Boland v Smart No. Scgrg-98-227 Judgment No. S6641

[1998] SASC 6641

BOLAND V SMART

Williams J:

This is an appeal by the defendant Boland against a final judgment given by a Magistrate sitting in the civil jurisdiction of the Magistrates Court at Naracoorte on 3 February 1998 whereby the Court ordered judgment for the plaintiffs Smart in the sum of $5486.00 (including $1266.00 interest) and costs to be taxed.

The respondents Smart sued upon a cheque drawn by Boland upon the Bank of New South Wales at Forbes and payable to Mr and Mrs Smart.  The cheque dated 11 April 1983 was of the amount of $4220 and was delivered by Boland to the respondents.  The cheque was presented for payment on 13 April 1983 and dishonoured.  The appellant actually stopped payment on the cheque.

The Magistrate found that despite notice of demand given to the appellant on 27 June 1983 he failed to honour his obligation.  Proceedings were commenced in the Local Court of Bordertown on 22 November 1983 but the appellant disappeared and the appellant was not served with the summons.

On 31 January 1996 the respondents applied for and obtained an extension of time in which to serve the proceedings and in accordance with a Magistrates order of 4 March 1996 (obtained ex-parte) service was effected on 16 May 1996.

The appellant argues that by virtue of the Rules of Court the action had lapsed.

Although expressed in various ways upon the face of the appeal notice the grounds of appeal in their essentials were reduced during argument to the following:

1. That upon the evidence the appellant did not receive the letter of demand dated 27 June 1983.  (This ground of appeal was abandoned by counsel upon appeal at the outset of oral argument).

2(a)That a Magistrate did not have power to extend the time for service of the summons after time had expired in accordance with the rules of court.

(b) That if a Magistrate had power to extend time the defendant should have been given the opportunity to challenge the ex-parte order whereby time for service was extended; this opportunity was denied the defendant. (see Kalibia v Wilson (1910) 11 CLR 689 for a statement of the defendant’s right).

(c) That upon a proper application of the principles in Victa v Johnson (1975) 10 SASR 496 at 504 the prejudice to the defendant in allowing the matter to proceed was such that an extension of time should have been refused.

A question was raised by the respondent as to the competency of the present appeal; Local Court claim for $4473.20 plus costs and the question was raised as to how such a claim should be characterised under a new regime of structure of courts in terms of the transitional provisions of the Statutes Repeal and Amendment (Courts) Act 1991.  However no application in terms of SCR97-11 has been filed.  I was told by counsel that the amount of the claim was eventually increased to $10,000.

Under the Local Court Rules as in force in 1983 a summons was required to be served with 12 months of issue but there was power to extend this time if application were made before the expiration of this period. (r35(1) and (2)).

Under the Magistrates Court (Civil) Rules which came into effect on 6 July 1992 the matter was never remitted to the minor civil list action under r141.  (Thus each of the parties was entitled to be and was represented at trial by solicitor).  Under r28(3) of those rules proceedings stand dismissed for want of prosecution if judgment has not been signed or defence filed after the time for "service of an action or any extension thereof".  However there is power under r87 to set aside any judgment so obtained.

In my view s48(1)(b) of the Limitations of Actions Act provides authority to extend time for taking a step in an action.  The trial Magistrate proceeded upon the basis that power is to be found in Magistrates Court (Civil) r3.  In my opinion the Court had power to make an order to extend time.  However, if an order was made ex-parte the defendant was entitled to be given an opportunity to apply and be heard as to whether the order should be discharged.  (Kalibia v Wilson).

In fact the defendant did make an application by way of appeal to a District Court Master (rather than by further application to a Magistrate) but abandoned these proceedings.  Thereafter he sought to raise the matter at the beginning of the trial itself and the trial Magistrate decided to deal with the point when he had all the evidence before him.  This was a convenient course in the circumstances.
I am doubtful whether the trial Magistrate did deal with this matter in accordance with the principle in Kalibia v Wilson; it was common ground between the parties that when a judicial order has been obtained ex-parte in the circumstances of this case the party affected by it may apply for its discharge. In effect the trial Magistrate decided that he was not prepared to sit in judgment upon a decision of another Magistrate who made the ex-parte order on 4 March 1996. The trial Magistrate referred to the principles in Victa v Johnson (1975) 10 SASR 496 at 504 but he appears not to have been prepared to apply them himself in the face of the earlier decision of another Magistrate on 4 March 1996. In my view this was an error of law although the manner in which the appellant raised the point at trial may have been unorthodox. Upon this basis I consider that the appellant has made out a ground of appeal which as a consequence requires me to exercise power under SCR97.18 to determine whether an extension of time should have been granted by the ex-parte order of 4 March 1996.

