Esanda Finance Corporation Ltd v Swain
[1999] WASCA 118
•11 AUGUST 1999
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION: ESANDA FINANCE CORPORATION LTD -v- SWAIN & ORS [1999] WASCA 118
CORAM: IPP J
WALLWORK J
STEYTLER J
HEARD: 19 APRIL 1999
DELIVERED : 11 AUGUST 1999
FILE NO/S: FUL 185 of 1998
BETWEEN: ESANDA FINANCE CORPORATION LTD
Appellant (Plaintiff)
AND
JOHN SWAIN
First Respondent (First Defendant)LYNETTE MARGARET SWAIN
Second Respondent (Second Defendant)ROBERT ARTHUR MELBIN
Third Respondent (Third Defendant)ANN MELBIN
Fourth Respondent (Fourth Defendant)MELBIN NOMINEES PTY LTD
Fifth Respondent (Fifth Defendant)
Catchwords:
Contract - Appeal - Hire-purchase agreement - Repossession - Fourth schedule notice not served in time - Whether time should be extended - No prejudice shown - Appeal allowed - Time extended
Legislation:
Hire-Purchase Act 1959, s 13, s 35
Result:
Appeal allowed
Representation:
Counsel:
Appellant (Plaintiff) : Mr J C Curthoys
First Respondent (First Defendant) : No appearance
Second Respondent (Second Defendant) : Mr A R Beech
Third Respondent (Third Defendant) : Mr A R Beech
Fourth Respondent (Fourth Defendant) : Mr A R Beech
Fifth Respondent (Fifth Defendant) : Mr A R Beech
Solicitors:
Appellant (Plaintiff) : Stables Scott
First Respondent (First Defendant) : No appearance
Second Respondent (Second Defendant) : Taylor Smart
Third Respondent (Third Defendant) : Mr Simon Watson
Fourth Respondent (Fourth Defendant) : Mr Simon Watson
Fifth Respondent (Fifth Defendant) : Mr Simon Watson
Case(s) referred to in judgment(s):
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
House v The King (1936) 55 CLR 499
Case(s) also cited:
Marquis v Pacific Acceptance Corp Ltd [1963] NSWR 1377
IPP J: I have read the reasons to be published by Wallwork J. I agree with them and his Honour's conclusions. I have nothing further to add.
WALLWORK J: These are reasons for judgment after the hearing of an appeal from a Judge in the District Court who, having heard an appeal from a decision of a Magistrate, upheld the learned Magistrate's decision. That decision had been to dismiss a notice of motion for orders that the time be extended for the present appellant to serve a Fourth Schedule Notice pursuant to the Hire‑Purchase Act 1959 ("the Act") on each of the present respondents. The Fourth Schedule Notice under the Act is the notice to the hirers and their guarantors that the relevant goods, in this case a combine harvester, have been repossessed. It advises the hirers and the guarantors what they can do about reinstating the hire purchase agreement or finalising it, failing which they will be liable for the owner's loss, unless the value of the goods repossessed is sufficient to cover the liability under the contract.
In this case the relevant notice had been posted out to the respondents on 19 March 1992 instead of, at the latest, 17 March 1992. It had been received by the respondents on about 22 or 23 March 1992. The respondents had received it a few days outside the time in which they should have received it under the Act. Under the notice they then had 21 days after the receipt of the notice to take steps to protect their rights. They did not do that. The harvester was sold on 21 May 1992 resulting in a shortfall under the agreement of $59,780.66.
On 29 May 1992 a letter of demand from the appellant was sent to each of the respondents together with a statement of account dated the same day. When the moneys demanded were not paid, the appellant issued proceedings in the District Court against each of the respondents seeking recovery of the sum alleged to be owing. The first respondent did not file a notice of intention to defend and judgment by default was entered against him. The other respondents defended the action on the basis that the Fourth Schedule Notice had not been served on them within 21 days from the date of repossession of the harvester, the notice having been served some two days late. The learned Judge from whom this appeal is brought, stated that it seemed to be common ground that the relevant notice had been sent out of time.
After the filing of the defences and on 27 February 1995 the appellant by notice of motion in the Local Court at Perth, moved for orders that the time within which it had to serve the Fourth Schedule Notice be extended from 17 March 1992 to 23 March 1992. An affidavit
in support of that motion set out the facts alleged by the appellant, being as follows: The first and second respondents had failed to pay instalments due under the hire purchase agreement, whereupon the appellant had served upon them a notice in the form of the Third Schedule to the Act dated 6 December 1991. That notice demanded delivery up of possession of the harvester. When that was not done, and after a lot of difficulty, on 26 February 1992 the appellant had repossessed the harvester from the first two respondents. Due to difficulties in compiling the necessary information required for the Fourth Schedule Notice, there had been some delay in its preparation. On 19 March 1992 the appellant had posted the notices pursuant to s 13(3) of the Act. The reason for the notices being late was said to be amongst other things:
"…an internal delay within the plaintiff which consisted of the plaintiff not being advised of the repossession by its repossession agent until 4 March 1992. The harvester was repossessed from a remote location, namely … Kalannie and the repossession agents report dated 4 March 1992 did not reach the plaintiff until on or about 6 March 1992."
