Future Investments Family Trust v Adams

[2020] SADC 179

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil: Minor Civil Review)

FUTURE INVESTMENTS FAMILY TRUST v ADAMS

[2020] SADC 179

Decision of His Honour Judge O'Sullivan

23 December 2020

MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA

Application for a minor civil review. The applicant, Mr Adams, filed a claim in the amount of $11,805.50 in the Magistrates Court against the respondent and was subsequently successful in obtaining a default judgment against the respondent, Future Investments Family Trust.

The respondent made an oral application to set aside the default judgment on the basis that it was not served on the correct legal entity. The respondent further argued there was a reasonable excuse for not filing a defence within the required time.    

The Magistrate refused the application, finding that the respondent did not have a reasonable excuse for failing to file a defence but did have a reasonable basis for defending the claim.

The respondent seeks an application for extension of time to bring this appeal pursuant to rule 214.1(3) of the Uniform Civil Rules 2020.

Held:

1. The time for filing the Notice of Review is extended to 11 September 2020;

2. The application for review is allowed;

3. The default judgment entered against Future Investments Family Trust as All Tech Security is rescinded;

4. The action is remitted to the Adelaide Magistrates Court for hearing;

5. No order as to costs.

Uniform Civil Rules 2020 (SA); Magistrates Court Act 1991 (SA); Magistrates Court’s (Civil) Rules 2013 (SA); Acts Interpretation Act 1915 (SA), referred to.
Harradine v District Court of South Australia [2012] SASC 96; Marmanidis v Germein [2017] SASC 103, considered.

FUTURE INVESTMENTS FAMILY TRUST v ADAMS
[2020] SADC 179

Introduction

1. On 19 April 2020 the applicant, Mr Adams, filed a claim in the Magistrates Court claiming the sum of $11,805.50 (“claim document”).  He alleged that the respondent, (“All Tech Security”), was in breach of a contract with him for installing what he alleged was a non-functioning error-riddled security camera system in his house.

2. All Tech Security is a business operated by a trust known as Future Investments Family Trust, the trustee of which is Mr Jamon Miles (“Mr Miles”).

3. The claim document was sent by post to the address for service of documents set out in the business name summary for All Tech Security.  That address is a post office box and is the address of an accountancy firm which is operated by Mr Miles’ father-in-law, Mr Paul Beare.  The claim document was brought to Mr Miles’ attention by Mr Beare.

4. The claim document refers to an attached document (“particulars”). 

5. On 26 June 2020 the applicant filed an application for default judgment on the basis that the respondent had not filed a defence within 21 days as required by the Magistrates Courts (Civil) Rules 2013 (“MCR”).  Default judgment was entered against All Tech Security that day. 

   The application in the Magistrates Court

6. On 14 July 2020, a first directions hearing was held in the Magistrates’ Court for an assessment of damages.  Mr Miles appeared for the respondent and made an oral application to set aside the default judgment as well as a written application which was filed that same day.  The application to set aside a default judgment was made on the ground that the claim document was addressed to the name of the business as opposed to the entity which operated that business.  The learned Magistrate made an order that day pursuant to rule 22.4 of the Uniform Civil Rules 2020 (“UCR”), which came into operation on 18 May 2020, amending the respondent’s name on the claim to Future Investments Family Trust trading as All Tech Security.

7. Her Honour also noted that a substantial affidavit of Mr Miles had been provided to both Mr Adams and the Court on that day (“Miles Affidavit”).[1]  Consequently, her Honour adjourned the application to allow Mr Adams to consider the affidavit.  Mr Adams swore an affidavit in reply dated 24 July 2020 and filed it on 28 July 2020 (“Adams Affidavit”). 

   [1]    Affidavit Jamon Miles sworn 14 July 2020, filed 20 July 2020.

8. On 13 August 2020, Mr Miles swore and filed an affidavit attaching a proposed defence and counterclaim (“Second Miles Affidavit”). 

9. On 14 August 2020, the learned Magistrate delivered ex-tempore reasons in which her Honour noted that UCR rule 142.12(1) has two limbs, both of which need to be satisfied in order for a default judgment to be set aside. 

10. The first limb in UCR rule 142.12(1)(a) requires that the party applying to set aside the default judgment establish either:

    (a)that the claim document did not come to their attention; or

    (b)that the party has another reasonable excuse for not having filed a defence. 

