Clogher v Mattock

[2000] NSWSC 514

CITATION:	Clogher & Anor v Mattock & Anor [2000] NSWSC 514
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	SC 12803/99
HEARING DATE(S):	1 June 2000
JUDGMENT DATE:	9 June 2000
PARTIES :	Tom Clogher and Sandra Clogher (Applicants) Brian Thomas Mattock and Judith Mattock (Respondents)
JUDGMENT OF:	Studdert J

LOWER COURT JURISDICTION :	Local Court
LOWER COURT FILE NUMBER(S) :	9904/97
LOWER COURT JUDICIAL OFFICER :	Mr R. Dive

COUNSEL :	A. Radojev (Applicants) J. Simpkins (Respondents)
SOLICITORS:	Jack Rigg Solicitors (Applicants) Michael McKelvey & Associates (Respondents)
LEGISLATION CITED:	Civil Claims Act Arbitration (Civil Claims) Act Arbitration (Civil Actions) Act Local Courts Act Justices Act
CASES CITED:	El Ali v Government Insurance Office (1988) 15 NSWLR 303 The State of Queensland v J.L. Holdings Pty Limited (1996-97) 181 CLR 146
DECISION:	See para 35

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

STUDDERT J

Friday 9 June 2000

12803/99 TOM CLOGHER & ANOR v BRIAN THOMAS MATTOCK & ANOR

JUDGMENT

1   HIS HONOUR: Tom and Sandra Clogher apply on summons in proceedings against Brian Thomas Mattock and Judith Mattock seeking an order that a decision of a magistrate made in the Local Court on 22 October 1999 be set aside and that the proceedings be removed to the Local Court for hearing. The applicants for relief here were the defendants in proceedings in the lower court, so for the sake of convenience I shall refer to those persons as “the applicants” in the course of this judgment and I shall refer to the survivor of those persons who were the plaintiffs in the court below as “the respondent”.

2   It is necessary to record shortly the circumstances which give rise to the present summons.

3   The plaintiffs began proceedings in the Local Court by statement of liquidated claim on 9 September 1997. In short they claimed that they lent the applicants a total amount of $25,000 in September 1995. I record features of the progress of the litigation:

(a) On 25 February 1998 default judgment was entered against the applicants.

(b) Three days later the second plaintiff died and subsequently an order was made for the respondent to continue these proceedings as the representative of the second respondent’s estate. This order is not reflected in the naming of the parties to this present summons but no point has been taken about this.

(c) On 17 June 1998 a bankruptcy notice was served on the applicants and this prompted an application to set aside the default judgment. That judgment was set aside on 14 August 1998.

(d) The applicants’ defence put in issue the loan, asserting that the money was advanced not to them but to a company in which the applicants were involved.

(e) On 16 November 1998 an order was made under s 21H of the Civil Claims Act referring the dispute to arbitration. The arbitration hearing took place on 10 February 1999 and on 16 April 1999 an award was made in favour of the respondent.

(f) On 12 May 1999 the applicants made application for a rehearing.

(g) The applicants were directed to file any amended defence on or before 21 July 1999. The question of a possible breach of fiduciary duty by the respondents in the circumstances in which the money was advanced was raised by the arbitrator during the course of the arbitration and this prompted consideration of an amendment of their defence by the applicants. However, no amended defence was filed as directed.

(h) The matter was listed for callover in the Local Court on 25 August 1999 and the applicants did not appear. In consequence, the application for rehearing was discontinued under s 18D of the Arbitration (Civil Claims) Act .

4   It was in this setting that the applicants made their application to the Local Court, the failure of which has prompted the present summons. On 16 September 1999 the applicants applied on notice of motion for the following orders:

“1. The arbitration award handed down on 12 April 1999 be set aside.
2. The matter be referred back to the registrar’s callover to set a date for rehearing.
3. Such further or other orders as this honourable court thinks fit.
4. Costs.”

5   When the notice of motion came on for hearing the applicant had before the magistrate two affidavits of Michael Bellingham sworn on 17 September 1999 and 20 October 1999. There were three affidavits by Michael McKelvey relied upon by the respondents in opposing the application. These were sworn 14 October 1999, 19 October 1999 and 21 October 1999. I do not propose to record their content in detail in the course of this judgment, but I have of course considered these affidavits.

