Imprenta Pty Ltd v Hamerkies Pty Ltd No. Scgrg-98-1287 Judgment No. S167

[1999] SASC 167

IMPRENTA PTY LTD V HAMERKIES PTY LTD

[1999] SASC 167
Appeal from a Master of the Supreme Court
1 MARTIN J.      (Ex tempore)       This is an appeal against a decision of a master of this Court in which he refused an extension of time for the institution of an appeal against a decision of a magistrate given on 4 May 1998, the reasons for which were delivered on 20 May 1998. 
2 On 9 April 1997 the respondent instituted proceedings in the civil division of the Magistrates Court claiming damages of $25 000 for a breach of contract relating to the failure to carry out certain printing work.  The appellant denied liability and filed a counterclaim of $7 650 for work done by the appellant for the respondent.  The trial was completed in one day on 7 April 1998.  On 4 May 1998 the magistrate delivered judgment, but without giving written reasons.  He awarded the respondent the amount of $16 390 and, on the counterclaim, gave judgment for the appellant in the amount of $6 200. 
3 At the time of giving judgment his Honour indicated he had prepared written reasons, but they were currently being typed.  It is not in dispute that the written reasons, although dated 4 May 1998, were not received by solicitors for the appellant until 20 May 1998. 
4 Section 40 of the Magistrates Court Act 1991 provides that a party to a civil action may appeal against the judgment in accordance with the rules of the Supreme Court. The appeal lies to a single judge, but the judge has the power to refer the matter for hearing and determination by the Full Court. Pursuant to rule 97.04 the appeal must be instituted within 14 days of the judgment. It was not until 17 September 1998 that the notice of appeal was filed together with an application for extension of time within which to appeal.
5 The application for an extension of time pursuant to rule 3.04(d) of the Supreme Court Rules was heard by a master on 27 January 1999.  The application was dismissed and the master gave ex tempore reasons.  The transcript of those reasons was received by solicitors for the appellant on 1 February 1999.  As to the merit of the appeal, the master considered the complaint was mainly as to quantum of damages and there were reasonable grounds for challenging certain of the findings of the magistrate.  In his view, therefore, there was merit in the appeal.  He found there was no more prejudice to the respondent than any other respondent in this position which could be adequately be dealt with by compensation in terms of interest on the judgment and costs orders. 
6 The issue that caused the master "considerable concern" was the delay of approximately four months.  The application was supported by an affidavit dated 15 September 1998 of the then South Australian solicitor acting for the appellant, Mr Harley.  The master commented on that affidavit as follows:
"This affidavit really gives no direct information with regard to the advice given to the appellant or instructions given by the appellant following the advice.  It would have been appropriate, in my opinion, to have some direct affidavit information from Mr Kingham.  In exercising my discretion in this matter I consider that this omission is critical."
7 The master's decision having been given on 27 January 1999, it was on 10 February 1999 that the appellant filed a notice of appeal against the decision of the master.  The solicitor now acting for the appellant, Mr Patel, has sworn an affidavit in support of the application.  He deposes to receiving the written reasons of the master on 1 February 1999.  On the same day he wrote to the appellant's Victorian solicitors forwarding a copy of the decision.  In the letter to the Victorian solicitors, a copy of which is annexed to the affidavit, Mr Patel sought urgent instructions on the question of an appeal and advised that the appeal had to be filed within 14 days of 27 January 1999.  He received oral instructions from the Victorian solicitors on 9 February 1999 that they were no longer acting for the applicant and, on that day, spoke with the appellant's director who gave him instructions to institute the appeal.  The notice was filed the following day. 
8 An application for leave to appeal was also filed in the belief that leave was needed under rule 106(2)(b).  The application for leave to appeal was heard by Lander J on 22 February 1999.  In his ex tempore reasons his Honour held that leave to appeal was not necessary.  I agree with that view. 
9 Appeals from masters are governed by s50(2) of the Supreme Court Act 1935 which provides:

1. Subject to the rules of court an appeal shall lie to a judge against a judgment, order, direction or decision of a master."