After hearing full argument and applying the principles in Victa v Johnson in the light of the evidence now available I am of opinion that the ex-parte decision of 4 March 1996 should be confirmed.

The appellant’s counsel claims that the appellant was prejudiced by the long delay and that the appellant is now not able to produce the witnesses who could support the appellant’s defence and provide the basis for a counterclaim.

The appellant now maintains that the cheque in question was the purchase price by him of a load of hay which was of inferior quality.  The appellant asserts that he discussed the matter with Mr Smart and that in effect they agreed to cancel the transaction.

Paragraphs 8, 9 and 10 of the defence reads as follows:

1. Within two days of receiving the hay, the defendant rang Mr Smart, one of the plaintiffs, and complained that the bails of hay which had been delivered contained some thirty-five per cent barley grass and therefore were not of any use to the defendant, were not what he had contracted to purchase and were not fit for the purpose for which they were intended.

1. During that telephone conversation, Mr Smart agreed on behalf of the plaintiffs to accept the return of the hay.  The plaintiffs agreed to collect the hay from the defendants premises.  The defendant then stopped payment of the cheque which had been sent to the plaintiffs in payment for the hay.

1. The plaintiffs never collected the hay (which was available at all times for collection by the plaintiffs) and the hay rotted away."

The appellant asserts that he could have called evidence as to the poor quality of the hay as observed by those to whom he purported to on-sell the product.

The fact of the matter is that the appellant’s evidence was not accepted at trial.  The trial Judge said:

"Mr Smart gave his evidence in a ‘matter-of-fact’ way.  He was prepared to make concessions adverse to his interest at appropriate times.  He gave the very definite impression of truthfulness.  He remained unshaken as to the essential thrust of his evidence concerning what transpired between himself and Mr Boland after payment was stopped on the cheque.  He impressed as a robust, ‘no-nonsense’ individual who would not readily succumb if he thought right was on his side.

Consistently with what he said transpired between himself and Mr Boland, he caused his solicitors to write a letter to Mr Boland within a reasonably short time demanding that the cheque be honoured (see Exhibit P4).  None of this sits comfortably with Mr Boland’s evidence that Mr Smart meekly capitulated when told that the hay had been rejected.  It defies belief that he would accept this without further enquiry, and, further, that he said that he would make arrangements to collect the hay from the defendant’s property and thereafter bring it back to Keith for re-sale.  There would be significant expense involved in this, given the geography of the situation.

The probabilities material to an estimate of the evidence lead me to conclude that the scenario deposed to by the defendant is inherently improbable.  I reject his version of events.  I much prefer Mr Smart’s version.  I am to be taken as having made findings of fact accordingly.  Without limiting the generality of that, I find as follows:

(a)     Mr Smart telephoned the defendant shortly after finding out that payment had been stopped on the cheque.

(b)     The defendant was apologetic and asked Mr Smart to re-present the cheque to the bank for payment.

(c)     Mr Boland then made no complaint at all about the quality of the hay.

(d)     Mr Boland said nothing to Mr Smart about the hay being rejected by the farmer to whom it had been delivered.

(e)     That there was no agreement by Mr Smart to arrange for the hay to be collected from Mr Boland’s property.

(f)     Having been asked by Mr Boland to do so, Mr Smart presented the cheque to his bank a second time, and once again there was no payment thereon.

On the abovementioned primary findings of fact, there is an inference open that the real reason for the defendant stopping payment on the cheque was a shortage of funds to meet payment thereof.  I draw that inference."

During argument upon appeal it was conceded that the appellant had not replied to the letter of demand (Exhibit P4 abovementioned).

Moreover a further letter written by the respondent’s solicitors to the appellant on 15 June 1995 was ignored.  That letter made demand for payment and recorded the circumstances of the claim alleged by the plaintiffs.

In my view this correspondence deserved an answer (see Davies v Nyland (1974) 10 SASR 76 at 88 citing Wiedemann v Walpole (1891) 2 QB 534). If the appellant had any real answer to the claim he might have been expected to respond. It is admitted that the appellant was in New Zealand for a short while at a time in 1983-1987 when the respondents were trying to serve him but there is no reason why he would not have responded to the correspondence.

In my view the respondents have an unanswerable claim which they have been unable to pursue due to difficulties in locating the appellant.  The respondents might have made greater efforts to locate the appellant but there were financial constraints upon them.  I am unable to discern any hardship or prejudice to the appellant.  Taking into account particularly the conduct of the parties and the reasons for the delay I consider that the justice of the case supports the conclusion that an extension of time in terms of the order of 4 March 1996 was appropriate.

The appeal will be dismissed.