6   The transcript of proceedings before the magistrate on 22 October 1999 makes it clear that the application for relief was presented on two grounds:

(i) that the applicants be permitted to reinstate their rehearing of the matter since such rehearing had been discontinued pursuant to the operation of s 18D;

(ii) in the alternative, that the applicants be given leave to file a fresh application for rehearing out of time.

7   The applicants failed on both grounds and it is submitted that the magistrate erred in the exercise of his discretion so as to call for the relief sought in the summons.

8   The relevant provisions of the Arbitration (Civil Actions) Act are ss 18, 18A, 18B and 18D.

9   Section 18 makes provision for a rehearing following an award of an arbitrator in a matter referred to arbitration:

“(1) A person aggrieved by an award of an arbitrator may apply for a rehearing of the action concerned.

(2) The applicant may (but need not) in the application request that the rehearing be a full or a limited rehearing.”

10   Where a rehearing is requested by a dissatisfied party, the court by which the matter was referred to arbitration must provide a rehearing if the application for this is made ”before the award becomes enforceable as a judgment or order of the court”. Section 18A provides:

“(1) The court by which an action was referred to an arbitrator, or the registrar of that court, must order a rehearing of the action if an application for a rehearing of the action is made before the award becomes enforceable as a judgment or order of the court.

(2) An order for rehearing cannot be made if the amount claimed in the action, or the value of the property to which the action relates, does not exceed the amount prescribed by the regulations for the purposes of this section.

(3) An order for rehearing need not be made if it appears to the court or registrar that the applicant failed to attend a hearing before an arbitrator on the action and the applicant fails to satisfy the court or registrar that there was good reason for the failure to attend the hearing.

(4) The court or registrar may in an order for rehearing direct that the rehearing be a full or a limited rehearing as the court or registrar thinks appropriate. In the absence of such a direction, the rehearing is to be a full rehearing. This subsection has effect regardless of whether the applicant requested that the rehearing be a full or a limited rehearing or made no such request.

(5) In making an order for a limited rehearing, the court or registrar is to specify in the order the aspects that are to be the subject of the rehearing. The aspects may be described by reference to specific issues in dispute, specific parties to the dispute, or otherwise.

(6) The court or registrar may at any time before or during the rehearing make an order amending an order for rehearing.”

11   Any rehearing ordered pursuant to s 18A which is an order for a full rehearing brings about the result that the award of the arbitrator ceases to have effect. Section 18B provides:

“(1) If an order is made for a full rehearing, the award ceases to have effect and the action is to be heard and determined in the court concerned as if it had never been referred to an arbitrator.

(2) If an order is made for a limited rehearing:

(a) the award is suspended and the aspects ordered to be dealt with at the limited rehearing are to be heard and determined in the court concerned as if they had not been dealt with in the arbitration, and
(b) the court may reinstate the award with such modifications (if any) as the court thinks appropriate after the rehearing.”

12 Section 18D of the Arbitration (Civil Actions) Act addresses the circumstances in which a rehearing may be discontinued and the consequences of that. This section, which assumes central importance for the purposes of the present summons, provides as follows:

“(1) If a rehearing is discontinued, the order for rehearing ceases to have effect and the award is taken to be a judgment or order of the court concerned.

(2) A rehearing is discontinued for the purposes of this section if:

(a) the applicant for the order for rehearing files a notice for the discontinuance of the rehearing of the action and no person (other than the applicant or a person who consented to the discontinuance) applies for such an order within the prescribed period after the filing of the notice, or
(b) the applicant fails to attend the rehearing or related proceedings before a registrar and no person present at the rehearing or related proceedings requests that the rehearing proceed, or
(c) the court orders (in accordance with the rules) that the award be reinstated, for the reason that the court is satisfied that the applicant does not intend to proceed with the rehearing or for such other reason as appears sufficient to the court.

(3) If a rehearing is discontinued under subsection (2) (b), the order for rehearing may, subject to and in accordance with the rules, be reinstated by the court concerned on application made in accordance with the rules within 7 days after the discontinuance.”

13 It is conceded that the operation of s 18D was enlivened in this case when the solicitor for the applicants failed to attend at the callover on 25 August 1999. The absence of a representative for the applicants at that callover is explained in the affidavit evidence of Mr Bellingham. Whilst Mr Bellingham normally had the conduct of this matter, he was absent from Sydney at the time of the callover and the other solicitor who was to attend the callover was detained in another court.