11. The second limb is contained in UCR rule 142.12(1)(b) and requires the party applying to set aside the default judgment to satisfy the court they have a reasonable basis for defending the claim. 

12. If the Court is satisfied of both these requirements, it may set aside the default judgment as on such conditions as it sees fit. 

13. Her Honour dismissed the application to set aside default judgment.

    Evidence before the Magistrates’ Court

14. The evidence before the Magistrates’ Court comprised:

    i.The Miles Affidavit;

    ii.The Second Miles Affidavit;

    iii.The Adams Affidavit. 

    Nature of a Minor Civil Review

15. Section 38 of the Magistrates Court Act 1991 (“MCA”), details the provisions which are applicable to the trial and any review of a minor civil action, and are as follows:

    1)         The following provisions are applicable to the trial of a minor civil action:

    (a)     the trial will take the form of an inquiry by the Court into the matters dispute        between the parties rather than an adversarial contest between the parties;

    (b)     the Court will itself elicit by inquiry from the parties and the witnesses, and by examination of evidentiary material produced to the Court, the issues in        dispute and the facts necessary to decide those issues;

    (c)     the Court may itself call and examine witnesses;

    (d)     the parties are not bound by written pleadings;

    (e)     the Court is not bound by the rules of evidence;

    (f)     the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.

    2)At or before the trial of a minor civil action, the Court should explore any possible avenues of achieving a negotiated settlement of the matters in dispute.

    3)      After giving judgment in a minor civil action, the Court—

    (a)       should advise the unsuccessful party of his or her right to apply for review of        the proceedings by the District Court; and

    (b)      should give the successful party any advice or assistance as to the     enforcement of the judgment that the Court considers appropriate in the       circumstances; and

    (c)       if there is a judgment debtor who is present, should proceed immediately to investigate his or her means of satisfying the judgment and to take any      further action that appears appropriate in view of the results of that     investigation.

    4)      The following provisions govern representation in minor civil actions:

    (a)     representation of a party by a legal practitioner will not be permitted   unless—

    (i)      another party to the action is a legal practitioner; or

    (ii)     all parties to the action agree; or

    (iii)    the Court is of the opinion that the party would be unfairly      disadvantaged if not represented by a legal practitioner;

    (ab)   however, the Court may, in its discretion, permit representation of a party by        a legal practitioner at the hearing of an interlocutory application;

    (b)     if a party to the action is a body corporate, the Court must, if the party seeks to be represented by an officer or employee who is not a legal practitioner,      permit such representation;

    (c)     if a person is subrogated to the rights of a party, the Court will permit that     person to appear in the proceedings on behalf of that party and to be     represented in the same way as if that person were a party;

    (d)     the Court will permit a party, or a person subrogated to the rights of a party, to be assisted by a person who is not a legal practitioner but only if that     person is not acting for fee or reward.

    5)      In a minor civil action costs for getting up the case for trial, or by way of counsel   fees, will not be awarded unless all parties were represented by counsel, or the Court is of opinion that there are special circumstances justifying the award of such costs.

    6)      The District Court (constituted of a single Judge) may, on the application of a party        dissatisfied with a judgment given in a minor civil action, review the matter.

    7)The following provisions apply to such a review by the District Court:

    (a)     the right of a party to be represented by a legal practitioner at the review will        be determined in accordance with subsection (4);

    (ab) if, in the case of a review that relates to a minor civil action in respect of a transferred proceeding within the meaning of Part 3A of the South Australian Civil and Administrative Tribunal Act 2013, a party was represented by a legal practitioner at the proceeding, then the party may be represented by a legal practitioner at the review by the Court;

    (b)     the Court may inform itself as it thinks fit and, in doing so, is not bound by   the rules of evidence;

    (c)     the Court may, if it thinks fit, re-hear evidence taken before the Magistrates Court;

    (d)     in determining the matter, the Court may—

    (i)      affirm the judgment; or

    (ii)     rescind the judgment and substitute a judgment that the Court    considers appropriate; or

    (iii)    if the review arises from a default judgment or summary judgment,     rescind the judgment and—

    (A)    substitute a judgment that the Court considers appropriate; or

    (B)    remit the matter to the Magistrates Court for hearing or further hearing;

    (e)     in hearing and determining the review, the Court must act according to       equity, good conscience and the substantial merits of the case without regard      to technicalities and legal forms.

