Cherry Red Pty Ltd v Calonsag
[2019] SADC 95
•10 July 2019
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
CHERRY RED PTY LTD v CALONSAG
[2019] SADC 95
Reasons for Decision of His Honour Judge Tilmouth
10 July 2019
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES
Application to review a decision of a Magistrate refusing to set aside a default judgment on the basis of material not placed before the Magistrate. Discussion of the proper application of the power to set aside conferred by MCCR 87(2)(b) of the Magistrates Court (Civil) Rules 2013 (SA).
Magistrates Court (Civil) Rules 2013 (SA) r 87, r 87(2)(a) & (b), r 101; Magistrates Court Act 1991 (SA) s 38(6), s38(7)(c), s 38(7)(d)(i), s 38(7)(d)(ii), s 38(7)(d)(iii)(A), s 38(7)(d)(iii)(B); Harradine v District Court of South Australia (2012) 280 LSJS 572; Rem v Kargas Supreme Court of South Australia, Nyland J, 30 March 1994; Mortimer v State of South Australia [2001] SASC 37; Hunter Valley Developments Pty Ltd & Ors v The Hon Barry Cohen, Minister for Home Affairs and Environment (1984) 3 FCR 344; Passmore v Minahan (1887) 13 VLR 262; Burgoine v Taylor (1878) 9 Ch 1, referred to.
Langanis v Roberts Supreme Court of South Australia, Mullighan J, 15 July 1993; Davies v Pagett (1986) 70 ALR 793, applied.
CHERRY RED PTY LTD v CALONSAG
[2019] SADC 95An action in the Magistrates Court
This application is to review a judgment given in a minor civil action challenging the correctness of a decision of a Magistrate refusing to set aside a judgment entered in default of appearance on the part of the applicant.
Proceedings brought in the name of Robert Calonsag in the underlying action, were issued in the Minor Civil jurisdiction of the Adelaide Magistrates Court. This claimed property damage against Cherry Red Pty Ltd,[1] caused by rear end collision to his motor vehicle. The action was in fact commenced by RAA Group Insurance exercising rights of subrogation under a Motor Vehicle Insurance Policy taken out by Mr Calonsag. The claim was defended on the basis that Cherry Red ‘have not had anyone on our staff or drivers notify us of an accident’ and that ‘it has no information of the accident’, according to the defence filed on 20 June 2018. The address for service was nominated as Cherry Red’s accountant at Lower Portrush Road, Marden.
[1] Hereafter referred to simply as ‘Cherry Red’.
The particulars of claim filed in the Magistrates Court pleads that on 26 April 2017 the plaintiff’s Toyota Kluger motor vehicle registered number S148-BHH was parked in Deloraine Road Edwardstown when the defendant’s Mitsubishi truck registered number S158-BHC collided with the rear of the Kluger. The case for Mr Calonsag on liability wholly depends on a note supposedly left at a nearby business by a person calling herself Anna in the note:[2]
… confirming that the defendant’s truck that she was in control of at the time and had collided with the plaintiff’s motor vehicle which was parked at the time.
The defence filed by Cherry Red contained no denial that the Mitsubishi was not owned by it. It said nothing as to whether it had an employee by the name of Anna or who had charge of the vehicle on 26 April.
[2] Particulars of Claim, para.4.
The matter was administratively set for a directions hearing before a Magistrate on 15 August 2018, when Mr Hunt appeared as agent for the defendant. He did not dispute the quantum of damage alleged as detailed in a repair account filed at the time the action was instituted, but he did deny liability. The matter was set for trial on ‘liability only’, accordingly.
The trial was listed for Thursday 1 November 2018. Notice of the trial date was posted on 19 September 2018. The trial date was however vacated administratively by a Magistrate on 29 October 2018 at the request of the plaintiff with the consent of Mr Hunt, as the plaintiff was ‘suffering a medical illness and will not be available to appear’. The same Magistrate re-set a hearing date for Monday 18 February 2019 at 10.00 am. Notices of the adjourned trial date dated 31 October 2018, were posted to both parties, to his lawyers in the case of the plaintiff and to its accountant in the case of Cherry Red.
