Carron Investments Pty Ltd v George Lang and the Magistrates' Court of Victoria
[2016] VSCA 287
•24 November 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0060
| CARRON INVESTMENTS PTY LTD | Applicant |
| v | |
| GEORGE LANG and THE MAGISTRATES’ COURT OF VICTORIA | Respondents |
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| JUDGES: | WARREN CJ and FERGUSON JA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 21 July 2016 |
| DATE OF JUDGMENT: | 24 November 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 287 |
| JUDGMENT APPEALED FROM: | [2016] VSC 165 (Daly AsJ) |
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PRACTICE AND PROCEDURE — Service of originating process interstate — Form 1 notice required by Service and Execution of Process Act 1992 (Cth) — Magistrates’ Court Registry entered default judgment — Form 1 notice not referred to in affidavit of service — Whether Magistrates’ Court Registry empowered to enter default judgment — Whether magistrate’s failure to set aside default judgment unreasonable.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr E C Muston SC with Mr B Le Plastrier | Neumann & Turnour |
| For the Respondent | Mr J B Davis QC with Mr K Mihaly | Coulter Roache |
WARREN CJ
FERGUSON JA:
On 24 December 1997, the applicant (‘Carron Investments’) issued proceedings in the Magistrates’ Court of Victoria against the respondent (‘Mr Lang’) and two other defendants, claiming monies said to be owing for rental arrears.
According to an affidavit of service sworn on 7 December 1998 by Mr Donald Cecil Watkins, a process server, the applicant’s complaint was served on Mr Lang in Queensland on 3 December 1998. Mr Watkins’ affidavit of service relevantly stated: ‘I served a copy of the Complaint together with two Notices of Defence on George A H Lang … [b]y passing the Complaint to Mrs Lang (Wife), a person apparently above the age of 16 years and residing there at [Mr Lang’s residential address]’.
On 9 April 1999, a registrar of the Magistrates’ Court entered judgment for the applicant in default of an appearance by Mr Lang. The judgment was in the sum of $40,000, plus interest and costs totalling approximately $7,000.
For many years no action was taken by the applicant to enforce the default judgment against Mr Lang. It would appear that on 1 March 2000, Mr Lang wrote to Mr Frank Carron, principal of the applicant, seeking his intervention to clear an unpaid debt in favour of the applicant recorded against Mr Lang’s name by a credit reference agency. The debt was in the sum of $25,536 and was dated 9 April 1999. Among the documents Mr Lang sent to Mr Carron were ‘letters of sincerity’, which relevantly stated:
Regarding any payment, I leave that matter to you to be decided as and when required.
I state the above on the premise that this is an individual arrangement and in no way associated with Carron Investments, rather an arrangement between you and myself.
In late 2013, the applicant decided to pursue enforcement of the default judgment. In material put before the Magistrates’ Court in support of an application for an extension of time to enforce the judgment, Mr Carron deposed that shortly after the default judgment was entered in April 1999 he received a telephone call from Mr Lang during which Mr Lang indicated that he would pay the rental arrears owing to the applicant, but that as he was no longer working he would have to see to ‘some sort of financial arrangement involving his house’. This promise was accepted in good faith. However, after a series of events between 2010 and 2013 put financial strain on the applicant, Mr Carron sought to enforce Mr Lang’s judgment debt, which remained unpaid. On 12 March 2014, a registrar of the Magistrates’ Court granted the applicant an extension to 1 May 2015 to enforce the default judgment.
On 9 April 2015, Mr Lang filed a summons in the Magistrates’ Court seeking orders that the default judgment be set aside. The summons was heard by a registrar on 27 April 2015 and was dismissed. Mr Lang sought review of the registrar’s decision by a magistrate pursuant to s 16K of the Magistrates’ Court Act 1989, and the summons was listed for a de novo hearing before a magistrate on 5 August 2015. Following that hearing, on 11 August 2015 the magistrate dismissed the summons.