    8)A decision of the District Court on a review is final and not subject to appeal.

    9)However, the District Court may reserve a question of law arising in a review for determination by the Full Court of the Supreme Court which may determine the question and make any consequential orders or directions appropriate to the circumstances of the case.

16. In Harradine v District Court of South Australia,[2] Blue J detailed the legislative history of the minor civil action, and explained that the role of the court is that of an inquiry by the Magistrate rather than that of managing an adversarial contest between the parties. The clear policy of the Act is to provide an efficient and economical means by which small claims can be determined in the Magistrates Court.  His Honour noted that Parliament had devised this system in consequence of the increasing costs of litigation. Accordingly, some of the protections provided by legal practice in the general jurisdiction ‘may be sacrificed to the necessity of relating the cost to the amount of the claim’ in a minor civil action.[3]

    [2]. [2012] SASC 96.

    [3] Ibid, at [40]-[49].

    Application for an extension of time

17. Mr Miles applies for extension of time to bring this Review pursuant to UCR rule 214.1(3).

18. Mr Adams opposes the application. 

19. In an affidavit sworn and filed on 10 September 2020, Mr Miles’ solicitor, Caitlin Smith (“Smith Affidavit”), deposes that she attempted to obtain a copy of the default judgment and the ex-tempore reasons of the learned Magistrate delivered at the hearing on 14 August 2020.  She deposes further that she was informed by the Magistrates Court that whilst the application for default judgment had been approved, the learned Magistrate had not yet awarded summary judgment and the matter had been adjourned to 15 September 2020 for an assessment of damages.  Still further, she deposes that as at the date of swearing her affidavit, a copy of the Magistrate’s ex-tempore reasons had not been produced by the Magistrate Court and she was advised that a copy of the Magistrate’s ex-tempore orders and reasons could not be provided until damages had been assessed.

20. Finally, Ms Smith deposes that on 10 September 2020, given that the time for filing a notice of review had expired by 6 days, a decision was made to lodge the Notice of Review in the absence of a copy of the Reasons.

    Consideration of the application for an extension of time

21. The conduct of a Minor Civil Review by this Court is governed by MCA s 38 and in particular, s 38(7). Section 38(7)(e) provides that in hearing and determining the Review, the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.

22. Notwithstanding the application for Review of the learned Magistrate’s decision was filed out of time, the delay was not significant and there was, in my view, good reason for not filing the application, namely the delay in providing a copy of the learned Magistrate’s reasons.  I hasten to add that in making that observation I do not make any criticism of the learned Magistrate, or the Magistrates’ Court for any delay in providing the reasons to Mr Miles’ solicitors.

23. In my view, equity and good conscience demands that the time of filing the Notice of Review be extended.

24. Accordingly, I extend the time within which Mr Miles is to file a Notice of Review against the learned Magistrate’s ex-tempore decision delivered on 14 August 2020 to 11 September 2020.

    The application to set aside default judgment

25. These proceedings were commenced on 19 April 2020 and posted on 20 April 2020.[4]

    [4]    Appeal Book, tab 3. 

26. Under the Magistrates Court’s (Civil) Rules 2013, which were in operation at the time, these proceedings were instituted, MCR rule 46 provides that the Registrar may serve a document on a person by any means provided by the Rules.  MCR rule 47 provides one means of service on a person as by sending it by prepaid post to the address of the person.

27. There is no evidence as to when the claim document was received by Mr Miles, nor when it was received at Mr Beare’s office which is the address for service of the documents.  Under MCR 52(1), service of the claim document by post is deemed to be effected four business days after the Registrar posted the originating claim.  Four business days after the claim document was filed is 23 April 2020.  21 days from 23 April 2020 is Thursday, 14 May 2020.  Accordingly, as from Friday, 15 May 2020, the applicant was entitled to apply for default judgment, assuming proper service. 

    UCR 142.12(1)(a) – Service

28. On the question of the claim document coming to Mr Miles’ attention, the learned Magistrate noted that Mr Miles deposes that Mr Beare called him and told him that a claim had been received relating to his business.  He deposed that he read the claim document. 

