prosecute.
25. [25]
    An application was made for a certificate under the Appeal Costs Fund Act 1973, s 15(1)(a).  That application is refused.  The course taken by the primary judge was preceded by a wrong submission on the part of the respondent’s solicitor that the Magistrates Court had jurisdiction, and when the course of dismissing the District Court proceeding was advanced by her Honour, it was not objected to by the respondents.
26. [26]
    As to costs, the respondents have been unsuccessful both in opposing the appellants’ application for leave to appeal and in opposing the relief which the appellants sought on appeal.  The appellants are unrepresented and do not ask for a costs order.  In these circumstances, the Court should not make an order as to costs.
27. [27]
    McMURDO JA:  I agree with the orders proposed by Justice Dalton and with her reasons.  I would add only one comment in relation to the respondent’s submission as to the limited jurisdiction which it is said is given to the District Court under s 68(1)(b)(viii).  The effect of that submission is that the Court’s jurisdiction to make a declaration that a trust subsists is limited to making a declaration that property is held upon a trust for somebody, as long as the Court does not say who that somebody is.  In my respectful view, that submission cannot be accepted.  It cannot be thought that the intention was to so artificially constrain the jurisdiction which is conferred by that provision.
28. [28]
    BOND JA:  I agree with the orders proposed by Justice Dalton and with her reasons for so doing.  I also agree with the additional remarks made by Justice McMurdo.
29. [29]
    McMURDO JA:  The orders will be as Justice Dalton has foreshadowed, that is, that the appeal be allowed, the orders below be set aside, the application for a certificate under the Appeal Costs Fund Act be refused, there be no order as to the costs of this appeal and the reserve costs of the application to appeal.  Adjourn the Court.