The decisions below
The magistrate’s reasons[1] record that Mr Lang’s principal argument in support of setting aside the default judgment was that there had been a failure to comply with the provisions of the Service and Execution of Process Act 1992 (Cth) (‘SEPA’) in the course of serving the complaint upon him in Queensland. Section 16 of that Act provided that for service to be effective, a Form 1 notice had to be served with the complaint.[2] Mr Lang contended that the affidavit of service upon which the default judgment had been granted did not evidence the service of a Form 1 notice; rather, it referred only to service of ‘a copy of the Complaint together with two Notices of Defence’. On that basis, Mr Lang submitted that the default judgment had been irregularly entered.
[1]Carron Investments Pty Ltd v Lang (Unreported, Magistrates’ Court of Victoria, Magistrate Saines, 11 August 2015).
[2]See also Service and Execution of Process Regulations 1993 r 4(1)(a).
His Honour concluded that, contrary to Mr Lang’s submission, the affidavit did not evidence a failure to serve a Form 1 notice.[3] Although there was a general lack of evidence about the events of 1998 and 1999, the magistrate did not accept it was a matter of probability that there had been a failure to serve a Form 1 notice on Mr Lang. His Honour considered that a process server could plausibly use the word ‘complaint’ to describe the collection of documents served upon a defendant, and as such it was not possible to infer from the language of the affidavit of service that no Form 1 notice was served.
[3]Carron Investments Pty Ltd v Lang (Unreported, Magistrates’ Court of Victoria, Magistrate Saines, 11 August 2015) [7].
His Honour noted that it was established case law that ‘an irregular judgment must be set aside on later application’,[4] but found that, in this case, there was not sufficient evidence to show an irregularity in service. The magistrate’s reasons indicate the irregularity considered was the failure to serve a Form 1 notice as required under s 16 of SEPA.[5] The magistrate did not appear to consider whether the failure to evidence service of the Form 1 notice in the affidavit of service prevented a default judgment from being entered by the Registry. The magistrate’s consideration of any ‘irregularity’ in the judgment was in reference to an actual failure in service, not to a failure in evidence of that service.
[4]Ibid [3] (citations omitted).
[5]Ibid [6].
Mr Lang sought judicial review of the magistrate’s decision by the Trial Division under the jurisdiction set out in Order 53 of the Supreme Court (General Civil Procedure) Rules 2015.
Before an associate judge, Mr Lang submitted that it was illogical or irrational for the magistrate to have found Mr Lang had not proven service was invalid. According to counsel for Mr Lang, as the affidavit was silent on whether the Form 1 notice was served, it was ‘a matter of mere speculation’[6] and the magistrate could not reasonably have been satisfied it was more likely that the Form 1 notice had been served.
[6]Transcript of Proceedings, Lang v Carron Investments (Supreme Court of Victoria, S CI 2015 05240, Associate Justice Daly, 10 February 2016) 20.
Mr Lang further submitted that the magistrate should have found that the failure to refer to the Form 1 notice in the affidavit of service prevented the Magistrates’ Court Registry’s power to enter default judgment in 1999 from being enlivened. Counsel for Mr Lang stated that the magistrate had failed to consider the inadequacy of the record of service on the court file, despite the matter being raised before his Honour.[7] On these bases, Mr Lang submitted that the magistrate’s decision should be quashed and the associate judge should substitute her own decision setting aside the default judgment.
[7]Ibid 29.
The associate judge determined the first question as to whether there was actual service of a Form 1 notice was a finding of fact by the magistrate which her Honour was not empowered to disturb. The associate judge reasoned that the question could not be a matter of jurisdictional error unless the finding had been so unreasonable that no reasonable decision maker could have come to it.[8] Her Honour stated that in her view:
…there was sufficient evidence before [the magistrate], including the letter from Mr Lang to Mr Carron in 2000, for him to form the view that Mr Lang had not discharged the onus upon him with respect to whether or not service was effected, even though a finding that valid service was not effected was also reasonably open to be made.[9]
[8]Lang v Carron Investments Pty Ltd [2016] VSC 165, [29] (‘Reasons’).
[9]Ibid [32].
The associate judge reasoned that the second question involved determining a jurisdictional fact and so was within her jurisdiction to review. Her Honour found that:
…the learned magistrate [had been] charged with the task of determining whether the evidence of service was satisfactory for the purpose of the Court exercising its jurisdiction: that is, to review the determination of a jurisdictional fact by the registrar who caused the default judgment to be entered in April 1999.[10]
[10]Ibid [41] (emphasis added).