29. The learned Magistrate also referred to Mr Miles’ evidence in the same paragraph where he deposes that the claim ‘…referred to an “attached document”’ which was said to explain the basis or Mr Adams’ claim.  However, there was no such attachment to the claim received by Mr Beare.  I assumed that it would be provided in due course”.

30. Her Honour proceeded by saying[5] ‘I am assuming that the attached documents would have provided further particulars, however the lack of it did not invalidate the claim’.  Whereas it may not have invalidated the claim in the sense the claim remained valid, nonetheless I consider that service of an incomplete claim document is not effective service and that in these particular circumstances Mr Miles was entitled to be served with the complete claim document before the time for filing a defence began to run.

    [5] Ex tempore decision, 14 August 2020, at [4].

31. Her Honour also noted the requirement printed on the claim document that a defence or counterclaim must be filed within 21 days from service of the claim.

32. In the Miles Affidavit, Mr Miles exhibits emails between him and Mr Adams.[6]  In particular, in an email sent 5 May 2020 by Mr Adams to Mr Miles, Mr Adams refers to his claim and attaches the particulars to the claim.  I note “claim documents” is defined in the UCR rule 63.3 as meaning the claim incorporating or accompanied by the statement of claim.  It seems that it was not until 5 May 2020, the respondent had a full copy of the applicant’s claim. 

    [6]    FDN6.

33. On that basis, the time for filing a defence expired on 27 May 2020.  Nonetheless, the respondent did not file a defence.  Accordingly, Mr Miles has failed to establish the first requirement of UCR rule 142.12(1)(a).

    UCR rule 142.12(1)(a) – Reasonable excuse

34. The second part of UCR rule 142.12(1)(a) is in the alternative and requires the Court to be satisfied that Mr Miles has another reasonable excuse for not having filed a defence.

35. Her Honour referred to the statement by Hinton J in Marmanidis v Germein as to what constitutes a reasonable excuse:[7]

    ‘… a reasonable excuse is one which in all circumstances the ordinary person would consider warrants forgiveness for non-compliance. Here is it necessarily the case that the ordinary person will appreciate the high premium that the community places upon compliance with rules of courts and orders of courts in order that justice be administered effectively and efficiently. That appreciation reflects an understanding of the importance to the functioning of the community of the effective and efficient exercise of judicial power to quell controversies arising in the community. With this understanding the community, no less than the courts, expects litigants to discharge the obligations placed upon them by the law and the courts’.

    [7] [2017] SASC 103, [83].

36. The learned Magistrate noted that Mr Miles conceded the claim was properly served on the respondent at its registered office, that he acknowledged receiving it and offered no reasonable excuse as to why he failed to file a defence within the time prescribed by the Rules.  Her Honour held that Mr Miles had not established the respondent had a reasonable excuse for not having filed a defence.  Accordingly, her Honour determined that since the requirement in UCR.12(1)(a) had not been satisfied she would dismiss the application.[8]

    [8]    Ex-tempore Reasons, 14 August 2020, [11].

37. The learned Magistrate noted in a postscript to her ex-tempore reasons delivered 14 August 2020[9] that after delivery of the decision and her Honour’s reasons in Court, Mr Miles said he had a new baby and that was the reason why he did not file a defence.  Her Honour indicated to Mr Miles that she did not consider the fact of a new baby would provide the respondent with a reasonable excuse for not having filed a defence. 

    UCR rule 142.12(1)(b) -  Reasonable basis for defending the claim

    [9]    Appeal Book, Tab 14, [21].

38. Her Honour then continued by saying that if she was wrong in that finding, she would consider whether the respondent had a reasonable basis for defending the claim which is the requirement in UCR rule 142.12(1)(b).  Her Honour determined that Mr Miles had established a reasonable basis for defending the claim.[10]

    [10] Ibid, [18].

39. I have considered the proposed defence and counter-claim which are Exhibits JM-2 and JM-3 respectively to the Second Miles Affidavit.[11]  I agree with her Honour’s finding.

    [11] FDN9. 