A file note of 13 February 2019 records that the plaintiff’s solicitor was telephoned, advised to bring three copies of documents and was told the plaintiff had ‘nil witnesses’. The caller was however ‘unable to contact defendant, not answering (on Friday 15/2/19 at 9.55am)’.
The matter came before another Magistrate as listed for hearing on 18 February 2019 when Mr Calonsag appeared in person. There was no appearance for the defendant. The Magistrate entered default judgment for the property claim in the sum of $2,034.83 plus the costs of attendance fixed at $100.00, a witness fee of $75.00 and a trial listing fee of $204.00, bringing total judgment to $2,413.83.
In entering judgment the Magistrate exercised the power contained in r 101 of the Magistrates Court (Civil) Rules 2013, which provides:
Where a party fails to attend within 15 minutes of the time fixed for a conciliation or listing conference, directions hearing or trial, the Court may give judgment or make an order against, and in the absence of, that party, without hearing any evidence.
The application to set aside
An application to set aside the judgment was filed by Cherry Red on 13 March 2019, after it was notified by the solicitors for Mr Calonsag of the judgment. This requested payment of the judgment sum within 21 days. An affidavit filed in support of the motion to set aside read in part ‘(D)id not receive any notice by mail, only received the judgment letter from our accountants.’
The application came before the same Magistrate on 25 March 2019. Mr Hunt again appeared on behalf of Cherry Red, whereas there was no appearance on behalf of Mr Calonsag or RAA Insurance. His Honour refused the application for the reasons expressed in an ex tempore judgment:[3]
This is an application to set aside judgment. The applicant claims he did not receive a notice of trial sent out two days after he agreed to an adjournment of an earlier listing.
The trial date was set more than three months after the notice was sent out. He knew the matter had been listed for trial and that the trial had been adjourned. He received earlier notices of trial within three weeks of the listing.
Had he not received the notice of the adjourned date and had he wished to defend the matter, he had only to contact the Court to find out when the matter had been listed. He did not do so.
The Court attempted to contact Mr Hunt over a period of time on the Friday before the Monday trial. The applicant did not answer his telephone.
I am not satisfied that the applicant has a satisfactory reason for failing to attend the hearing and in those circumstances the application is set aside the judgment is refused.
[3] Cherry Red Pty Ltd v Robert Calonsag AMCCI-18-1792.
The power to set aside judgment is vested by r 87 of the Magistrates Court (Civil) Rules. This provides:
87.(1) The Court may set aside or vary a judgment (not being a final judgment).
(2) The Court must not set aside such a judgment unless the party seeking to set it aside establishes that he or she –
(a) has an arguable case on the merits; and
(b) has a reasonable excuse for not having complied with these Rules, or an order of the Court, or any time limit fixed by these Rules or order of the Court, in respect of the action or proceeding.
As noted in Attorney-General (SA) v Marminidis,[4] ‘both r 87(2)(a) and (b) must be satisfied before the power to set aside arises.’
[4] [2019] SASCFC 3, [186].
The transcript of proceedings taken at the time indicate Mr Hunt told the Magistrate:
. the notice of the hearing was not received;[5]
. their accountants did not receive any such notice;[6]
.he did not know why he did not receive the calls from the Court as he had his phone on;[7]
.he rang the accountants inquiring as to any such notice;[8]
.if notice was received he ‘would have definitely turned up; [as] we have nothing to do with this whole scenario;[9]
.he changed the notification address ‘so this won’t happen again’;[10]
.he co-operated when the plaintiff sought the adjournment of the trial;[11]
.the reasons for not contacting the court to ascertain the new trial date was that he ‘waited through the Christmas period; was ‘a busy man most days, I’ve got a heavy schedule’ and ‘this is a common thing with being on the road quite a bit …’.[12]
[5] T2.13-.15, T2.25-.26, T2.35-.36, T3.19-.21, T4.23-.26, T5.18, T5.36-.37.