Her Honour determined that the magistrate’s reasoning as to this question was not apparent in his reasons for judgment.[11] After canvassing the case authorities on the standard of unreasonableness, the associate judge determined that she:
…would not find that the decision of the learned magistrate to refuse to set aside the default judgment was arbitrary, capricious, or even plainly unjust. However, the reasons make no reference to the second question before him at the hearing of the application, that is, whether the default judgment was irregularly obtained because the first affidavit of service did not provide evidence, or sufficient evidence that service of the complaint had been validly effected. Accordingly, it is possible to impugn the decision on the basis that, as suggested by the plurality in Li, it is not ‘possible for a court to comprehend how the decision was arrived at’, and that the decision ‘lacks an evident and intelligible justification’.[12]
[11]See, eg, ibid [53], [60].
[12]Ibid [53] (emphasis added).
Her Honour then considered the matter for herself, noting that the relevant rule in the Magistrates’ Court Civil Procedure Rules 1989 (then in force) required that an application for a default judgment be accompanied by ‘an affidavit or declaration of service of the complaint’.[13] She concluded that:
…having regard to the terms and policy of the Rules, including the provisions of Part 1 of Order 10 of the Rules, not simply 10.1 and 10.2 of the Rules, that in order for the Court to grant judgment in default of defence, the evidence before the Court must prove valid service of the complaint in question, including, in the case of defendants resident interstate, service of a SEPA notice.
…
Indeed, it would arguably be an absurd construction of the Rules if default judgment could be entered in the absence of evidence of valid service, including proof of compliance with the requirements imposed by other legislation, such as the Corporations Act 2001 (Cth) and its predecessors and the SEPA Act.[14]
[13]Magistrates’ Court Civil Procedure Rules 1989 r 10.02.
[14]Reasons [55], [57].
Ultimately her Honour decided that the affidavit of service, with its failure to refer to service of a Form 1 notice ‘was not capable, of itself, of providing adequate evidence of valid service’.[15] The Magistrates’ Court Registry was never empowered, in her determination, to have entered the default judgment. The associate judge accordingly quashed the decision by the magistrate and ordered that the default judgment be set aside.
[15]Ibid [59].
The associate judge commented, however, that she had not disturbed the finding made by the magistrate that valid service in fact had been effected.[16] Her Honour noted that, although the default judgment had been set aside and Carron Investments’ claim was ‘now long stale’,[17] this finding meant Carron Investments may still have a right to prosecute the claim, for example by applying for dispensation for compliance with the rules of the Magistrates’ Court.[18]
[16]Ibid [59], [62].
[17]Ibid [61].
[18]Ibid [62].
The applicant seeks leave to appeal against the decision of the associate judge.
The Magistrates’ Court formally entered an appearance but advised that it did not intend to take an active role in the proceeding and that it would abide the Court’s decision in accordance with the principles set out in R v Australian Broadcasting Tribunal; Ex parte Hardiman.[19] It would seek to be heard on the question of costs.
[19](1980) 144 CLR 13.
Applicant’s submissions
Carron Investments, the applicant before this court, made three submissions to the effect that the associate judge’s decision should be set aside and the default judgment reinstated.
Ground One: that her Honour erred by identifying and applying the wrong test for unreasonableness
First, the applicant submitted that her Honour erred in finding that the lack of ‘an evident and intelligible justification’ in the magistrate’s decision was sufficient to warrant an order quashing it. According to the applicant, her Honour wrought a distinction between two expressions of Wednesbury unreasonableness in Minister for Immigration and Border Protection v Stretton[20] and Minister for Immigration and Citizenship v Li[21] and found that the latter imposed a lower standard that was satisfied in respect of the magistrate’s decision. The applicant submitted that the two expressions of unreasonableness articulate the same standard so there could be no case of satisfying one but not the other.
[20](2016) 237 FCR 1.
[21](2013) 249 CLR 332.
Her Honour therefore erred, in the applicant’s submission, in finding that the magistrate’s decision demonstrated unreasonableness in not setting out his logical process regarding the question of whether there was sufficient evidence of service of the Form 1 notice. According to Carron Investments, her Honour
could only conclude that the finding was unreasonable if it could be shown that the reasoning was sufficiently lacking a rational foundation or an evident or intelligible foundation in the sense of being unjust, arbitrary, or capricious.
