Ferguson v Ddec Detroit Specialists Pty Limited

[2017] NSWSC 416

Supreme Court

New South Wales

Medium Neutral Citation:	Ferguson v DDEC Detroit Specialists Pty Limited [2017] NSWSC 416
Hearing dates:	13 April 2017
Date of orders:	13 April 2017
Decision date:	13 April 2017
Jurisdiction:	Common Law
Before:	Bellew J
Decision:	1 The time for the filing of the service of the summons in these proceedings is extended to 19 January 2017. 2 The appeal is allowed. 3 The orders made in the Local Court on 22 September 2016 are set aside. 4 The order made in the Local Court on 22 December 2016 is set aside. 5 The proceedings are remitted to Magistrate Walker at the Macksville Local Court to be dealt with according to law. 6 By agreement between the parties, each party is to pay its own costs of, and incidental to, the proceedings in this Court.
Catchwords:	PRACTICE AND PROCEDURE – Determination of Magistrate to strike out a defence and enter judgment – Where proceedings had been listed before the Court for mention/directions only – Lack of clarity as to the terms of the orders made and the powers purportedly exercised by the Magistrate – No evidence to support the orders made by the Magistrate irrespective of what powers were purportedly exercised – Failure on the part of the Magistrate to have regard to relevant provisions of the Civil Procedure Act 2005 (NSW) – Errors established   PRACTICE AND PROCEDURE – Application by plaintiff to set aside orders for judgment made by Magistrate – Where application was refused – Where the determination of the Magistrate was apparently based upon the view that more appropriate course was to lodge an appeal against the primary decision to the District Court – Where no such right of appeal was available – Error established
Legislation Cited:	Civil Procedure Act 2005 (NSW) Local Court Act 2007 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69 Hans Pet Constructions Pty Limited v Cassar (2009) NSWCA 230
Category:	Principal judgment
Parties:	John Ferguson – Plaintiff DDEC Detroit Specialists Pty Limited – Defendant
Representation:	Counsel: P. Batley - Plaintiff D. F Elliott – Defendant   Solicitors: Coastal Law and Conveyancing Pty Limited - Plaintiff Smith Leonard Fahey Lawyers - Defendant
File Number(s):	2017/19007
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Local Court of NSW, Macksville Date of Decision: 22 September 2016 Before: Magistrate Walker

Judgment EX-TEMPORE (REVISED)

INTRODUCTION

1. By a summons filed on 19 January 2017 the plaintiff (who was the defendant in the proceedings in the Court below) appeals from two decisions delivered in the Local Court at Macksville. It is common ground between the parties that the plaintiff requires an extension of time in which to bring the present proceedings and the defendant raises no objection to such an extension being granted.

2. The first decision which is the subject of the appeal is that of Magistrate Walker of 22 September 2016. On that day, his Honour purported to make orders striking out a defence filed by the plaintiff and entering judgment against him.

3. The second decision is that of 22 December 2016 dismissing a Notice of Motion filed by the plaintiff seeking to set aside the orders of Magistrate Walker made on 22 September 2016. For reasons to which I will come it is not entirely clear whether it was Magistrate Walker, or a Registrar, who made the order of 22 December.

4. The summons is supported by the following affidavits which were read without objection:

1. the plaintiff of 22 February 2017;

2. the plaintiff's wife, Christine Ferguson, of 21 December 2016;

3. the plaintiff’s wife of 22 February 2017.

5. There is some doubt about whether some of the contents of those affidavits are properly admissible in light of the relief sought. To the extent that such questions arise, I have limited the use of that evidence to evidence of context only.

6. The defendant has raised no objection to the relief sought and accepts that the proceedings must be remitted to the Magistrate.

BACKGROUND

7. The background to the present proceedings is not in dispute and may be summarised as follows.

The Local Court proceedings against the plaintiff

8. The defendant commenced proceedings in the Local Court against the plaintiff seeking recovery of a sum of $66,124.80. It is not necessary, for present purposes, to detail the cause of action which formed the basis of those proceedings. An order was subsequently made in the Local Court referring the proceedings to arbitration. In October 2015 the arbitrator found in favour of the defendant.