[6] T3.3-.4.
[7] T2.6-.9.
[8] T3.26-.27.
[9] T4.1-.3, T4.22-.23, T5.24-.25, T6.11-.13.
[10] T4.19-.21.
[11] T5.13-.22.
[12] T5.33-.35, T7.6-.7.
It is evident from his Honour’s reasons that it was the failure to contact the court within a reasonable time after the original hearing date was vacated as well as the failure to remain contactable by telephone that led him to refuse the application. It is not evident whether his Honour accepted the claim that the notice of the new trial date was received or not. It is clear from both the transcript and the reasons, that the Magistrate did not embark upon any inquiry into the underlying merits of the case in terms of MCCR 87(2)(a).
The application for review
An application for review pursuant to s 38(6) of the Magistrates Court Act 1991 (SA) was filed in this Court on 3 April 2019. It states in part ‘we maintain our innocence we know nothing of the matter’ and seeks an order that the action be dismissed ‘as there is no evidence, no CCTV footage no witnesses’.
In handwritten grounds of appeal, Mr Hunt repeats the assertion that he received no correspondence at all regarding the hearing date and that he ‘strongly disagrees with the opinion of the Magistrate’, because Cherry Red ‘never had anything to do with the plaintiff’.
The submissions and further material on review
Mr Hunt appearing again for Cherry Red affirmed the fact that no notice of the hearing was received. His explanation for not making an inquiry of the Magistrates Court to ascertain the new trial date was ‘miscommunication, I thought there’d be something in the mail’.[13] He admitted on behalf of Cherry Red that the Mitsubishi Truck registered number S158-BHC belonged to it on 26 April 2017, that the Cherry Red coffee roasting business then operated in the area near Deloraine Road Edwardstown and that it serviced ‘quite a few businesses in that street’.[14]
[13] T3.16-.18, 21 June 2019
[14] T4.12-.38, 21 June 2019.
Mr Hunt said that Cherry Red did not have an employee by the name of Anna, although he volunteered that was his wife’s name. He told the court she did not drive the vehicle, as it was a manual which she couldn’t drive.[15] He further stated there was no damage to the Cherry Red vehicle.
[15] T5.1-.15.
Photographs later provided to the court through RAA’s recovery specialist Ms Psyridis, do show rear end damage to the Toyota Kluger owned by Mr Calonsag. From this it could be expected the infringing vehicle sustained some obvious damage to the front, especially since the Kluger had a tow-bar.
Mr Hunt later produced a note from Cherry Red’s accountants which read:
We confirm that we act as accountants for Cherry Red Pty Ltd and our premises is the registered office of this company.
We confirm receipt of the Notice of Trial (dated 31st October, 2018) in relation to the above action in the Magistrates Court of SA.
Our standard office procedure for this type of correspondence is to photocopy for the file and forward the original to the client.
Our client has advised us that he was not forwarded the original document and subsequently failed to appear at the trial on 18th February, 2019.
As a result, we recently reviewed the file and discovered that the original notice of trial was still on the file, and inadvertently, had not in fact been forwarded to the client.
We apologise for this embarrassing error and the inconvenience it may have caused.
Our procedures have now been updated to ensure such an error/ oversight does not re-occur.
Ms Psyridis representing RAA insurance indicated she had no reason to dispute this state of affairs, but she continued to emphasise Mr Hunt’s failure to inquire of the Magistrates Court as to the new trial date. She advised the court that ‘unfortunately, due to the amount of time that had elapsed, our client had not retained a copy of that note so that no longer exists for us to present to the court’.[16]
[16] T36.36-.37, 21 June 2019.
