Frankos v Hocking

FRANKOS v HOCKING
[2000] SASC 128

Magistrates Appeal: Civil

1................ GRAY J............ This is an application pursuant to s 40 of the Magistrates Court Act for an extension of time in which to appeal against a decision of Mr Hiskey SM refusing the defendant's (applicant's) application to set aside a default judgment.

An application to set aside a default judgment is properly categorised as an interlocutory application. An order refusing the application is an interlocutory order not a final judgment. The test to be applied to determine whether a judgment is final or not, is whether the judgement or order appealed from finally determines the rights of the parties. An order refusing to set aside a default judgment does not as a matter of law dispose of the rights of the parties. It is open to the disappointed defendant to apply again to have the judgment set aside.[1]
[1] Carr v Finance Corporation of Australia Ltd (1) (1980-81) 147 CLR 246 at 248; Licul v Corney (1976) 50 ALJR 439 at 444; Hall v The Nominal Defendant (1996) 117 CLR 423 at 440; Atwood v Chichester (1878) 3 QBD 722 and SA Repairs and Painting Pty Ltd v Trenka Pty Ltd (1993) 171 LSJS 300.
In the circumstances I propose to treat the defendant's application as an application for an extension of time to seek leave to appeal. The applicable procedure was discussed by Debelle J in McPherson v Groenveld [2]
" Rule 97 which now governs appeals of this kind does not in terms provide a power to extend the time in which to set down an appeal, but it is open for the applicant to seek to come within the terms of rule 3.04(d). The criteria which should govern an application for leave to extend the time under rule 3.04(d) would be the same as those criteria which would apply to an application to extend the time within which to set down an appeal which govern other appeals to this court. Regard, therefore, would be had to the length of the delay, the reasons for the delay, whether there is an arguable case, and the extent of any prejudice to the defendant: Palata Investments Ltd v Burt & Sinfield. (1985) 1 WLR 942, 946, Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196; Technical Team Projects Pty Ltd v Noble Dunn Pty Ltd (1990) 20 NSWLR 221 and Burke v Garsden (10 March 1993 unreported, judgment number S3865).
When considering the reasons for delay, regard will be had to whether the delay is attributable to the party or the solicitor. The former will operate more severely against the applicant: Allen v McAlpine & Sons Ltd (1968) 1 All ER 543; Ulowski v Miller (1968) SASR 277 at 282-283; and Esther Investments Pty Ltd v Markalinga (supra) at 198. This list of factors is not exclusive. Those which I have mentioned are relevant to the determination of this application. It must be constantly borne in mind that the discretion is a wide one and that at the end of the day the court will be concerned to do what the interests of justice require."
[2] Judgment No. S6052 21.2.99 at 3
Although the material filed is confusing, the apparent explanation for the delay is that Basilia Frankos, (the mother of the defendant), set about to prepare an appeal to the District Court. She sought to verify the appropriate time limit. She then learnt that she needed to apply to the Supreme Court. She only learnt of the time limit on the afternoon of the 10.3.200 when time was about to expire. An extension of time is opposed only on the ground that the application for leave to appeal has no prospect of success.
The relevant history in this matter in the Magistrates Court can be briefly summarised as follows:
(1)... On 13 March 1996 the plaintiff issued her claim for damages as a result of personal injuries sustained on 15 March 1993 following a fall on a stairway. The incident occurred in premises owned by the defendant and leased to the plaintiff at 71A Semaphore Road Semaphore.
(2)Difficulty was encountered in effecting service on the defendant and on 2 April 1997 an order was made for substituted service upon Mason Gray Strange, the then property managers of the premises at 71A Semaphore Road Semaphore. The order also required the plaintiff to forward a copy of the proceedings and notice that the proceedings had been served on the property manager by airmail letter to the defendant at an address in Greece. Apparently the defendant was in Greece from 1995 until December 1999.
(3)... Affidavit evidence established compliance with the orders for substituted service.
(4)Judgment in default was entered for damages to be assessed on or about 16 October 1997.
(5)... The matter came on for an assessment of damages on 9 March 1998 and evidence was taken before Mr Harry SM. He entered judgment for $40,675.50 (being damages of $30,000.00 inclusive of any costs and disbursements of $10,675.50).
(6)Subsequently a warrant to sell the defendant's property was issued.
(7)... The warrant was served on 9 February 2000, although the defendant was aware of the warrant from early January 2000.
(8)On 11 February 2000 an application to set aside the default judgment was made by the defendant. The application came before the Court on 16 February 2000 when the defendant was represented by her then solicitor Mr Hardy. The matter was set for special argument on 25 February 2000. Orders were made for the filing and delivery of affidavits. Soon after Mr Hardy's instructions were terminated.
(9)... When the application came on for hearing on 25 February 2000 the defendant was legally unrepresented, and the defendant's father was permitted to make submissions on her behalf.
(10)Mr Hiskey SM refused the application and delivered reasons for judgment.
(11). On 25 February 2000 the defendant made further application to the Magistrates Court. That application was listed before Mr Cannon SM on 17 March 2000. His Honour treated the application as a second application to set aside the default judgment. He said:
"I will note the objection of the plaintiff to what I propose. I'm going to take the application here and amend it to be a second application to set aside judgment and adjourn it for later hearing. The basis for doing that is that (as it will have appeared from my earlier remarks) it seems obvious to me that there may be a triable issue as to whether there was contributory negligence. I want to hear from the plaintiff how they suggest that can be rebutted.
" I note as I correctly anticipated Mr Fabbro's objection to the course that I have just undertaken. I reassure him to this extent that as yet I have done nothing adverse to his position. I am merely reconstituting this application as a second application to set aside judgment. If I am moved to grant the application to set aside judgment, I will need firstly to give leave for that application to be made and then secondly, to decide whether the failure to give adequate explanation for ignoring court processes is an overwhelming argument against the application to set aside. All that is before me sometime more than a month away. My previous order I vary to extend the time for the information to be put in by both sides, to be not later than close of business on 12 May. That applies to information from the Frankos' as well. I suggest I next look at this on 23 May 2000, at 11 a.m. I will reduce my orders to writing and post them to the parties."
"I want to be sure that any judgment that they end up with against you is fair and I will be sure that any judgment that they do end up with against you will be paid because we have got our hands on the property."

