Curtis v Hallett Cove Manager Pty Ltd - [2016] SASC 47

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
CURTIS v HALLETT COVE MANAGER PTY LTD
[2016] SASC 47
Judgment of The Honourable Justice Doyle
6 April 2016
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
The respondent sued the appellant in the District Court. Those proceedings were resolved by entry into a heads of agreement which required that the appellant pay the respondent a number of weekly instalments, or in default of those payments being made, the sum of $40,000.
The appellant did not pay, and the respondent brought proceedings in the Magistrates Court seeking payment of the $40,000. A Magistrate entered summary judgment in favour of the respondent. The Magistrate gave no reasons for his decision.
The appellant appealed on the grounds that the Magistrate erred in finding that the heads of agreement was properly executed and erred in failing to find that the respondent had acted unconscionably.
Held (per Doyle J), dismissing the appeal:
1. The appellant has not established any defence in fact or law which has reasonable prospects of success.
2. Although the Magistrate erred in failing to give reasons, the order for summary judgment was appropriate.
Magistrates Court (Civil) Rules 2013 (SA) r 103(1), r 8, referred to.
Kadeh v Gill (2000) 211 LSJS 88; Papps v Police (2000) 77 SASR 210; R v Keyte (2000) 78 SASR 68; Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1; Estate of the Late Sir Donald Bradman v Allens Arthur Robinson (2010) 107 SASR 1, considered.

CURTIS v HALLETT COVE MANAGER PTY LTD
[2016] SASC 47
Magistrates Appeal: Civil
DOYLE J:

The respondent sued the appellant in the District Court. Those proceedings were resolved by entry into a heads of agreement which required that the appellant pay the respondent a number of weekly instalments, or in default of those payments being made, the sum of $40,000.
The appellant did not pay, and the respondent brought proceedings in the Magistrates Court seeking payment of the $40,000. By orders made on 2 December 2015, a Magistrate entered summary judgment in favour of the respondent for $40,000 plus costs.
This is an appeal from the Magistrate’s order.
Background
The respondent is the underlessor of the Hallett Cove Shopping Centre. In February 2011 the respondent and Our Home Holdings Pty Ltd (the Lessee) entered into a lease (the Lease) in relation to premises located at the Shopping Centre (the Premises). The appellant agreed to guarantee and indemnify the respondent in respect of the Lessee’s performance of its obligations under the Lease.
The Lessee’s business was unsuccessful, and in early May 2012 the respondent re-entered the Premises and terminated the Lease as a result of the Lessee’s failure to pay rent. The respondent issued proceedings against the Lessee and the appellant in the District Court, seeking recovery of a debt and damages resulting from the termination of the Lease. The appellant filed a defence, and the matter was set down for a 5 day trial commencing 11 August 2014.
In late July, the appellant met with representatives of the respondent at the offices of Cowell Clarke, the solicitors for the respondent. Mr Jamie Watts of Cowell Clarke was present at the meeting. The purpose of the meeting was to attempt to resolve the matters which were the subject of the District Court proceedings.
A resolution was reached, taking the form of a document entitled ‘Heads of Agreement’. It was executed by both parties. The agreement required that the appellant pay the respondent $31,200 by way of $200 payments every week for a period of three years commencing 31 January 2015. The agreement provided that in default of those payments being made, the sum of $40,000 (less any sums already paid) would become immediately due and payable by the appellant to the respondent, and that the respondent may apply for summary judgment against the appellant in respect of this sum.
On 19 January 2015 the respondent sent the appellant an invoice for the payments. A letter of demand followed on 26 February 2015, but the appellant did not make any of the weekly payments required by the agreement.
On 18 March 2015 the respondent issued proceedings in the Magistrates Court seeking judgment for the amount of $40,000 owing under the agreement, plus interest and costs.
The appellant filed a defence dated 2 April 2015. The defence raised several complaints relating to the circumstances surrounding the entry into the Lease, and the conduct of the Lessee’s business pursuant to that Lease. It made reference to the appellant being a bankrupt at the time he signed the guarantee, alleging that this was known to Cowell Clarke. It described Cowell Clarke as being his lawyers, as well as the lawyers for the respondent. The only matters in the defence that directly responded to the claim for $40,000 under the heads of agreement were in paragraphs 6 and 7 of the defence:
I was convinced (bullied) into believing I had to sign a heads of agreement in 2014 to reduce a notional debt of over $100 thousand dollars and due to me trying to get back on my feet and the young business I was now running as a sole trader was struggling to survive I believed I had no option but to sign this agreement and buy myself time to get the business strong. This did not happen and the business was closed down by the landlord Coles in October 2014.