14 It is acknowledged that the effect of s 18D(2)(b) was that there was a discontinuance of the rehearing. Under s 18D(3) the order for rehearing could have been reinstated within seven days but again it is clear that in the present case there was no order for reinstatement within seven days.

15 It was in recognition of the provisions of s 18D that Mr Radojev conceded before this Court that the first of the grounds argued before the magistrate was untenable. The Arbitration (Civil Actions) Act provided only a relief period of seven days and since there was no application for reinstatement within that period, s 18D(3) did not permit of an order for reinstatement.

16   Nevertheless Mr Radojev submitted that the magistrate could have granted relief by giving leave to file a fresh application for rehearing out of time. He submitted further that the magistrate was in error in the exercise of his discretion in declining to do so.

17 In the course of argument I expressed my doubts as to the basis upon which the magistrate could have granted the discretionary relief sought. The effect of the discontinuance under s 18D was to reinstate the award and thereafter the award became a judgment of the court. Was the appropriate application then an application to set aside judgment? If this was so, since no such application was made, how could it be argued that the magistrate fell into error in failing to do what he was not asked to do?

18   However since reserving my decision in this case, I have closely considered the Local Courts Act and the rules thereunder. There does not appear to be any rule such as to specifically contemplate an application to set aside judgment in the circumstances presently under consideration. Section 84 of the Local Courts Act empowers the Rules Committee to make rules, inter alia, “prescribing the circumstances in which judgments and orders may be set aside” (see s 84(1)(r)). The provisions of the rules that relate to setting aside judgments appear to be Pt 10A r 2(3), Pt 11 r 1(2), Pt 12 r 2(11), Pt 12 r 3(5), Pt 21 r 2(1) and Pt 26 r 3(2).

19 None of these rules seems apposite to support an application to set aside a judgment that is the consequence of discontinuance by operation of s 18D(2)(b).

20   Section 18A(1), which I set out above, requires that the court order a rehearing “if an application is made before the award becomes enforceable as a judgment or order of the court.” This requirement should be read in conjunction with s 21H(5) of the Local Courts Act, Pt 38 r 11 and Pt 4 r 2 of the Local Court Rules.

21 Section 21H(5) of the Local Courts Act provides:

“…the award of an arbitrator in relation to an action referred to the arbitrator under sub-section (1) shall, after the expiration of the time prescribed by the rules for the purposes of this sub-section, be deemed to be a judgment or order of the court by which the matter was referred to the arbitrator.”
(Emphasis added)

22 The time prescribed by the Rules of Court for the purposes of s 21H(5) is to be found in Pt 38 r 11:

“For the purposes of section 21H(5) of the Act, the time prescribed is:
(a) in relation to an award expressed to be made with the consent of all parties - the period ending on the date endorsed by the Registrar on copies of the award as the date of sending the award; or
(b) in any other case - the period of twenty-eight days immediately following the date so endorsed.”

23   The period of “twenty-eight days” referred to in Pt 38 r 11(b) could be extended under Pt 4 r 2 where it was appropriate to grant such an extension. This rule provides:

“2. (1) A court may, on terms, by order extend or abridge any time fixed by these rules or by any judgment or order.
(2) A court may extend time under sub-rule (1) after, as well as before, the time expires, whether or not an application for the extension is made before the time expires or at all…”

24   I have concluded that the power to extend time to apply for a rehearing remained, notwithstanding the fact that before the grant of any extension, the award was enforceable as a judgment of the court. In El Ali v Government Insurance Office (1988) 15 NSWLR 303 the Court of Appeal determined that the District Court had power to extend the time for applying for a rehearing under the Arbitration (Civil Claims) Act even after the award had become a judgment of the court by a deeming provision of the District Court Rules. By analogy the Local Court has the same sort of power exercisable in appropriate circumstances under the statutory provisions and the Court Rules, to which I have above referred. I observe, however, that El Ali is distinguishable from the present case, because in El Ali the rehearing was sought belatedly, but not after s 18D(3) of the Arbitration (Civil Claims) Act had been activated. In El Ali there was but a single request for a rehearing.

25   Whilst the notice of motion, in seeking the orders which I earlier recorded, did not identify the basis upon which the magistrate was empowered to act, I consider that there was a discretion in the Local Court to extend the time for applying for a rehearing, notwithstanding all that had occurred.

