Herriot v Bromley No. Scciv-04-288

[2004] SASC 92

HERRIOT & ORS v BROMLEY
[2004] SASC 92

Magistrates Appeal

1. VANSTONE J:     This matter came before me in the chambers list on 19 March 2004 and was adjourned for further argument.  The further hearing took place today.

2. The applicants seek leave to appeal from an interlocutory decision of Mr Kleinig SM made on 27 February 2004, setting aside a default judgment which they entered against the respondent.  The applicants filed proceedings in the Magistrates Court on 23 December 2003 seeking damages against the respondent for negligence and breach of contract in relation to the respondent’s service to them as an accountant giving tax advice.  The proceedings were served late on the same day.  Prior to issuing proceedings the applicants had given 21 days notice to the respondent of their intention to take action.  The sum in issue is of the order of $25,000. 

3. Under the Magistrates Court Civil Rules 1992 a defendant is no longer required to file an appearance.  If he wishes to defend an action then the first document which needs to be filed is a defence.  Rule 60 provides as follows:

   60     [Signing judgment in default of service]

   (1)     Where a party has been served with an action (other than an action under rules 26A, 37 and 38) and does not file a defence within 21 days of service, or any other period fixed by the Court, the other party, on proof to the Registrar of such service, may sign judgment against the party in default, by filing a form 18;

   …

   (2)     …

   (3)     (a)     The 21 days referred to in sub-rule (1) will be taken not to include the day on which the party was served; 

4. It seems that contrary to the position under the Supreme Court Rules 1987, public holidays, including Christmas Day, count in the computation of the 21 days.

5. On 14 January 2004 the applicants entered judgment in default against the respondent.  On 19 January the respondent filed an application to set aside the default judgment.  That was heard on 27 February.  Both sides were represented.  The plaintiffs put argument with the aim of resisting the setting aside of the judgment.  Mr Kleinig SM set aside the judgment and also ordered that a defence filed by the respondent, along with an affidavit in support of his application, be deemed to be the defence in the matter.

6. The applicants’ proceedings in this Court have been taken pursuant to s 40 of the Magistrates Court Act 1991 and Supreme Court Rule 96B. There being no certification by the Magistrate as to this appeal, it is necessary that the applicants seek leave.

7. The essential complaint of the applicants is that the learned Magistrate did not allow counsel to complete his submissions as to why the judgment should not be set aside, and that he made his decision without reading certain materials which the applicants had prepared in support of their position.  Those materials amounted to proof of a number of other instances where the respondent had sought to have set aside default judgment entered against him in comparable circumstances unconnected with these applicants.

8. Magistrates Court Rule 87 governs the setting aside of a judgment.  A party seeking such an order must demonstrate 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 and proceeding.

9. In an attempt to meet that criteria the respondent filed an affidavit setting out the difficulties he faced in taking timely action to defend the proceedings over the Christmas period and he further provided a document in the form of a defence to the action.  In response the applicants argued that not only was the respondent present in the Magistrates Court on 12 January 2004 attending to filing a document in relation to separate proceedings, but also that he apparently had access to his solicitor on that day and, therefore, could have done what was necessary to file a defence or, at the least, had his solicitor contact the plaintiffs’ solicitors to seek more time.

10. As to the respondent’s part in the separate proceedings, it can probably be said, without fear of contradiction, that, at the least, the respondent has not always demonstrated himself to be a diligent litigant.  Further, the documents demonstrate that he has, at least, some knowledge of the processes of the Magistrates Court including of the need to file a defence within a certain time and the consequences of not doing so.

11. However, there are other factors in this matter which weigh, in my view, more heavily in the scales.  For example, the proceedings were issued at a time of year which would make the timely filing of the defence a difficulty for any defendant, let alone one with the particular commitments which the respondent’s affidavit shows he had at that time.  Moreover, the nature of the claim and the defence to it may have necessitated careful consideration of a range of documentary materials.

12. The fact that no letter was sent to the respondent warning him that judgment would be entered and that judgment was entered so promptly upon the lapse of the applicable time period are further relevant matters.  I do not say that judgment can never be entered so promptly and sustained, but that is a factor that has to be weighed in the balance, along with the respondent’s reasons for not acting more quickly and the nature of his defence.  Ultimately his action or inaction in other proceedings has little weight when compared with the particular difficulties he faced in this matter.

13. Unlike Mr Kleinig SM, who in all probability dealt with the application in the course of a busy list, I have had ample opportunity to read the materials placed before me by the applicants.  I consider that the respondent did demonstrate and has again demonstrated reasonable excuse for non compliance and I consider that the draft defence exhibited does disclose an arguable defence.

14. Having had the opportunity to hear full argument on the matter and to have, as I say, perused the relevant documents, I have determined to treat this matter as both an application for leave to appeal and the appeal itself.  Indeed, that was the applicants’ request.  In view of the fact that it seems Mr Kleinig SM may not have allowed the applicants’ counsel to complete his submissions, and that he may not have fully considered the material that was placed before him, I am prepared to grant leave to appeal.  Having said that, apart from one matter, I am not persuaded that there is any merit in the appeal itself.  As it turns out, I have reached the same view as Mr Kleinig, but have taken rather longer to do it. 

15. The appeal will be dismissed except to this extent.  The applicants also complain of the costs order made by Mr Kleinig.  They say, and it is not contradicted, that the Magistrate again did not hear counsel as to the costs order, but simply ordered costs to be in the cause on the application, rather than ordering, at least, that the respondent have the applicants’ costs thrown away.

16. I am prepared to allow the appeal to the extent of setting aside the Magistrate’s order as to costs and ordering that the respondent pay the applicants’ costs thrown away in relation to the order setting aside the judgment. 

17. Therefore the orders I make are:

    1.     leave to appeal;

    2.appeal allowed only for the purpose of substituting for Magistrate’s costs order an order that the respondent pay the applicant’s costs thrown away in relation to the order setting aside judgment;

    3.appeal otherwise dismissed.

18. There being no application by the respondent for costs on the appeal, I make no order as to costs.