I am now in a position where I would like to defend the original claim completely as it was not meant to be and it was signed illegally.
On 1 September 2015 the respondent filed an application for summary judgment in the Magistrates Court proceedings. It was accompanied by an affidavit, essentially deposing to the background matters I have summarised above.
There was a directions hearing the following day, which resulted in the appellant being given 14 days to file an answering affidavit. The application was adjourned to 23 September 2015.
The appellant filed an affidavit dated 9 September 2015. In this affidavit he said that he was bullied into signing the heads of agreement; that he later discovered that the respondent had broken the Lease; and that he had not been told this by Cowell Clarke or the respondent when he was convinced into signing the heads of agreement. He went on to say that “they” used the fact that the appellant could not pay for a lawyer “to guide this matter into a heads of agreement where they can trap me and make me liable for a company’s lease”. He said that he was told that he had no option but to sign the heads of agreement or his new business would be wound up. Referring to earlier events, he said that he did not knowingly sign as guarantor; that he was told he was signing as a witness only; and that Cowell Clarke should have “rejected” the document knowing he was a bankrupt. While he said that Cowell Clarke should have done this to protect its client (the respondent), he also referred again to Cowell Clarke as his lawyers.
On 23 September 2015 the appellant sought an adjournment to obtain legal representation. The Magistrate granted this application and adjourned the matter to 4 November 2015. On that day, the appellant again foreshadowed getting legal advice. He was given 21 days within which to file a further affidavit. The application for summary judgment was adjourned to 2 December 2015 for determination.
The appellant filed a second affidavit dated 30 November 2015. In relation to the heads of agreement, the appellant said that he:
… was pressured into signing a Heads of Agreement and was mislead (sic) about who caused the lease failure and about his possible liability at this meeting, he was not represented at this meeting and the Cowell Clark (sic) lawyer (James Forde) who had full knowledge of this case was also not present.
The affidavit went on to make various allegations in relation to the circumstances of entry into the Lease and guarantee, and the conduct of the respondent in relation to the Lease. These allegations were largely along the same lines as those made in the earlier documents filed by the appellant and summarised above.
The Magistrates Court record shows that on 2 December 2015, the Magistrate ordered (i) that the defence be struck out; and (ii) that summary judgment be entered in favour of the plaintiff (the respondent in this appeal) against the defendant (appellant) for $40,000 plus certain costs. The respondent was represented at this hearing. The appellant represented himself, as he has at all stages, including on the hearing of this appeal. There is no transcript of the hearing on 2 December 2015, although I was informed from the bar table on this appeal that submissions were made by both parties, relying upon the matters set out in their respective affidavits. The Magistrate gave no reasons for his decision.
The Appeal
The appellant’s first notice of appeal contained five grounds. Those grounds complained that Cowell Clarke acted for both parties; that they did not disclose fault by the respondent when forcing the appellant to sign the heads of agreement; that they did not disclose that a bankrupt person was a signatory on the Lease; that they knowingly accepted the signature of a bankrupt person on the lease; and that they knowingly participated in signing a document that stopped disclosure of rent rebates to the owners of the Premises.
The appellant then filed an amended notice of appeal which abandoned these grounds. This notice of appeal asserted that the Magistrate erred in two respects in finding that summary judgment should be entered, namely, (i) in finding that the heads of agreement was properly executed under the Corporations Act 2001 (Cth), and (ii) in failing to find that it was unconscionable for the respondent, as the appellant’s former solicitor, to insist on execution of the heads of agreement.
It emerged during the hearing of the appeal that the respondent had not been provided with a copy of the proposed amended grounds of appeal. However, as there was no formal opposition to the proposed amendments, and because there is significant overlap between the abandoned grounds and the second of the proposed amended grounds, I grant the appellant permission to rely upon these grounds.
Consideration
As the respondent accepts, and as the Full Court of this Court held in Kadeh v Gill,[1] reasons should ordinarily be given for granting summary judgment after a contested application. The reasons need not be extensive, but they ought to address the main contentions raised and the main grounds for the decision reached.[2] In the absence of reasons, the appeal court’s role becomes more difficult. In the case of the Magistrates Court, the obligation to give reasons for a final judgment after the conclusion of a contested hearing is enshrined in r 103(1) of the Magistrates Court (Civil) Rules 2013 (SA). A summary judgment is a final judgment under those Rules.
[1] Kadeh v Gill (2000) 211 LSJS 88; [2000] SASC 367 at [26].
[2] Papps v Police (2000) 77 SASR 210; R v Keyte (2000) 78 SASR 68.