   Such appeals are regulated by rule 106.05.  If a final order is involved rule 106.05(1) provides that, subject to sub-rule (2) the appeal lies to the Full Court and is governed by rule 95.  If the order is interlocutory in nature, sub-rule (1) does not apply and the appeal is regulated by rule 106.05(2) which provides that it shall be to a single judge and governed by rule 97. 
   10 In those circumstances Lander J dismissed the application for leave to appeal.  He declined to answer on that application the question as to whether or not the decision of the master resulted in a final or interlocutory order.  His Honour declined to deal with the further application for an extension of time within which to appeal from the decision of the master as he considered that was a matter to be determined by the judge on the appeal. 
   11 At the time of the hearing before Lander J there appears to have been a dispute as to whether the order was final or interlocutory.  If it was final, rule 95.02 applied and the appellant had 14 days within which to appeal to Full Court.  If it was interlocutory in nature the appeal lies to a single judge and rule 106.05(3) requires that it be instituted within 7 days. 
   12 Subsequently, by notice dated 26 March 1999, the parties have consented to the appeal against the decision of the master being dealt with by a single judge.  The subsequent consent might be said to give rise to an interesting question if the order of the master is a final order.  If it is a final order, at the time of the making of the order and prior to the consent of 26 March 1999, rule 95.02 applied and the appellant had 14 days to appeal.  When the parties consented to the matter being dealt with by a single judge rule under rule 106.05(2), rule 106.05(3) came into play which provides that the appeal be instituted within seven days of the decision appealed from.  The issue need not be resolved, however, as the parties have indicated that the difference between seven and 14 days is of no consequence in the context of this matter.  I agree.  Following the consent, rule 106(2)(c) provides that the appeal is to be to a single judge and is governed by rule 97.  As mentioned, the decision was made on 27 January 1999, and the notice of appeal was filed on 10 February 1999.  If time ran from 1 February 1999 when Mr Patel received the written reasons, the appeal would have been within 14 days.  Time runs, however, from the date on which the decision was made and even on the 14 day time limit the appeal was instituted outside that period. 
   13 It is fair to observe however that Mr Patel acted promptly upon receiving the written reasons.  He advised the Victorian solicitors that 14 days from 27 January 1999 was the relevant period.  It appears he did not follow up the Victorian solicitors until 9 February, which was after the expiry of that period of 14 days.  On being advised that those solicitors were no longer acting, Mr Patel received a call from the appellant's director and acted promptly by filing the notice of appeal the following day. 
   14 The respondent opposes the application on the basis that the explanation for the delay is insufficient and delays have occurred as a consequence of the appellant's conduct in other respects.  A chronology attached to the respondent's submission demonstrates some delays, but there is no evidence that the appellant engaged in a deliberate course of conduct designed to delay the progress of this matter.  The delays identified in the chronology appear to have been caused by various misconceived applications, which were the fault of the appellant’s solicitors, but not the appellant.
   15 The respondent filed an affidavit sworn 20 April 1999 from its State manager stating that the manager suffers from stress related illnesses which have been significantly heightened by the delays in these proceedings.  In this way the respondent seeks to demonstrate that the prejudice is greater than the usual prejudice suffered by a respondent in these matters.  The respondent also contends that strict compliance with the rules will not work an injustice. 
   16 It is common ground that the merits of the proposed appeal are relevant in considering whether the justice of the case requires that an extension be granted.  It is appropriate, therefore, that I consider those merits.
   17 The notice of appeal against the decision of the master contains two grounds.  First it is said he erred in drawing an adverse inference from the failure of Mr Kingham, the appellant's director, to file an affidavit deposing to matters related to the advice given to him and the instructions given by him.  Secondly, the notice alleges the master erred in considering only the aspect of delay as being critical and failed to give sufficient weight to the merit of the appeal and the lack of prejudice to the respondent. 