…
It was not enough for her Honour to simply find a lapse in logic and from there conclude that there existed unreasonableness.[22]
[22]Emphasis in original.
The applicant pointed to certain passages in the magistrate’s reasons as evidencing sufficient reasoning to prevent the finding from being arbitrary or capricious. Although the magistrate’s reasons primarily referred to the finding that service was actually effected, the applicant suggested that the passages, particularly [10], could also be ‘seen to constitute a rational foundation or an evident or intelligible foundation’ for the finding that the affidavit provided sufficient evidence of service to empower a default judgment.
The relevant passages from the magistrate’s reasons read as follows:
[6] The principal argument in support of the application is that because the Complaint was served upon FND in Queensland, there had not been compliance with the provisions of the Service and Execution of Process Act 1992 (Commonwealth) (hereafter “The Act”) pertaining to service upon SND, such that the judgement was irregular. Non compliance with The Act is said to have been the absence of a Form 1 notice as required under S. 16. The Form 1 notice is part of the Exhibit FC1 to the Affidavit of Frank Carron sworn 24.4.2015. The exhibit FC1 is stated by the deponent as “a true copy of the complaint”. The FC1 document is indeed a Form 1 notice under S. 16 of The Act, the Complaint, the Particulars of Claim and 2 standard Notices of Defence (in incompleted form).
[7] The applicant asserts that the Affidavit/Declaration of Service used to obtain the judgement did not evidence the service of the Form 1 notice. That Affidavit/Declaration of Service was sworn 7.12.1998 and is exhibit GAHL-3 to the Affidavit of FND Mr Lang, sworn 4.4.2015. It deposes that the process server “served a copy of the complaint together with two Notices of Defence” on 3.12.1998. Despite that an ordinary person, Mr Carron on 24.4.2015, and/or an ordinary process server might describe all documents, including a Form 1 notice, Particulars or claim and the complaint as “the complaint”, the Applicant asserts that the interpretation of the Affidavit of Service (GAHL-3) should be that it evidences a failure to serve the Form 1 notice.
…
[10] As to the wording of the first Affidavit of Service, GAHL-3 that the word “complaint” being served should be understood to mean only the complaint and Particulars of Claim, but not a Form 1 notice as well, I am unable to apply that interpretation to the document.. The deponent is a process server. Although that is a role in managing aspects of court process, it is essentially an unskilled or semi skilled role, frequently undertaken by persons with little or no legal qualification. I accept it as entirely plausible that a collection of documents sent to a process server might all be described by him as a single complaint. It may be inaccurate, possibly misleading, but the wording of that part of the affidavit of service forms such a small part of the service he provides, such that there may well be little or insufficient emphasis placed upon this precise detail. Even if a solicitor had a hand in supply of a pro forma document, or even if the process server used a pro forma document from his own shelf, I find it to be entirely plausible that an affidavit might describe a number of documents as a “complaint” and entirely plausible the deponents attention was more focussed upon the detail as to place, manner, date of service. I do not draw the inference that the words of the first affidavit of service (GAHL-3) support the conclusion a Form 1 Notice was not served. Nor to infer that the Particulars of Claim were unserved as well.[23]
Ground Two: even if her Honour correctly identified the standard for unreasonableness, her Honour erred in the application of the test
[23]Carron Investments Pty Ltd v Lang (Unreported, Magistrates’ Court of Victoria, Magistrate Saines, 11 August 2015) [6], [7], [10].
The applicant’s second ground of appeal was that if, in the alternative, the judge below had identified the correct test for unreasonableness and Minister for Immigration and Citizenship v Li imposed a lower standard, her Honour nonetheless erred in the application of that test. The applicant again pointed to paragraphs [6], [7] and [10] of the magistrate’s reasons as providing sufficient intelligible justification to show how the magistrate’s decision was arrived at.