(12)The second application of the defendant to set aside the default judgment is listed for hearing on 23 May 2000.

It is sought to have this Court review the order of Mr Hiskey SM refusing the defendant's application to set aside judgment. Mr Hiskey SM was exercising jurisdiction pursuant to Rule 87 of the Magistrates Court (Civil) Rules 1992. That Rule provides:-
"(1) The Court may set aside or vary a judgment (not being a final judgment).
(2) The Court must not set aside such a judgment unless the party seeking to set it aside establishes that he or she -
(a). has an arguable case on the merits; and
(b). has a reasonable excuse for not having complied with these rules, or an order of the Court, or any time limit fixed by these rules or order of the Court, in respect of the action or proceeding.
(3) When setting aside a judgment the Court may order -
(a). payment to the other party of costs thrown away;
(b). payment or security under rule 81.
Mullighan J considered Rule 87 in SA Repairs & Painting Pty Ltd v Trenka Pty Ltd[3]. There His Honour said at 302-303:-
" However, the discretion to set aside a judgment as provided by R.87(1) cannot be exercised in that way unless the party making the application has passed both of the threshold tests set out in R.87(2). Upon doing so, the Court must then exercise the discretion. In Watson v Anderson (1976) 13 SASR 329, the Full Court was concerned with the exercise of the discretion under s.25v(b) of the Local and District Criminal Courts Act and, upon reviewing the authorities, identified four matters of importance; whether there is a reasonable explanation for the default, whether there has been undue delay in applying to have the judgment set aside, what prejudice the other party would sustain if the judgment were set aside and whether the party making the application has an arguable case on the merits: see Bray CJ at pp 333-334. The first and last of these maters are, by virtue of R.87(2), no longer matters to be considered in the scales along with other relevant matters when exercising the discretion but are now conditions precedent to the exercise of the discretion and must be clearly established by the party making the application. So, the Court must first turn its attention to these two matters."
[3] (1993) 171 LSJS 300
Mr Hiskey SM had limited material before him from the defendant. That material was relevant to the allegation that notice of the proceedings had not been received by the defendant. Nothing of substance was put before the Court on the issue of there being an arguable defence.
Mr Hiskey SM concluded that the order for substituted service had been complied with and that the judgment had been regularly obtained. His Honour considered it to be a reasonable inference from the correspondence that the defendant had become aware of the legal proceedings and had failed to do anything about them.
His Honour determined to refuse the application, concluding that:-
"There is insufficient before me to explain the failure to file a defence and insufficient before me to establish what might be the arguable ground for defence."
S 40 of the Magistrates Court Act 1991 as amended provides:-
" (1) A party to a civil action (except a minor civil action) may, in accordance with the rules of the Supreme Court, appeal against any judgment given in the action.