At the invitation of the court, she initiated further enquiries of Mr Calonsag on 25 June 2019:
I have today spoken with Mr Calonsag. He has confirmed that he made an extensive and exhaustive search prior to the Trial Hearing date, being 18th February 2019 and was unable to locate a copy of the note left by ‘Anna’ at the offices of Festival Glass. He further confirmed that he did not make or retain a copy of same.
The reference of the office of Festival Glass is to the glassing business on Deloraine Road, close to where the Kluger was damaged and at which the ‘Anna’ note was apparently left. It turns out that Mr Calonsag was an employee. Quite independently, Mr Hunt spoke of contacting this business but his inquiry revealed only that ‘they saw nothing’. [17] He later told the court that Festival Glass is ‘a customer of ours’ which Cherry Red still services ‘everyday’ and that he inquired of them about the note which he has not seen.[18] It would appear the ‘Anna’ note was disposed of by Mr Calonsag at some time before proceedings were initiated by the RAA’s solicitors.[19]
[17] T5.26-.28, 21 June 2019.
[18] T4.16.6-.15, T17.24-.31, 5 July 2019.
[19] T7.34-8.1, T9.16-.33, 21 June 2019.
The receipt of these subsequent materials in the review process, is authorised by s 38(7)(c) of the Magistrates Court Act: Harradine v District Court of South Australia.[20]
[20] (2012) 280 LSJS 572, [53].
Analysis
On reviewing the decision of the Magistrate it pays to bear in mind that a review to the District Court is not a hearing de novo on the merits.[21] The version of the events subscribed to by Mr Hunt certainly founds a basis for the conclusion that Cherry Red has an arguable case on the merits. Whilst the circumstances are somewhat unusual, the hypothesis that a miscreant driver provided false particulars is not inherently implausible, especially since Cherry Red’s truck frequented the area. As the Magistrate did not determine this question adversely to Cherry Red, that returns the review inquiry to the question of whether there was a reasonable excuse for not having attended.
[21] Ibid.
Mr Hunt was genuine and consistent in terms of denying liability and in the consequent determination to defend the action. He fully participated in the first directions hearing and in fact facilitated court processes by agreeing to proceed solely on the issue of liability. The original summons, the notice of the directions hearing and the notice of the first trial date were all served on Cherry Red’s accountants and duly passed on to it. In those circumstances he was entitled to assume that would be the case with respect to the notice of the vacated trial date.
Whilst it might be expected that an inquiry should be made of the court in the intervening period between 29 October 2018 and mid-February 2019, there were distractions with heavy work commitments, not to mention Christmas and New Year interruptions. Mr Hunt did assert that he did contact his accountants who assured him ‘we haven’t received anything’.[22] For its part the RAA made no claim to any prejudice on its side.
[22] T3.3-.18, 16.38-17.5, 5 July 2019.
The inquiry the Magistrate was required to make was not whether Cherry Red could have done more to inform itself of the trial date, but rather whether it had a reasonable excuse for not attending ‘within 15 minutes of the time fixed for trial’, as required by MCCR 101. The resolution of that question may be informed by lack of diligence on the part of an infringing party, but it is not exhaustive of it. It is clear that Mr Hunt intended to attend for the trial. There is no suggestion of avoidance, delay or obfuscation on his part. To the contrary, he actively and constructively contributed to the course of the proceedings.
By far the most significant contributor to the fact of non-appearance was the failure of the accountants to forward the notice of hearing to Cherry Red. Mullighan J explains in Langanis v Roberts,[23] the threshold tests established by MCCR 87(2) usually relates to conduct of the litigant. That was a case in which a solicitor was in default, so that ‘usually in this context, a party will not have to bear the consequences of the neglect of his solicitor’. A similar approach was taken by Nyland J in Rem v Kargas,[24] and by Gray J in Mortimer v State of South Australia.[25] At all events, the ultimate question to be posed by the court when considering an application to set aside default judgments, is as stated in Davies v Pagett:[26]
The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed.