Ground Three: the magistrate’s decision should not have been interfered with as he was exercising a discretion not to set aside the default judgment
At the hearing, the applicant made a third submission.[24] In its view, it was incorrect to quash the magistrate’s decision as the magistrate was afforded a discretion under s 110 of the Magistrates’ Court Act1989 not to set aside a default judgment. Therefore, even if there had not been valid service or valid evidence of service, the applicant submitted his Honour could still have refused to set aside the default judgment. Section 110 reads:
110 Re-hearing
(1) If a final order is made by the Court in a civil proceeding against a person who did not appear in the proceeding, that person may, subject to and in accordance with the Rules, apply to the Court for an order that the order be set aside and that the proceeding be re-heard.
(2) On an application under this section, the Court may set aside the order subject to any terms and conditions that it thinks just and re-hear the proceeding.
…
[24]The applicant also raised this submission in its response to the notice of contention, however it was not set out in the applicant’s written case. The respondent objected at the hearing to the lack of notice of this ground of appeal and was given the opportunity to file a further notice of contention. A further notice of contention was filed by the respondent on 26 July 2016.
Respondent’s submissions
The respondent made three submissions to the effect that the associate judge was correct to set aside default judgment and that the default judgment could not stand.
Ground One: the associate judge identified and applied the appropriate test for unreasonableness
In response to the applicant’s first ground of appeal, the respondent contended simply that the associate judge had identified and applied the correct test for unreasonableness. He referred to the observations of Allsop CJ in Minister for Immigration and Border Protection v Stretton[25] as articulating an open concept of unreasonableness, rather than propounding an exhaustive or strict test. Accordingly, finding unreasonableness in a decision that lacked an evident and intelligible justification was appropriate.
[25][2016] FCAFC 11.
The respondent also pointed to sections of Daly AsJ’s judgment in which her Honour canvassed various authorities on unreasonableness, including Minister for Immigration and Border Protection v Stretton[26] and Minister for Immigration and Citizenship v SZDMS.[27] Her review of this material indicated, in the respondent’s submission, that her Honour’s concept of unreasonableness was informed by all of the relevant authorities.
Ground Two: whatever the standard, it was unreasonable of the magistrate to fail to find the affidavit could not prove service of the Form 1 notice
[26]Ibid.
[27](2010) 240 CLR 611.
Even if a finding of unreasonableness required meeting the applicant’s standard of caprice or arbitrariness, the respondent contended it was met. The affidavit of service was incapable of evidencing proof of service of the Form 1 notice on Mr Lang so failing to find as much ‘was unreasonable by any measure of unreasonableness in the legal sense’.
That finding of the affidavit’s deficiency would have, in the respondent’s submission, compelled the magistrate to set aside the default judgment. The respondent referred to authority, which we will return to below, which it contended established that it was a necessary condition for the default judgment that an affidavit of service which proved service of a Form 1 notice under SEPA first have been filed.
Ground Three: Even if a discretion, it was unreasonable not to set aside the default judgment because of the irregularity in the affidavit
Finally, the respondent submitted that, even if the magistrate was exercising a discretion, the irregularity in the affidavit of service meant a reasonable exercise of that discretion had to result in setting aside the default judgment.
Issues for determination
In our view, the issues at the heart of this dispute can be boiled down to the following questions.
First, was the Magistrates’ Court Registry empowered to enter default judgment in 1999 notwithstanding the affidavit of service not referring to a Form 1 notice? If not, the default judgment must be set aside and the associate judge’s finding of unreasonableness affirmed. This is because, regardless of whether the magistrate was exercising a discretion, it would have been unreasonable to allow a default judgment to stand if the Registry had acted beyond its power. We will return to this point but we note that in the magistrate’s own reasons, he commented that ‘an irregular judgment must be set aside on later application’.
If, however, the Magistrates’ Court Registry was acting within power, then a second question arises: was the magistrate reasonable in choosing not to set aside the default judgment in 2015?
Was the Magistrates’ Court Registry acting within power in entering the default judgment in 1999?
Registry’s power to enter default judgment requires a valid affidavit of service
On 9 April 1999, when Carron Investments applied to have the default judgment entered, the only proof of service before the Magistrates’ Court Registry was the affidavit from the process server stating that ‘the Complaint together with two Notices of Defence’ had been served.
