Creative Cooks Pty Ltd v Aretzis Properties Pty Ltd - [2021] SASCFC 5

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
CREATIVE COOKS PTY LTD & ORS v ARETZIS PROPERTIES PTY LTD
[2021] SASCFC 5
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, the Honourable Justice Stanley and the Honourable Justice Doyle)
23 October 2020

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL - WHEN APPEAL LIES
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - DEFAULT JUDGMENT - GENERALLY
Application for permission to appeal against the decision of Judge Bochner.
Held (per Kourakis CJ, Stanley and Doyle JJ agreeing):
1. Permission to appeal is refused.
Lauro v Minter Ellison [2020] SASC 137, discussed.

CREATIVE COOKS PTY LTD & ORS v ARETZIS PROPERTIES PTY LTD
[2021] SASCFC 5

Full Court: Kourakis CJ, Stanley and Doyle JJ

KOURAKIS CJ: This is an application for permission to appeal against the decision of a Judge of the District Court allowing an appeal brought against the decision of a Master of that Court setting aside a default judgment.
The respondent to this application for permission is the plaintiff in an action brought in the District Court (the plaintiff) claiming damages for breach of a lease given to the applicants who were the personal and corporate defendants in the District Court action (the defendants). The lease had been terminated before the action was commenced.
In the action instituted on 26 March 2009, the plaintiff claimed the sum of $94,564.85 for the liquidated claim for unpaid rent up until the date of the termination of the lease. The plaintiff claimed further amounts by way of unliquidated damages (primarily for the losses suffered by reason of the early termination of the lease) also flowing from the defendants’ breach. The proceedings were served on the several defendants on different dates; the date for the filing of the defence by the defendant last served was 1 May 2019. Solicitors for the personal defendants filed a notice of acting on 4 April 2019 and in September 2019 filed a notice of acting for the corporate defendant. On 2 May 2019, the plaintiff’s solicitor contacted the defendants’ solicitor putting that solicitor on notice that the defendants were in default and reserving the plaintiff’s rights. No defence was filed. On 15 May 2019, the plaintiff obtained a default judgment in the sum of $94,564.85 and an order referring the balance of the claim for hearing. The amounts sought for the unpaid rent, and by way of damages, were set out separately in the body of the statement of claim but accumulated as a single sum in the prayer for relief.
The Master of the District Court held that the judgment was irregularly obtained because it did not reflect (was less than) the total amount claimed in the prayer for relief. At the relevant time, r 229 of the District Court Rules 2006 (SA) provided that a plaintiff may enter judgment in default without first obtaining the Court’s permission:
229—Entry of default judgment where…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] SASCFC 5
Decision Date: 23 October 2020

CaseChat Overview and Summary

Creative Cooks Pty Ltd, as plaintiff, sought permission to appeal against a decision of a District Court Judge who had refused to set aside a default judgment obtained by Aretzis Properties Pty Ltd. The dispute concerned the regularity of the default judgment entered against Creative Cooks Pty Ltd for breach of a lease agreement.

The primary legal issues before the Full Court of the Supreme Court of South Australia were whether the default judgment was irregularly obtained, whether the plaintiff had provided adequate notice of its intention to enter default judgment, and whether the defendants' defence of economic duress was arguable. Specifically, the court considered whether the inclusion of both liquidated and unliquidated sums in the prayer for relief rendered the default judgment irregular under Rule 229 of the District Court Rules 2006 (SA), and whether a specific email constituted sufficient notice of the intention to enter default judgment.

The Full Court, comprising Kourakis CJ, Stanley and Doyle JJ, held that the Judge had correctly determined that the default judgment was regularly obtained. The court reasoned that a claim for unpaid rent was a discrete liquidated sum for the purposes of Rule 229, even if other unliquidated sums were also claimed. Furthermore, the court found that the email sent by the plaintiff's solicitors provided sufficient notice of the intention to enter default judgment, rejecting the defendants' contention of a binding practice requiring more specific or longer warning. Finally, the court agreed with the Judge that the defence of economic duress was not arguable, as the circumstances relied upon by the defendants constituted ordinary market forces and commercial negotiations, rather than vitiating duress.

Permission to appeal was refused.

Orders

Orders of the court

Application for permission to appeal against the decision of Judge Bochner.

Held (per Kourakis CJ, Stanley and Doyle JJ agreeing):

1. Permission to appeal is refused.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The Master of the District Court held that the judgment was irregularly obtained because it did not reflect (was less than) the total amount claimed in the prayer for relief. At the relevant time, r 229 of the District Court Rules 2006 (SA) provided that a plaintiff may enter judgment in default without first obtaining the Court’s permission:229—Entry of default judgment where Court's permission not required…(a) if a defendant does not file a defence to a liquidated claim within 28 calendar days after service of the plaintiff's statement of claim—the plaintiff may enter judgment in default of a defence against the defendant for an amount not exceeding the amount of the liquidated sum plus interest;… The Judge held that the claim was regularly obtained even though the prayer for relief had accumulated liquidated, and unliquidated, sums. Her Honour was correct to do so. Several claims may be brought in the same action. The plaintiff’s claims arose out of the same cause of action, namely a breach of the lease, but the claim for unpaid rent is properly characterised as a discrete claim for a liquidated sum for the purposes of r 229. It is not arguable that the default judgment was irregularly obtained. The Judge also held that there was no obligation on the plaintiffs to give any more notice than the email sent by its solicitors on 2 May 2019. The defendants contended for the existence of a binding practice to give a more specific, or longer, warning of an intention to enter a default judgment. That contention is not supported by any legal authority and was expressly rejected by Bleby J in Lauro v Minter Ellison.[1] In any event, the Judge, correctly, held that the email did give notice of the plaintiff’s intention. It is not arguable that the Judge erred in either respect on this ground.[1] Lauro v Minter Ellison [2020] SASC 137. Finally, the Judge held that the defendants’ defence of economic duress was not arguable. The circumstances on which the defendants rely are no more than ordinary market forces of supply and demand which generally arise in negotiations between landlords and prospective tenants. The defendants did not plead any particular vulnerability and did not make a claim of undue influence, unconscionable conduct or misrepresentation. The operation of ordinary commercial circumstances, and in particular the interest in the premises from other prospective tenants, which induced the defendants to enter into a lease less favourable than one they might have hoped for, cannot amount to economic duress. This ground too is not arguable. STANLEY J: I would refuse permission to appeal. I agree with the reasons of the Chief Justice. DOYLE J: I would refuse permission to appeal. I agree with the reasons of the Chief Justice.

Ratio Decidendi

Legal Principle Established

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