[23] Supreme Court of South Australia, Mullighan J, 15 July 1993.
[24] Supreme Court of South Australia, Nyland J, 30 March 1994.
[25] [2001] SASC 37, [33] and [37].
[26] (1986) 70 ALR 793, 799.
Returning to the facts of this case, if the Magistrate was given confirmation of the failure of the accountants to advise Cherry Red of the fresh trial date, the proper exercise of the power to set aside was to allow the application, consistently with the authorities just referred to.
In light of the evidence now before the court, and which was not before the Magistrate, the application for review is allowed, the order refusing to set aside the default judgment is rescinded, and in substitution thereof, there will be an order allowing the application to set aside the default judgment pursuant to ss 38(7)(d)(ii) and (d)(iii)(A) of the Magistrates Court Act.
Since this review ‘arises from a default judgment’, the power to remit is preserved to this court by s 38(7)(d)(iii)(B) thereof. Remission is appropriate since no evidence was adduced in either court on the outstanding liability issue.
The usual practice when judgment is set aside, is for an applicant to pay the costs thrown away, and so the costs and fees orders made by the Magistrate should stand: Magistrates Court Practice South Australia, Looseleaf Service Thompson Reuters para MCCR 87.60 and Civil Procedure South Australia, Looseleaf Service Lexis Nexis para MCCR 87.30. This practice is consistent with the general wider practice that in the case of judgments regularly obtained but later set aside, costs thrown away are awarded to the other party: Hunter Valley Developments Pty Ltd v Cowen.[27]
[27] (1984) 3 FCR 344, 353.
The principle was settled by the time of Passmore v Minahan,[28] and in the judgment of Jessel MR in Burgoine v Taylor:[29]
Solicitors cannot, any more than other men, conduct their business without sometimes making slips; and where a solicitor watches the list, and happens to miss the case, in consequence of which it is taken in his absence, it is in accordance with justice and with the course of practice to restore the action to the paper, on the terms of the party in default paying the costs of the day, which include all costs thrown away by reason of the trial becoming abortive. As a general rule, solicitors in my branch of the court consent to such an order as is now asked, and that such an application should be opposed is to be a novelty. Still, as the Appellant was in default, he must pay the costs of the application to the Court below, …
[28] (1887) 13 VLR 262.
[29] (1878) 9 ChD, 1, 4-5.
Since the application for review succeeds on the basis of material provided quite recently, there will be no order as to the costs of the review.
Before the matter is set for trial it is advisable to call a directions hearing to canvass with the parties what evidence they might call. Apart from Mr Calonsag, consideration might be given to calling someone from Festival Glass for example concerning the ‘Anna’ note, how it was received or to whom it was given. From the point of view of Cherry Red, records of repairs, maintenance at relevant times might serve to disprove the repair of any damage to its Mitsubishi Truck, and diaries or rosters of those employees using the vehicle might throw light on its whereabouts on 26 April 2017. Likewise, records demonstrating a person by the name of Anna was not employed by it at that time might equally be of significant relevance. These and no doubt other matters are of course ultimately for the parties to determine.
Orders
For the time being, consistently with the above reasons the formal orders of the court are:
The application for review of a Minor Civil decision filed on 3 April 2019 is allowed.
The order refusing to set aside the default judgment of 25 March 2019 is rescinded and an order allowing the application is substituted in its place, pursuant to s 38(7)(d)(ii) and s 38(7)(d)(iii) of the Magistrates Court Act.
The issue of liability is remitted for hearing to the Adelaide Magistrates Court pursuant to s 38(7)(d)(iii)(B) thereof.
The orders for the payment by Cherry Red of fees and costs are otherwise affirmed, pursuant to s 38(7)(d)(i) thereof.
No order for costs of the review.
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