(2) If the rules of the Supreme Court provide that an appeal from a judgment of a particular class can only be brought by leave of that Court, the right of appeal is limited accordingly, but in any other case an appeal lies as of rights.
(3) The appeal lies to the Supreme Court constituted of a single Judge but the Judge may (if he or she thinks fit refer the appeal for hearing and determination by the Full Court.
..."

"Judgment" is defined in the same Act in the following terms:
"Means a judgment, order or decision and includes an interlocutory judgment or order."
Rule 96B of the Supreme Court Rules regulates appeals from the Magistrates Court. Rule 96B.02 provides:-
"(1) Unless a Magistrate has certified that the proposed appeal involves:
(a) A point of law of difficulty or importance; or
(b)... A point of sufficient importance in the proceedings to warrant an interlocutory appeal being dealt with before final judgment in the action, any appeal against an interlocutory judgment under Sections 40 of the Act is subject to leave being obtained from the Supreme Court.
(2)... Such leave may be granted by a single Judge in chambers ex parte or upon such notice to the other parties as the Court may direct:
(a).... Upon a summons which is to be issued within 14 days of the making of the judgment complained of:
..."
The Rule has been considered by Lander J in Nash v Lappins Judgment No S6345, 27 August 1997 and Martin J in Capral Aluminium LGD v Barker & Barker Judgment No [1999] SASC 410.
Those decisions make it clear that the purpose of Rule 96 B.02 is to discourage appeals on interlocutory matters. Usually leave will be given only when the Court is satisfied that there is a point of law of difficulty or importance involved or when the particular decision is of sufficient importance to warrant an interlocutory appeal being dealt with.
The affidavit of Basilia Frankos of 7 April 2000 filed in this Court in support of the defendant's application for leave addresses the complaints made against the decision of Mr Hiskey SM. This affidavit asserts new material, not put before Mr Hiskey SM. It is suggested that the plaintiff's conduct was inconsistent with her having suffered the alleged injury. In my view the assertions do not establish the basis of a credible defence. The asserted facts are equivocal and at best are matters that could be put to test the plaintiff's evidence.
It is further asserted that the premises were safe, the stairway was in a good condition, was not slippery, was not steep and that there was a safety hand-rail. The affidavit suggests that independent evidence exists to confirm these assertions . However that evidence has not been identified, particularised or produced. These bare assertions in my view do not make out any credible basis of defence.
Basilia Frankos asserts that the proceedings and notice of the proceedings were not personally served. The affidavit of Mr Pearson of Mason Gray Strange, the property manager, and the exhibits thereto, support the Magistrate's finding that the judgment was regularly obtained and that it is probable that the defendant had actual notice of the proceedings.
Further complaint is made that Mr Hiskey SM should have granted an adjournment of the proceedings. In his reasons His Honour said:
" I had a day or two prior to 24 February 2000 been advised by registry staff that the defendant was seeking an adjournment of the hearing of the application because of an appearance in the Port Adelaide Court on the same day. That application was in relation to a restraining order and was listed at 9.30 am. The matter of that nature was likely to be short. The argument before myself was not listed until 3.30 pm. I directed that the defendant be informed that the application would proceed on the time and date suggested.
" When Mr Frankos appeared I endeavoured to explain to him that his daughter was the defendant and that she was the person who should appear in court. I was informed by Mr Fabbro that he understood that the instructions of Mr Hardy had been terminated. Mr Fabbro (told) me he has been contacted by several other solicitors making enquiries about the matter."
In my view this complaint is not made out.
In my opinion Mr Hiskey SM was right in making the order that he did. No error of principle has been identified and it has not been shown that he overlooked any material fact or had regard to any inappropriate material. He exercised a discretion open to him on the material before him. No point of law of difficulty or importance was involved. In essence the applicant wishes to reopen her application relying on further material This does not raise in my view a matter of sufficient importance to warrant a grant of leave to appeal.
The history of the matter before this Court can be briefly summarised as follows.