There is nothing in the Magistrates’ Court Act1989 setting out the process of entering default judgments. Instead it is left to the governance of the Magistrates’ Court Civil Procedure Rules 1989 (‘the Rules’). Rules 10.01 and 10.02 provided as follows:
10.01 Plaintiff may apply for order
(1) If a defendant does not give notice of defence within 21 days after the service of a complaint or any other time fixed by the Court for giving notice of defence, the plaintiff may apply for an order.
(2) An application under paragraph (1) must be—
(a) in Form 10A; or
(b) subject to Rule 10.02.1, made by electronic message by an authorised user.
10.02 Affidavit required
An application under Rule 10.01 to which Rule 10.01(2)(a) applies must be filed with the registrar and must be accompanied by—
(a) where the claim—
(i) is for a debt or liquidated demand; or
(ii) is a claim arising from a motor vehicle collision and the claim is—
(A) for the cost of repairs only; or
(B) for total loss of the vehicle only—
an affidavit or declaration of service of the complaint; and
(b) in any other case—
(i) an affidavit or declaration of service of the complaint;
(ii) an affidavit or affidavits verifying the complaint and the nature and extent of the injury loss or damage suffered by the plaintiff.[28]
[28]These rules now appear as rr 21.01 and 21.02 of the Magistrates’ Court General Civil Procedure Rules 2010 (‘2010 Rules’)
In this case, the claim was a debt in respect of rental arrears and there is no suggestion the application for default judgment was made by electronic message. As such, r 10.02(a)(i) was applicable and an affidavit or declaration of service of the complaint was required.
The purpose of such an affidavit can be deduced from r 5.11 which sets out the required contents of an affidavit of service:
(1) An affidavit or declaration of service of any document must state by whom the document was served, the hour of the day, day of the week and date on which it was served and the place and mode of service and must be in Form 5A.
(2) A document purporting to be an affidavit or declaration of service shall be taken to be evidence of the proper service of a document unless the contrary is proved.
(3) An affidavit of service must be filed as soon as practicable after service of an application or summons.[29]
[29]Emphasis added. See now 2010 Rules r 10.17 which sets out the current requirements for affidavits of service.
On one view, the rules extracted impose no explicit requirement for a default judgment that the affidavit of service refer exhaustively to all documents served. Further, the affidavit required by r 10.02 is to show service of the complaint, not of surrounding documents.
It is also relevant that in r 2.01(1) it was made explicit that ‘a failure to comply with these Rules is an irregularity and does not render a proceeding or a step taken, or any document or order therein a nullity’. Rule 2.01(2) then provided that in the event of an application after a failure to comply with the Rules, the Court may set aside the proceeding or set aside any step taken in the proceeding.[30] That there were these measures in place to remedy failures or irregularities after the event might be suggestive that a correct affidavit of service was not a prerequisite or jurisdictional fact necessary to the exercise of the power in the Rules to enter default judgment.
[30]See now 2010 Rules r 2.01. See further Magistrates’ Court Civil Procedure Rules 1989, rr 2.03, 2.04; 2010 Rules rr 2.03 and 2.04.
On the other hand, r 10.03 provided that if such an application were made for default judgment, two separate paths may be followed. If ‘the registrar is satisfied that the order should be made, the order must be made’[31] but ‘if the registrar is not satisfied that an order should be made, the registrar may, or if the plaintiff so requests must, refer the matter to the Court for decision’.[32] Upon referral, the court may direct that a further affidavit be filed.[33] This seems to set out the method which ought to be followed in the event that an inadequate affidavit of service is filed with the application for default judgment.
[31]Magistrates’ Court Civil Procedure Rules 1989 r 10.03(1). See now 2010 Rules r 21.04(1).
[32]Magistrates’ Court Civil Procedure Rules 1989 r 10.03(1). See now 2010 Rules 21.04(3). Note that there is a separate rule if the default judgment concerns a claim that is not for a debt or liquidated demand or a claim arising from a motor vehicle collision relating to vehicle costs; see Magistrates’ Court Civil Procedure Rules 1989 r 10.03(2.1).
[33]Magistrates’ Court Civil Procedure Rules 1989 r 10.03(3). See now 2010 Rules r 21.04(5).