The application for re-hearing

9. Following the arbitrator's decision, the plaintiff made application for a rehearing of the matter pursuant to s. 42 of the Civil Procedure Act 2005 (NSW) (“the CPA”). On 17 August 2016 orders (“the consent orders”) were filed with the Local Court Registry. Those orders are annexure “D” to the plaintiff’s affidavit and were in the following terms:

1. The following expert be appointed to prepare a report to the court assessing the appropriateness of the amounts invoiced by the Plaintiff to the Defendant subject of these proceedings, and if those amounts are regarded as inappropriate advising the court what the amounts in the invoices should have been:

Leigh Anstee

….

2. The parties to provide the expert and each other with copies of the evidence relied upon within three weeks, being 8 September 2016.

3. The expert report to be provided to the parties and the court on or before 22 September 2016 (being five weeks of the date of this order).

4. The matter to be listed for further directions 29 September at 9.30 am (being in six weeks).

5. Other orders as the court sees fit.

6. Costs reserved.

7. Leave for either party to restore the matter to the list at seven days’ notice.

10. Three particular matters should be noted about the consent orders.

11. Firstly, despite the terms of order (4), the matter was in fact listed on 22 September, 2016 and not 29 September 2016. So much is clear from the Listing Notice which was sent from the Court Registry on 25 August 2016 which is annexure “E” to the plaintiff’s affidavit.

12. Secondly, the consent orders made no provision whatsoever for the payment of the costs of the expert report. For reasons to which I will come, that is of particular significance in terms of the appeal against the Magistrate’s decision of 22 September 2016.

13. Thirdly, it is clear from annexures “D” and “E” to the plaintiff’s affidavit that the proceedings were listed before the Local Court on 22 September 2016 for directions/mention only.

The proceedings before the Magistrate on 22 September 2016

14. The matter came before Magistrate Walker in the Macksville Local Court on 22 September 2016. On that day the defendant was represented by a Mr Davies. There was no appearance by, or on behalf of, the plaintiff. The reasons for the plaintiff’s absence are fully set out in his affidavit which was read in support of the orders sought.

15. In short, the plaintiff’s mother was seriously ill at the time. She died on 13 September 2016 and her funeral took place on 21 September 2016. Her illness, and her subsequent passing, necessitated the plaintiff spending time in Sydney, away from his home at Euengai Rail. As a consequence, he did not receive the Listing Notice referred to in [11] above, nor did he receive a Notice of Ceasing to Act which had been filed in the Court Registry by his former solicitor, a Mr Love.

16. Further, the plaintiff did not receive a letter of 14 September 2016 from the defendant’s solicitors advising him of the status of the expert report (referred to in order (3) of the consent orders) and seeking 50% of the costs of its preparation. It is of some significance that the letter closed with the following paragraph:

If we do not receive a response by 4.00 pm on Friday 16 September 2016 we will be providing the documents as drafted by us to the Expert and will produce this correspondence to the Court on the issue of costs.

17. No suggestion was made that in the absence of a response from the plaintiff, an application would be made to the Court for the entry of judgment.

18. The plaintiff’s personal difficulties were compounded by the fact that his wife was also away at the time, as a consequence of having to assist the convalescence of their daughter who had only recently undergone surgery. This is confirmed by the plaintiff’s wife in her second affidavit. However, that affidavit has added significance. The applicant’s wife deposed (inter alia) to the fact that she received the Notice of Ceasing to Act on or about 15 September, at which time she telephoned Mr Love “pleading” with him to continue acting for the plaintiff. It was her understanding from that discussion that Mr Love would contact the Court Registry and explain that the plaintiff could not be present on 22 September. Obviously, that was not done.

19. The plaintiff’s wife also deposed to the fact that on 22 September 2016 she attempted, on no less than fourteen (14) occasions, to contact the Macksville Local Court Registry for the purposes of explaining that the plaintiff would not be able to attend Court on that day. Her affidavit annexes “screen shots” taken from her telephone corroborating that attempted contact, all of which was unsuccessful.

20. I emphasise that the matters in [15] to [19] above are set out by way of background only. It is not suggested that the Magistrate was privy to any of this information when the matter came before him on 22 September 2016.

The Magistrate’s determination of 22 September

21. A transcript of what occurred before the Magistrate on that day is annexed to the plaintiff’s affidavit. It is appropriate that it be set out in full:

DAVIES:   Your Honour can I mention the civil matter of DDEC Detroit Specialists and Mr John Ferguson. Could John Ferguson be called please?

HIS HONOUR:   This is just the matter where we’ve got the –

DAVIES:      An expert has been agreed between the parties.

COURT OFFICER:   No appearance of John Ferguson.