26   The discretion was to be exercised judicially. Mr Radojev, submitting that the magistrate erred in the exercise of his discretion, referred to the statements of principle to be found in the judgments in The State of Queensland v J.L. Holdings Pty Limited (1996-97) 181 CLR 146. In their joint judgment in this case Dawson, Gaudron and McHugh JJ said in the course of their judgment, in considering an appeal against a refusal by the judge at first instance to allow an amendment to a defence (at 155):

“Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion.”

27   Kirby J said (at 173):

“The bases for appellate intervention to set aside a discretionary interlocutory order have been stated many times. They include the demonstration of an error in point of legal principle which is apparent on the face of the reasons or implicit in its result (Squire v Rogers (1979) 39 FLR 106 at 113-114); misapprehension of a fact important to the decision (Lovell v Lovell (1950) 81 CLR 513 at 533, per Kitto J; Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621 at 627, per Kitto J); failure to give weight or sufficient weight, to a relevant fact (Ahern v Deputy Commissioner of Taxation (Q) (1987) 76 ALR 137 at 148-149); or reaching a result which is plainly unreasonable or unjust and which demands appellate intervention (House v The King (1936) 55 CLR 499 at 504; Thornberry v The Queen (1995) 69 ALJR 777 at 777; Cohen v McWilliam (1995) 38 NSWLR 476 at 492). The appellate court must be careful not to convert a conclusion that the order appears to it to be unjust into a conviction that it must therefore be based upon an error of the primary judge in assigning inadequate or excessive weight to particular circumstances of the case (Gronow v Gronow (1979) 144 CLR 513 at 537). Special restraint will be exercised where the interlocutory order challenged is one concerned with practice or procedure. But even such orders have a capacity to affect substantive rights (Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd (1991) 32 FCR 379 at 386, per Gummow J). The appellate court will be slow to intervene. But if it is convinced that the primary judge's discretion has miscarried and that this has resulted in an injustice, it will be its duty to do so (Cohen v McWilliam (1995) 38 NSWLR 476 at 491; Tzouvelis v Victorian Railways Commissioners [1968] VR 112 at 139-140).”

28   Mr Radojev submitted that the proper exercise of the discretion of the magistrate compelled that the applicants be granted the relief they sought. Mr Simpkins, on behalf of the respondent, argued to the contrary.

29   The magistrate rejected the second ground upon which relief was sought for reasons which are recorded at pp 8-9 of the transcript of proceedings of 22 October 1999:

“Now the application is now for a fresh re-hearing application to be granted and of course that application is now well out of time and the award was made on 16 April and the 28 day period for a re-hearing application ran from there. The defendant applicants argue that the fresh application for re-hearing comes very quickly, very shortly after the time when the reinstatement period expired and to go back to that issue, the sub section 3 of section 18D allows 7 days for an application to be made for reinstatement and it’s apparent that a letter was faxed by the defendant’s solicitor on 2 September, one or two days outside that period of time and the registry answered that letter on 3 September and the letter bears the date 2 September. So it is argued that it is only just outside that reinstatement period when this fresh application is made. It is argued that it would be unjust to prejudice the defendants’ case so severely when the time is so close to the time allowed for reinstatement.
In my view this is quite a difficult decision. I am certainly well aware of decisions such as the High Court’s decision in Queensland and J L Holdings, as to the Court looking for where the balance of the interest of justice lie and looking to when an indulgence should be granted to a party.
The plaintiffs oppose the filing of a fresh application at this late stage for a number of reasons. Firstly given the history of the case which has been one of some delay and some default by the defendants to get on with filing required documents and allowing the hearing to proceed. There has been a stop, start process over some two years. My attention is also drawn to the issue as to whether the Court should be effectively overruling the statute which provides a very well defined process by which a re-hearing which has been discontinued by virtue of section 18D should be allowed to be reinstated. Parliament quite carefully says in those recent amendments to the Arbitration Civil Actions Act that a matter is deemed to be discontinued if there is a failure to attend and then goes on to provide a very specific time limit for a reinstatement application. So this second application for re-hearing out of time, would be seen to overcome those very specific provisions in the legislation and of course it’s argued that the defendants have had a hearing of this case, that there was a hearing before the arbitrator which was lost. The defendants have exercised the right they have to apply for a re-hearing and that was before the court and then thee was a failure to appear and so it is not the first application out of time, but in fact the whole process has been undertaken and this is a fresh, second application.
I am also concerned that the defendants have even failed to act within the requirements of the Arbitration Civil Actions Act, once aware of the difficulty that arose on the call over of 25 August. The evidence is that Mr Bellingham was away at the time, that he says in his affidavit that on returning to the office he checked as to the progress of matters in the office in his absence. It was appreciated that Mr Rigg had missed the item in the diary and had not appeared on 25 August and certainly that was appreciated by at least 31 August but there was even then a failure to act which I think didn’t recognise the reality of the legislative provisions and even the later letter of 9 September referred to a fourteen days period when no such period exists.
Now in the decision of El Ali and the GIO of New South Wales, a case reported in 1988 15 NSWLR page 303, Mr Justice Mahoney said ‘that substantial reasons were needed to be given to disturb the finality of the award of an arbitrator which has become a judgment or order of the court’ and it is certainly the case that the only available course to the defendant in this situation is to make that fresh and subsequent application for re-hearing. Now in my view, given the legislative provisions which are so clear and unequivocal as to how a matter that has been discontinued can be reinstated, just how clear those provisions are and the failure of the defendant to comply with those, the fact that the defendant has already had its opportunity to have this hearing re-heard by taking the necessary proceedings and then having failed to comply with those requirements, to, as Mr McKelvey points out, avoid the consequences of the legislation. In my view this is not a case where the application should be granted and ACCORDINGLY THE APPLICATION TO FILE A FRESH RE-HEARING APPLICATION OUT OF TIME WILL ALSO BE REFUSED.”