In my view, the failure to give reasons involved error on the part of the Magistrate. However, I consider there to be little utility in remitting the matter for rehearing in the Magistrates Court. This would be productive merely of delay and cost. As this appeal is by way of rehearing, and because the matter was determined on the papers, it is appropriate that I determine the appropriate outcome.
The Magistrates Court has power to enter summary judgment under r 8 where there is “no reasonable basis for the action or defence”. The power to enter summary judgment is to be exercised sparingly. In the case of an application brought by a plaintiff, it requires that the court be satisfied that the defence is bound to fail, or that the prospects of the defence succeeding are merely fanciful rather than realistic.[3]
[3] Kadeh v Gill (2000) 211 LSJS 88; [2000] SASC 367 at [29]; Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1; Estate of the Late Sir Donald Bradman v Allens Arthur Robinson (2010) 107 SASR 1.
Turning to the matters raised by the appellant as being defences potentially available to him, most of his complaints can be put to one side as being relevant only to the circumstances surrounding the Lease and guarantee, and not impugning the heads of agreement. The respondent’s claim for $40,000 in the Magistrates Court proceedings was for money owing under the heads of agreement, and so only matters responsive to that claim are capable of constituting defences which might stand in the way of summary judgment in favour of the respondent.
The first matter raised by the appellant in his amended notice of appeal is his contention that the heads of agreement was not executed in accordance with the Corporations Act. On the hearing of the appeal the appellant explained that his challenge was on the basis that Mr Blunt, who executed the heads of agreement for the respondent, may not have been authorised to do so. This matter was not raised in the appellant’s defence, nor in his affidavits or submissions before the Magistrate. Even putting this problem to one side, I consider that this foreshadowed defence is bound to fail. Mr Blunt is the Chief Executive Officer of the group companies of which the respondent is a member. He attended the meeting in late July on behalf of the respondents. The appellant quite frankly conceded that he had no reason to believe that Mr Blunt was not authorised, and has not adduced any evidence to suggest that he was not authorised. Bearing in mind the seniority of Mr Blunt, and the authority which would usually come with his role, I do not think that this defence has reasonable prospects of success.
The second matter raised by the appellant is his allegation that he was pressured or misled into signing the heads of agreement, or that the respondent (or its solicitors) acted unconscionably. The basis for this allegation has been left vague and general in the defence and in the affidavits filed by the appellant.
I have no difficulty in accepting that the appellant felt under significant pressure, both financially and more generally, when he signed the heads of agreement. There was an inequality of bargaining power and position between the appellant and respondent on the occasion of the late July 2014 meeting when the heads of agreement was signed. In part this was a product of the identity of the parties (an unrepresented individual versus a represented corporation from a significant corporate group). In part it was also a product of previous dealings which had left the appellant in a commercially or financially vulnerable position. However, an inequality of this nature is not sufficient to impugn the heads of agreement. It is not suggested that the appellant was under any relevant special disability (in the sense described in the case law relating to unconscionability). Nor was the relationship between appellant and respondent, or the circumstances more generally, such as to suggest an exercise of undue influence. I do not consider it sufficient to impugn the heads of agreement that the respondent took a hard line in the July 2014 meeting, or that it (through its lawyers) pointed out some of the commercial and financial circumstances that might follow if the appellant decided to continue the District Court proceedings rather than sign the heads of agreement. Even if this can be described as pressuring or bullying, as the appellant has described it, I do not think these matters are, without more, sufficient to impugn the heads of agreement.
While the appellant complains that he thought Cowell Clarke were his solicitors, this complaint generally related to their role at the time of entry into the Lease and guarantee and not the heads of agreement. Even in respect of that earlier time period the allegation is of doubtful merit. But in any event, so far as the heads of agreement is concerned, I do not think it can be reasonably suggested that the appellant thought Cowell Clarke was acting for him on the occasion of the July 2014 meeting. It is not alleged that the respondent or any representative from Cowell Clarke said anything to suggest that this was so.
The appellant says that he did not know the July 2014 meeting would involve a settlement of the District Court proceedings and that he was thus caught somewhat by surprise when presented with the heads of agreement. However, he accepts that he knew that the meeting was to discuss the District Court proceedings, and I do not think any surprise as to the content of the heads of agreement is sufficient to avoid the usual consequences of him signing it.
There is no other allegation of a relevant misapprehension by the appellant, let alone any allegation that he was misled by any particular statement by the respondent or its lawyers at the July 2014 meeting when the heads of agreement was signed.
Conclusion
It follows from the above that the appellant has not established any defence in fact or law which has reasonable prospects of success. The matters which he has raised either do not address the heads of agreement, or are bound to fail. While the Magistrate erred in not giving reasons for ordering summary judgment in the respondent’s favour, the order made was the appropriate one.
I dismiss the appeal.