DAVIES:   The situation is your Honour the expert of course doesn’t do his job for nothing. The matter is listed today for mention. The situation is though that it’s in the list today for further directions. However I have correspondence. My solicitors in fact have contacted Mr Ferguson saying that if they didn’t hear from him they were going to send the material to the expert which they’ve done because they didn’t hear from him and I have a letter here indicating that my client has paid in trust his part of the costs. We’ve heard nothing from Mr Ferguson. He’s not doing the right thing.

HIS HONOUR   :   (Not transcribable) …. We might have to find against him.

DAVIES:   Well your Honour I would be asking in fact if he hasn’t complied with the note and I’m asking that his defence be struck out and for a summary judgment.

HIS HONOUR:   Well …. (not transcribable)

DAVIES:   I understand but at this stage he’s just playing us for fools to be honest your Honour and if your Honour is agreeable to that I’m then seeking costs.

HIS HONOUR:   The order was that he pay half the costs.

DAVIES:   Half costs each, yes, and as indicated my client has paid that amount into (not transcribable) trust.

HIS HONOUR:   Did he know he had to pay into the (not transcribable).

DAVIES:   He’s not paid anything at all. I can hand up if you need a … (not transcribable) … your Honour a trust account receipt that the client has paid $2,185.00.

HIS HONOUR:   I accept what you say ….. (not transcribable) ... party-party costs are you seeking –

DAVIES:   Yes party-party costs your Honour. I don’t think there’s a facility for indemnity costs.

HIS HONOUR:   In the matter of DDEC Detroit Specialists Pty Ltd and John Ferguson I note there is no appearance of Mr Ferguson today. Mr Davies tells me that his client has paid in his part of the expert’s costs in regard to the expert's report that being an expert that is agreed between the parties. There being no appearance of the defendant today and there is no compliance with the order for costs the defence is therefore struck out and judgment be entered against the defendant. The defendant is to pay the costs of (sic) the party-party basis".

DAVIES:   Please the court. Does your Honour need to specify the amount of the judgment?

HIS HONOUR:   Well … (not transcribable).

DAVIES:   You Honour the Statement of Claim in any case the amount of $66,124.80 plus interest.

HIS HONOUR:   That’s the judgement?

DAVIES:   Yes.

HIS HONOUR:   Well I make the order to pay costs in the agreed amount.

DAVIES:   Thank your Honour. Hopefully we won’t see this back again.

22. The proceedings concluded at this point.

The plaintiff’s application to set aside the Magistrate’s orders

23. The plaintiff learned of the Magistrate’s orders of 22 September when he was served with a Bankruptcy Notice which had been issued on the basis of the judgment entered against him. He then filed a Notice of Motion in the Local Court seeking orders in the following terms:

1. The judgment entered against the defendant in favour of the plaintiff on 22 September 2016 be set aside.

2. The proceedings be listed for further directions.

3. The Court grant a stay of enforcement in this matter until the application to set aside judgment is decided.

4. The application for a stay of enforcement be dealt with on an urgent ex parte basis in Chambers.

5. That costs of the motion be costs in the cause.

24. The notice of motion was supported by an affidavit of the plaintiff setting out those circumstances to which I have already referred in [15] and following above.

25. As noted in [23] above, paragraph (4) of the plaintiff’s motion sought an urgent ex parte determination of a stay application in Chambers. Precisely what occurred after the motion was filed is not clear on the evidence before me. However it is common ground that on 22 December 2016, the Registrar of the Court advised the parties as follows:

The defendant’s Notice of Motion to set aside the Judgment made on 22/9/2016 is refused. Magistrate Walker notes that it would be more appropriate in the circumstances to lodge an Appeal to the District Court.

26. Although it is not entirely clear on the evidence, I am left to assume that it was Magistrate Walker who made the decision which was the subject of the Registrar’s communication to the parties .

CONSIDERATION

The Magistrate’s determination of 22 September 2016

27. With the greatest respect, and leaving aside the lack of clarity in the terms of the orders which were eventually made, the Magistrate’s decision of 22 September 2016 is redolent of error.

28. To begin with, it is not at all clear what power(s) his Honour was purporting to exercise when he made the orders that he made. One possibility is that he was purporting to exercise the power contained in Part 13 of the Uniform Civil Procedure Rules 2005 (NSW) (“the Rules”). If so, there was no evidence whatsoever which justified the making of the orders. The Magistrate's determination of the matter in the complete absence of any evidence contravened the fundamental principle that a party will not be denied a contested hearing on the merits unless the absence of a defence is clearly demonstrated: General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69 at 129.