    Review of the Magistrate’s Decision

1. The respondent seeks a review of the Magistrate’s decision on two grounds.

2. First, the claim document was invalidly served as it was never served on the proper legal entity and that the Magistrate erred in refusing to set aside the default judgment and ordering that the respondent’s name be changed after the default judgment was entered; 

3. Second, that the Magistrate erred in finding that there was no reasonable excuse for the respondent’s failure to file a defence in time in circumstances where:

   ·The claim document filed and served by the applicant did not attach the particulars and as such did not contain sufficient information to enable a defence to be filed;

   ·Mr Miles had a new-born child who was experiencing health issues as described in his affidavit sworn 6 November 2020;

   ·The delay was brief and caused no prejudice to the applicant; and

   ·The respondent has an arguable defence.

   Incorrect entity

4. As to the first ground, in the Magistrate’s ex-tempore reasons dated 14 July 2020, her Honour notes that an error in the name or description of a party does not cause the claim to be invalid and under rule 22.4 of the Uniform Civil Rules 2020 the court may correct that error.

   22.4—Errors

   (1)A proceeding or appellate proceeding is not invalid merely due to an error in the joinder or name of a party, including (without limitation)—

   (a)     an error in the name, description or capacity of a party;

   (b)     the non-joinder of a necessary or proper party; or

   (c)     the joinder of a party who should not have been joined.

   (2)The Court may make such orders on such conditions as it thinks fit in respect of an error of joinder or name of a party.

5. I do not consider that the claim document was invalidly served simply because it misnamed the respondent. 

   Whether the claim came to the appellant’s attention

6. The Magistrate found that the claim came to the attention of the respondent as Mr Miles conceded that it was shown to him. The Magistrate further concluded that the lack of particulars did not invalidate the claim as there was sufficient information regarding the claim to allow a defence to be filed. Furthermore, the claim stated clearly that a response was required within 21 days.

7. I have dealt with this issue above.  I consider the claim document served without the particulars, was not properly served on Mr Miles until the particulars were served on 5 May 2020.  However, the respondent still failed to file a defence within the prescribed time.

   Whether the appellant has a reasonable excuse

8. Before this Court, Mr Miles swore and filed an affidavit on 6 November 2020[12] in which he deposed that he told the Magistrate on 14 August 2020 that during the period in question, his newborn daughter was unwell and had spent a number of nights in hospital.  He continued by deposing[13] that his daughter was born on 7 April 2020 and in May 2020 spent five nights in hospital over two separate occasions after two medical episodes.  Those medical episodes resulted in him and his wife taking his daughter to the emergency department at the Women’s and Children’s Hospital where she underwent many tests over the next 6 to 8 weeks.  He deposes further that his daughter was ultimately diagnosed with laryngomalacia and dysphagia, meaning she has difficulty in swallowing, which caused her to aspirate milk into her lungs.  At the time he swore his affidavit his daughter was currently under the care of a speech pathologist, a paediatrician and ear, nose and throat and respiratory team as well as being on home oxygen 24-hours per day.  He deposed[14] that he was under enormous personal stress caused by his daughter’s health apart from dealing with the normal stresses of a newborn baby and trying to work to support his family. 

   [12] FDN5. 

   [13] [3]-[5].

   [14] At [5].

9. He exhibits copies of his daughter’s medical records recording that she was admitted on 12 May 2020 and discharged on 14 May 2020, before being admitted again on 16 May 2020 and released on 19 May 2020.  This was in the period leading up to the time when the defence was due.

10. I have set out the circumstances put forward by Mr Miles as to why the respondent has a reasonable excuse for failing to file a defence.  In my view those circumstances come within the description of what Hinton J described as a reasonable excuse in Marmanidis v Germein.[15]Accordingly, I consider the respondent had a reasonable excuse for not having filed a defence within the time the time required.

    [15] Supra.

    Reasonable basis for defending the claim

11. The learned Magistrate found the respondent has established that there is a reasonable basis for defending the claim. It is not necessary to determine whether the defence will be made out.

12. I have agreed with the learned Magistrate that the proposed defence exhibited to Mr Miles’ affidavit filed on 13 August 2020 reveals that the respondent has a reasonable basis for defending the claim.

    Conclusion

13. Taking all matters into consideration I am satisfied the default judgment should be set aside and the action remitted to the Magistrates Court.

    Orders

    i.The time for filing the Notice of Review is extended to 11 September 2020;

    ii.The application for review is allowed;

    iii.The default judgment entered against Future Investments Family Trust as All Tech Security is rescinded;

    iv.The action is remitted to the Adelaide Magistrates Court for hearing; and

    v.No order as to costs.