30   There were a number of considerations to be weighed by the magistrate in the exercise of his discretion. To be included in the considerations to be weighed in the applicant’s favour were the following:

(i) that the applicants were to be shut out by the refusal of the application from further testing the respondent’s entitlement to the sum claimed;

(ii) that the failure to attend on the critical date was explained by inadvertence;

(iii) that the applicants’ solicitor acted only one day after the seven day period expired to seek to have the rehearing restored;

(iv) that the failure to attend on the critical date, and the failure within time thereafter to take the appropriate action were omissions of the applicants’ solicitors, not the applicants.

31   To be included in considerations to be weighed by the magistrate in the respondent’s favour were the following:

(i) the applicants’ tardiness in the past, resulting in a default judgment;

(ii) that an application to set aside that judgment was only prompted by the service of a bankruptcy notice, some four months after default judgment had been entered;

(iii) that after the applicants, having failed at the arbitration, applied for a rehearing within time, they were ordered to file an amended defence before 21 July 1999 and failed to do so. Whilst a proposed draft amendment to the grounds of defence was annexed to the affidavit of Mr Bellingham sworn 20 October 1999, there was no explanation offered as to why the applicants had not complied with the order requiring filing before 21 July 1999;

(iv) that to allow the applicants’ application would have the practical effect of avoiding the statutory time limit set in s 18D(3) of the Arbitration (Civil Actions) Act.

(v) The further application which the magistrate was considering as a fresh application was being made well out of time.

32   The magistrate assessed the decision required of him to be “quite a difficult decision”. His reasons for the conclusions he reached do not indicate on their face that he failed to take into account any relevant consideration. It is immaterial whether this Court, if the court of first instance, would have arrived at a different decision from that reached by the magistrate, unless the applicants prove an error of law in the exercise of the discretion which the magistrate was required to exercise. Plainly it is not enough that the decision the magistrate reached resulted in an undisturbed final judgment. If this was enough, error of law would always be involved in a refusal to set aside a judgment. The magistrate had to weigh competing considerations and minds may properly differ as to the weight to be attached to such considerations.

33 Under s 104 of the Justices Act the applicants require the leave of this Court to pursue their appeal. I consider that leave should be granted but I am not persuaded that the magistrate was wrong in law in refusing to grant the relief which was sought and accordingly this summons must be dismissed.

34   It follows that the respondent must have the costs of this appeal but the question arises as to whether it is appropriate to make an order under Pt 52A r 43 and I must reserve consideration of this.

Formal orders

35   1. Leave to appeal granted.

2. Summons dismissed.

3. The respondent is to have the costs of the summons but I reserve the form of order pending consideration of the application of Pt 52A r 43 of the Rules of Court .

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Last Modified: 09/26/2000