On 22 March 2000 the matter came before Martin J. The defendant was not present. His Honour ordered that the defendant file any further affidavit material by 6 April 2000. An order was made that the warrant to sell property of the defendant be stayed until the resolution of the application and any subsequent appeal. Martin J pointed out to the defendant, then represented by her mother, that it was important that the defendant have legal representation.
The matter next came before the Court on 10 April. Martin J again stressed the need for legal representation. The Court directed the plaintiff to file any answering affidavit by 3 May and the matter was adjourned to the 5 May for the fixing of a date.
The matter came on for hearing on 5 May. The defendant was not present and was represented by her mother. Again the desirability of legal representation was stressed. An adjournment was granted for that purpose until 12 May.
The matter came before the Court on 12 May with Mr Winter appearing on behalf of the applicant. The defendant was not present, but her mother was present throughout the proceedings. Mr Winter sought time to consider and if necessary file a further affidavit to clarify the confusion about the reasons for the delay in lodging the application in this Court. The affidavit, if filed, would only be relevant to the application to extend time. Mr Winter also needed time to prepare the argument for both the application for an extension of time and the application for leave to appeal. Both matters were listed for hearing on Wednesday 17 May with the afternoon set aside.
Mr Winter's instructions were then terminated as he later wrote to the Court advising:-
"We regret to advise that the Applicant in the above proceedings terminated our services following the hearing of Friday 12 May 2000.
In the circumstances, we are unable to be of further assistance to the Court and the Applicant.
..."
On 17 May the matter came on for hearing of both the application for leave to extend time and the application for leave to appeal. Mrs Frankos sought to put submissions on behalf of the defendant. In the circumstances I permitted Mrs Frankos and later her husband to make submissions. Their immediate application was for yet a further adjournment of the matter on the basis that they wished to obtain legal representation and file the affidavit of which Mr Winter had spoken on 12 May. As the plaintiff had indicated that the only point taken in regard to an extension of time was that it should be refused on the grounds that the application had no merit, any further affidavit material was unnecessary on that issue.
On my indicating that the matter should proceed Mrs Frankos asserted that she could not proceed saying that she had not brought any papers to court. Mrs Frankos was well aware that the matter was listed for hearing on 17 May.
I enquired specifically whether the defendant wished to file any further affidavit evidence, but could not elicit a response identifying any further material, even of the most general description. I refused the application for an adjournment. At this point of the proceedings Mrs Frankos and her husband left the court.
In addition to the matters already mentioned, in refusing the request for adjournment I had regard to the long history of the matter and the many attendances both in the magistrates court and in this court. I considered that it was unlikely that the defendant would retain legal representation. As Mrs Frankos could identify no further material to be filed, I considered that the matter should proceed.
I was also mindful that the defendant would have the opportunity to advance her second application to set aside the default judgment, with legal representation if she so chooses. Mr Cannon SM has directed that the application be heard on 23 May 2000. His Honour has informed Mrs Frankos that the defendant has the opportunity to file further material before that date and has allowed ample time for her to do so if she wishes.
Despite the withdrawal of Mrs Frankos and her husband, I proceeded to hear and consider the applications. Counsel for the plaintiff submitted that Mr Hiskey was correct in his decision, as the pre-conditions of Rule 87 and in particular the requirement of demonstrating an arguable case, had not been satisfied.

I have set out the history and circumstances of this matter and my reasons for refusing leave in some detail, as I consider the defendant should have the opportunity to advance her second application to set aside the default judgment being aware of the reasons.
I consider it appropriate to grant an extension of time as the matter has been fully argued. In accordance with the principles that guide this Court on dealing with an application for leave to appeal in regard to an interlocutory judgment and having regard to my earlier remarks I refuse leave to appeal. The matter can now proceed before the Magistrates Court on 23 May 2000.
The order of the Court is that leave to appeal from the order of Mr Hiskey SM of 25 February be refused.

[2000] SASC 128

18 May 2000