The affidavit in support of the motion deposed that after notice of the repossession had been received at the appellant's office, there appeared to have been a delay in the passing of instructions from the credit control department to the repossession department. The appellant had been concerned at the level of fees charged by the repossession agents. Those fees were renegotiated from $1300 down to $990. It was said that due to the circumstances, the repossession department had not had a lot of time in which to prepare and issue the Fourth Schedule Notices. It was also said that it appeared that the repossession department had not appreciated the fact that the time for issuing the Fourth Schedule Notice was extremely limited.
Following the issue of the Fourth Schedule Notice, solicitors for the third, fourth and fifth respondents had indicated to the appellant that their clients denied liability to pay. At that time no specific point was taken in respect of the late service of the Fourth Schedule Notices. It was not until the defences were filed in the District Court that the point was taken that the Fourth Schedule Notices had been served out of time.
The hearing and disposal of the motion in the Local Court took some time because it did not come on for hearing until 24 October 1995. Having been dismissed after that hearing, the matter went on appeal. It was then realised that the first respondent had not been served with the notice of motion. The matter was then returned to the learned Magistrate to be reheard. Again the learned Magistrate dismissed the motion, one of his reasons being that the delay in filing the original motion had been almost three years. He said that that was the most significant of all the matters before him. He noted that s 35 of the Act provided that:
"Any time prescribed by this Act for the service or giving of any notice or other document or for the commencement of proceedings may, on an application made to a Local Court or the court in which the proceedings are proposed to be instituted (either before or after the expiration of that time but after notice to the other party to the hire purchase agreement) be extended by that Court for such further period, and upon such conditions, as the court thinks fit."
The discretion to extend the time for service of the notice is to be exercised having in mind s 13(3) and s 13(4) of the Act which provide:
"(3)Within 21 days after the owner has taken possession of goods that were comprised in a hire‑purchase agreement he shall serve on the hirer and every guarantor a notice in writing in the form of the Fourth Schedule.
(4)If the notice required by subsection (3) is not served, the rights of the owner under the hire‑purchase agreement cease and determine, but, if the hirer exercises his rights under this Act to recover the goods so taken possession of, the agreement has the same force and effect in relation to the rights and liabilities of the owner and the hirer as it would have had if the notices had been duly given."
The Magistrate held that the delay in the filing of the motion had been excessive and was substantially unexplained "except perhaps by way oversight, or at worst, ignorance." His Worship noted that it had always been a strict requirement under hire purchase legislation that the relevant notice had to be served within the 21 days prescribed limit. His Worship said that he could not find anything in the circumstances which would justify the favourable exercise of the discretion in this case. He said he could accept that there had been logistical difficulties at the time "but in the context of this State, being a large wide-spread State, those sort of logistical problems are really an everyday event and not exceptional or unusual." His Worship said it was clear that there was a likelihood of prejudice to both parties whichever way the court exercised its discretion. However, it was his view:
"…that the prejudice to the defendants is greater and, indeed - it now being almost six years since those notices were issued - that the likely prejudice to them as individuals, albeit not detailed in an affidavit or even updated as at today, that I can accept as I indicated in my earlier reasons that people might well have moved on their lives considerably since that time, and that is a factor which I have taken into account."
At the appeal to the District Court Judge from which this appeal is brought, it was put to his Honour that the delay in service had been no more than five days and that the harvester had been sold more than 21 days after the service of the Fourth Schedule Notice, so that there had been no prejudice to the respondents. It was submitted that there would be substantial prejudice to the appellant if the discretion was not exercised in its favour. That that would bring about a situation which was unjust and inequitable due to the large sum of money which the appellant would lose. It was submitted that the respondents had received finance from the appellant and had obtained the benefit of it. To not allow the appellant to recover the sum due under the Act would allow the respondents to avoid liability under the agreement by reason of a minor delay which had caused them no prejudice.
The learned Judge said there was no evidence to support the proposition, but it was possible that the respondents, having received the Fourth Schedule Notices and taken legal advice, had then denied liability on the basis that the notice was void for not being served within the statutory period. His Honour said that by the time the matter had first come before the learned Stipendiary Magistrate on the motion to extend time, it had been too late for the respondents to exercise their rights to reinstate the agreement pursuant to s 15 of the Act, as the harvester had been sold. His Honour said that it was essentially prejudice caused by that delay which the learned Magistrate had seemed to be referring to when the motion had first come on for hearing.
