Issued
2014
Decision
03 Oct 2014
Appeal Status
Not appealed

Court had jurisdiction to cure failure to file a notice of pursuit of claim

2014 case note – Court had jurisdiction to cure a procedure irregularity and proceed with case and did so as no prejudice to appellant.

Case
Kin San Cheang v Commissioner of Inland Revenue
Legal terms
Notice of pursuit of claim, extension of time, technical non-compliance, irregularity, nullity, jurisdiction, strike out

Summary

The failure to file and serve a notice of pursuit of claim ("NPC") was a procedural irregularity and did not nullify the proceeding. The Court had jurisdiction to cure that irregularity, hear the strike-out application and enter judgment and did so in this case because there was no prejudice to the appellant.

Impact of decision

The District Court Rules 2009 ("the Rules") have since been replaced by the District Court Rules 2014 (under which there is no requirement to serve and file an NPC). Therefore, the precedential value of the decision is limited.

However, Moore J did say that this judgment should not be read as authorising the late filing of any application where r 1.18.2A is engaged. The circumstances encountered in this case that permit such a course will be relatively rare.

Facts

Mr Cheang was sued in the District Court by the Commissioner of Inland Revenue ("the Commissioner") for $301,767.86. This amount arose from default assessments issued for the 2004 and 2005 income tax years.

The relevant procedure under the Rules is provided for in r 2.17:  the Commissioner was to file a notice of claim, Mr Cheang a notice of response and both parties to file information capsules, following which the Commissioner was to file an NPC. However, the Commissioner did not file the NPC, but filed only an application to strike out Mr Cheang's defence. The Rules state that failure to file an NPC within time means the proceedings are at an end (r 2.17.4). Mr Cheang therefore argued the Court had no jurisdiction to entertain the Commissioner's strike-out application.

Judge Harrison in the District Court heard the strike-out application and determined that the Commissioner's failure to file the NPC was not fatal to the application because it was clear the proceeding did not go out of all existence following the failure. Since the Rules allow for the Court to extend the time for filing an NPC even after the deadline in r. 2.17 has expired (r 1.18.2/1.18.2A), the proceeding maintained sufficient existence for the Court to rule on the strike out application.

Mr Cheang appealed to the High Court.

Decision

Moore J determined that the Court did have jurisdiction to hear the strike-out application.

Moore J first examined the purpose of r 2.17 and the effect of r 1.18.2/1.18.2A. Recognising the Rules provide for the NPC to be served on the defendant first rather than filed, he held the primary intention of the NPC is to notify the defendant the plaintiff intends to proceed. He accepted this purpose was achieved when the Commissioner filed the strike-out application and therefore the substance of the Rules was met.

Both parties acknowledged that r 1.18.2 allowed the Court to extend the time to file the NPC. However, Mr Cheang argued that the rule only operated to extend the proceeding when the time was in fact extended: if the Commissioner had applied for an extension, the Court would have had jurisdiction to hear the strike-out application but not otherwise.

Moore J rejected that argument for the reason that it would render r 1.18.2A of no effect, the proceeding would come to an end and could not be revived. He accepted the proceeding maintained a level of existence sufficient to support an extension of time application and this was supported by the fact the Rules envisaged that application to be made on notice involving the other party (which would not be the case if the proceeding had ended).

However, Moore J did not accept that just because the proceeding could support an extension of time application, it could support a strike-out application.

Rather, His Honour decided the appeal on the fact that the failure to file the NPC amounted to technical non-compliance with the Rules and that r 1.10 provides that non-compliance with the Rules is to be treated a matter of irregularity rather than a nullity. Since the Court has discretion as to how the irregularity is treated, the Court has the ability to cure the failure to file the NPC.

In deciding to exercise that discretion in favour of the Commissioner, Moore J recognised there was no prejudice to Mr Cheang, since the only effect of enforcing strict compliance would be to make the Commissioner start the claim again. Further, since the purpose of the NPC is to inform the defendant that the plaintiff intends to continue with the claim and since that purpose in this case was satisfied by the strike-out application, Mr Cheang was in no doubt the Commissioner would pursue the claim. Moore J also noted Mr Cheang had no defence to the claim, given he could not contest the correctness of the Commissioner's assessment in the District Court.

Accordingly, under r 1.10, Moore J held that the Court had jurisdiction to hear and determine the strike-out application and enter judgment in favour of the Commissioner.

District Court Rules 2009