29. The contravention of that principle was compounded by the fact that on any view of it, the proceedings were before the Magistrate for directions/mention only. Even if the plaintiff had received the letter from the defendant’s solicitors referred to in [16] above (and I accept his unchallenged evidence that he did not) that letter did not foreshadow the making of any application of the kind which was ultimately made. A combination of these circumstances, and the making of the order by the Magistrate, saw a gross denial of procedural fairness being visited upon the plaintiff.

30. A second possibility is that the Magistrate was purporting to enter default judgment under the power conferred by Part 16 of the Rules. If that is what his Honour was purporting to do, he did so in the complete absence of any evidence pursuant to r. 16.6.

31. A third possibility is that the Magistrate was purporting to strike out the defence pursuant to the power conferred by r. 12.7, on the basis that it had not been conducted with due despatch. If that is what his Honour had in mind, there was again a complete absence of evidence to support the making of such an order.

32. Moreover, and irrespective of what power(s) the Magistrate was purporting to exercise, it is apparent from the transcript that his Honour acted under the fundamental misapprehension that the plaintiff was in default of an order which required him to meet half of the costs of the expert report. It is clear from what his Honour said at the time that this was a primary factor in his determination. However, as evident from the terms of the consent orders, no order of the kind that his Honour asserted – namely, an order requiring the plaintiff “to pay half the costs” - was ever made.

33. A further error arises from the Magistrate's failure to consider the factors set out in s. 58 of the CPA which is in the following terms:

58 Court to follow dictates of justice

(1) In deciding:

(a) whether to make any order or direction for the management of proceedings, including:

(i) any order for the amendment of a document, and

(ii) any order granting an adjournment or stay of proceedings, and

(iii) any other order of a procedural nature, and

(iv) any direction under Division 2, and

(b) the terms in which any such order or direction is to be made,

the court must seek to act in accordance with the dictates of    justice.

(2) For the purpose of determining what are the dictates of justice in a particular case, the court:

(a) must have regard to the provisions of sections 56 and 57, and

(b) may have regard to the following matters to the extent to which it considers them relevant:

(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii) such other matters as the court considers relevant in the circumstances of the case.

34. Consideration of the factors in ss. 56 – 58 is mandatory: see Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [43]. There is no indication from anything said in the course of the proceedings on 22 September 2016 that the Magistrate gave consideration to any of those factors. I am left to infer that he did not.

35. In light of these errors, the Magistrate’s orders of 22 September 2016 should be set aside.

The determination of the plaintiff’s Notice of Motion

36. On the evidence before me, the plaintiff was not afforded a hearing of the motion on the merits. Just how his motion was dealt with, and by whom, remains something of a mystery, although I am assuming it was determined by the Magistrate and not the Registrar. Importantly, it is clear that the decision not to grant the orders sought was informed by a view apparently held by the Magistrate that it was "more appropriate in the circumstances to lodge an Appeal to the District Court”.

37. To begin with, there was no right of appeal to the District Court from the Magistrate’s decision of 22 September. Appeals in matters of that nature lie to this Court under ss. 39-40 of the Local Court Act 2007 (NSW). On that basis alone, the Magistrate’s discretion miscarried.

36. Moreover, a determination of whether the judgment should be set aside was one to be made on the merits, not according to an erroneous view as to whether one particular course was preferable to another. Any further observation regarding the shortcomings of such an approach would be superfluous.

37. It follows that error has also been established in respect of this decision, and it should also be set aside.

ORDERS

40. The consequence of the various errors I have identified is that the proceedings must now be remitted to the Local Court to be dealt with according to law. That, to say the least, is unfortunate. The parties in this case should never have been put to the inconvenience and expense of having to bring the proceedings before this Court. They have agreed that in all of the circumstances they should each pay their own costs of the proceedings before this Court.

41. I therefore make the following orders:

1. The time for the filing of the service of the summons in these proceedings is extended to 19 January 2017.

2. The appeal is allowed.

3. The orders made in the Local Court on 22 September 2016 are set aside.

4. The order made in the Local Court on 22 December 2016 is set aside.

5. The proceedings are remitted to Magistrate Walker at the Macksville Local Court to be dealt with according to law.

6. By agreement between the parties, each party is to pay its own costs of, and incidental to, the proceedings in this Court.

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Decision last updated: 01 May 2017