It was pointed out to his Honour that the respondents had had 21 days in which to exercise their rights under the Act after the service of the Fourth Schedule Notices and before the sale of the harvester. His Honour said that although that was true, the notices had not been validly served and they had been entitled to take that point. His Honour said that a further matter was that by the time the matter had come back before the learned Magistrate in 1998 on the second hearing, further prejudice may have been suffered by the respondents due to change of the financial circumstances of the parties through the sheer effluxion of time. His Honour noted that there was no evidence to support that proposition, but it had seemed to be the subject of the learned Magistrate's comments.
His Honour came to the view that he was not satisfied either that the learned Magistrate had been in error or, assuming that he was, that it was an appropriate case in which he should extend time for the service of the Fourth Schedule Notice. His Honour said:
"Six years have passed. The essential fact is that the error was that of the appellant and it was not rectified before the harvester was sold. The appellant was and is a professional finance company which had both the knowledge and resources to deal with the matter properly in the first place or to rectify its error before taking the step of selling the harvester had it then been aware or made itself aware of its own error. In my view it would be gravely unfair to now extend the time for service of the original notices which may well have the effect of making the respondents liable a considerable number of years after the event to make payment of a very substantial sum. In my view the appeal should be dismissed."
The facts appear to be that although the Fourth Schedule Notices were given approximately three days out of time, they nonetheless gave to the respondents 21 days under the Act to reinstate or finalise the agreement if they had chosen to do so. None of the respondents chose to take steps pursuant to the notices. The matters were allowed to proceed and the harvester was sold. Whether or not action was not taken by the respondents because they regarded the notices as being invalid for having been served out of time, that was a matter which they could have raised at that time. If they had done so, an immediate application would have been made to extend the time. The harvester would not then have been sold in May 1992.
None of the respondents apparently took any action to save the agreement after they had been served about three days out of time. They had been given 21 days in which to take steps to protect their position. As against that the appellant stood to lose $57,636.25 which it said was owed under the agreement.
In my view it is a fair inference from all the circumstances that the time limit was overlooked by the appellant due to negligence on its part. It should be noted however, that during that time the appellant's employees were attempting to renegotiate the repossession fees. That action was in the interests of the respondents. The appellant was successful in that regard. At no time before the defences were filed, a short time prior to the filing of the notice of motion to extend time in the Local Court, did the respondents advise the appellant that the notices had been served a few days out of time.
At the hearing of this appeal it was said for the respondents that s 13(4) of the Act contains a substantive determination of the rights of the owner. Reliance was placed upon the reasons for judgment in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541. That decision concerned s 31(2) of the Limitation of Actions Act 1974 (Qld) where there is a power given to the court to extend a period of limitation of three years where there is alleged negligence or breach of duty in respect of personal injury. The Judges of the Appeal Court of Queensland held that the test for prejudice was whether an order extending time would leave a defendant any worse off than it would have been if the action had been commenced within, but towards the end of, the limitation period. It was complained in the High Court that that analysis had treated the limitation period as little more than a point of reference. In the High Court McHugh J at 555 said:
"To subject a defendant once again to a potential liability that has expired may often be a lesser evil than to deprive the plaintiff of the right to reinstate the lost action. This will often be the case where the plaintiff is without fault and no actual prejudice to the defendant is readily apparent. But the justice of a plaintiff's claim is seldom likely to be strong enough to warrant a court reinstating a right of action against a defendant who by reason of delay in commencing the action, is unable to fairly defend itself or is otherwise prejudiced in fact and who is not guilty of fraud, deception or concealment in respect of the existence of the action."
His Honour said:
"The general rule that actions must be commenced within the limitation period should therefore prevail once the defendant has proved the fact or the real possibility of significant prejudice. In such a situation, actual injustice to one party must occur."
His Honour said that the long delay in that case had given rise to a general presumption of prejudice.
In this case on the evidence there was apparently no prejudice to the respondents other than that they received the notices three days late. They still had 21 days in which to act. They apparently lost nothing due to the delay. There is no evidence to suggest that the respondents would have attempted to re‑instate the agreement had the notice been served three days earlier. There was no evidence of prejudice given by them to the learned Magistrate.
As against those considerations there was the very real prejudice that the appellant would lose the $57,636.25 plus interest on that sum. The appellant obviously had not realised it was out of time. The respondents have still not pointed to anything which they might have done or did not do because they thought the notice was void. At no stage have they suggested that they would have re‑instated the agreement or done anything to try and keep the harvester. There is no suggestion that the delays in the hearing after the filing of the notice of motion in January 1995 were the fault of the appellant.
In my view and with regard to the manner in which an appeal against an exercise of judicial discretion should be determined which is referred to in House v The King (1936) 55 CLR 499 at 504 ‑ 505, error on the part of the learned Judge has been established. Time should have been extended as on the evidence no real prejudice to the respondents was demonstrated.
I would allow the appeal, set aside the order of the learned Judge in the District Court and the order of the learned Magistrate and extend the time for the appellant to serve the Fourth Schedule Notices.
STEYTLER J: I have had the opportunity of reading the reasons for decision of Wallwork J. I agree with them and have nothing to add.
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