A valid affidavit of service is therefore a jurisdictional prerequisite to the ordering of a default judgment by the Magistrates’ Court Registry. The registrar could not feasibly be satisfied unless he had such an affidavit. As an aside, we must infer that the scheme in r 2 to deal with irregularities after the fact is a separate component, rather than encompassing irregularities relating to the Court’s ability to be satisfied that valid service has been made. That is, r 2 cannot be relied upon to remedy an irregularity that deprived the Court of power.
Valid affidavit of service must evidence service of all prescribed documents
The purpose of an affidavit of service is undeniably to provide evidence to the courts that the requisite documents have been served upon the other party. There is no doubt in this case that a Form 1 notice was required to be served. So much is made explicit by s 16 of SEPA which reads ‘[s]ervice is effective only if copies of such notices as are prescribed are attached to the process, or the copy of the process, served.’[34]
[34]Emphasis added. See also Service and Execution of Process Regulations 1993 r 4(1)(a).
In an undisturbed finding of fact, the magistrate found that the Form 1 notice was in fact served on Mr Lang. However, that finding was not made until 2015, 16 years after the Registry had entered default judgment.
In our view, it is nonsensical to say that the registry could assume valid service had been made without proof of it. The affidavit of service is the document which the court relies on to show that service was effected. It would be an abrogation of the rules governing service, in this case including the SEPA provisions, to expect less of the affidavit of service than is required in fact.
To buttress this interpretation, we note that it would be difficult to accept that the rules would allow default judgment to be entered without valid service having been made. Default judgments are a serious matter, involving an imposition of a debt upon a party in their absence.[35] Ensuring that the defendant is properly notified of the claim is the minimum necessary before such a power could be exercised.
[35]Boral Resources (Vic) Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] VSC 429 [23]; French v Triple M [2006] VSC 36 [12]; Clayton v Thomas v Denton & Co Pty Ltd [1972] VR 46, 49; Hamp-Adams v Hall [1911] 2 KB 942, 944, 945..
It is important to note that the Form 1 notice is required by SEPA for interstate service as it includes details such as which jurisdiction the defendant must respond to in order to defend the claim. Such information may not be on the original complaint or writ. It is vital to ensure that the defendant is able to understand the next steps necessary.
As the only evidence of service, the affidavit required for a default judgment must then clearly prove that valid service has been made. In this case, valid service required service of the Form 1 notice under SEPA. Without evidence that it was served as required, the Magistrates' Court Registry could not enter default judgment.
What is the effect of an irregularity in a default judgment?
Having established that the Registry was not empowered to enter default judgment in 1999, the magistrate could not reasonably refuse to set it aside. As Dixon CJ said in RT Company Pty Ltd v Minister of State for the Interior, an irregular judgment ‘ought not be on the records of the Court’.[36] There is extensive authority spanning back decades indicating that where a judgment obtained by default is irregular, it will be set aside ex debito justitiae (as a matter of right).[37]
[36](1958) 98 CLR 168, 170.
[37]See, eg, Gamble v Killingsworth & McLean Publishing Co Pty Ltd [1970] VR 161, 168; A/S Cathrineholm v Norequipment Trading Ltd [1972] 2 All ER 538; Hogg v J Isherwood-Hicks Pty Ltd (1992) 108 FLR 262.
As we have said above, in this case the irregularity went to the Magistrates’ Court Registry’s power to enter the default judgment. This matter cannot be sidelined as a mere technicality that can be remedied by further order. Rather the whole default judgment was made outside power. Such an irregularity required that the default judgment be set aside.
Conclusions
The magistrate’s failure to set aside the default judgment after the application by Mr Lang was unreasonable by any measure. It is apparent that the magistrate was aware that irregularities ordinarily require default judgments be set aside as of right.[38] The error infecting his decision was failing to identify that an irregularity was established by the deficient affidavit of service. That finding was legally unreasonable and cannot be supported for the reasons set out above.
[38]See above at [9].
As such, the magistrate’s orders cannot stand. The associate judge was right to find that the magistrate had acted unreasonably and right to order that the default judgment be set aside.
Given this finding, no further questions arise and the parties’ submissions regarding the standard of unreasonableness need not be addressed.
Leave to appeal should be refused.
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