   18 Counsel for the appellant contends that the master erred in characterising Mr Harley's affidavit as indirect evidence because it was direct evidence of the advice given by Mr Harley and of a conversation between him and Mr Kingham.  The appellant contends there is no rule that the explanation of delay must be based on direct evidence from the appellant and that the master erred in holding such evidence was necessary and the omission was fatal.  The appellant also says the conversation was subject to a claim for legal professional privilege and failure to divulge the advice does not entitle the court to draw an inference adverse to the appellant. 
   19 Finally, the appellant submitted that the master placed too much emphasis on the fact that he was not satisfied with the explanation for delay.  On this aspect it was suggested that the master had applied a wrong principle that without a satisfactory explanation leave should automatically be refused.  There is no doubt that the master gave considerable weight to what he perceived was the failure to provide an adequate explanation and I must consider whether he gave that aspect too much weight.  In my opinion, however, it cannot be said that he misconceived the relevant principles to be applied.  There is nothing in the reasons given by the master to suggest that he misconceived the relevant principles and he appears to have addressed all the relevant factors.  The fact that a proper explanation for delay is not a pre-condition for an extension of time being granted if other relevant factors would justify an extension is a well settled principle.  It is most unlikely that the master would have overlooked such a principle. 
   20 I can understand why the master viewed the explanation for delay with some concern.  The affidavit of Mr Harley discloses that he was acting on instructions from a firm of Victorian solicitors.  On 4 May 1998, the date on which the magistrate delivered judgment without supplying written reasons, Mr Harley advised the Victorian solicitors of the judgment and the need to wait until written reasons were given before a definite opinion as to the prospects of success on an appeal could be provided.  He indicated there was a possibility of grounds for appeal existing.  Following receipt of the reasons on 20 May 1998, Mr Harley spoke again with those solicitors and advised of his opinion that an appeal should be pursued.  He deposes to having indicated that it was a condition of pursuing the appeal that his outstanding account of approximately $1 000 be paid and a further $1 000 be provided to cover filing fees and preparation of the appeal.  The appellant gave instructions to its solicitors to pursue an appeal by a letter dated 9 June 1998 and at that time Mr Harley received the amount of $1 000, but not the additional $1 000 he had requested.  He says as a consequence, he "therefore did not institute an appeal."  It is a fair inference from the affidavit of Mr Harley, that on about 9  June 1998 he was aware of the written instructions from the appellant to pursue an appeal.  He declined to do so because the additional $1 000 had not been paid.
   21 The information provided by Mr Harley is deficient.  He does not say whether he told the Victorian solicitors of the time limit for an appeal.  There is no indication as to which solicitors the letter of 9 June 1998 was directed.  There is no evidence as to what advice was given to the appellant, if any, about the time limit that applied. 
   22 The next contact to which Mr Harley deposes occurred on 7 August 1998 when he spoke with the managing director of the appellant Mr Kingham.  From the conversation described by Mr Harley, it is clear that Mr Kingham believed an appeal had already been lodged.  He informed Mr Harley of that belief and of an understanding that the necessary funds of $1 000 had been sent to Mr Harley for the payment of the costs of the appeal.  He told Mr Harley he had not paid any outstanding account as such an account had not been forwarded to him by the Victorian solicitors.  At the request of Mr Harley, the appellant acted promptly and forwarded to Mr Harley a cheque for $441 to cover the filing fee.  That cheque was received by Mr Harley on 10 August 1998, but as it was a personal cheque and Mr Harley was required to wait for it to be cleared by the bank. 
   23 Mr Harley then deposes that he was advised by his medical practitioner to cease practice for a period of one month owing to ill health.  He says he was unable to find a person to conduct his practice and, as a result, "there was a delay in preparing the appeal". 
   24 It appears, therefore, that the appellant gave instructions to appeal by letter of 9 June 1998 and believed his solicitors were pressing that appeal in accordance with those instructions.  Although time was running from 4 May 1998, bearing in mind the involvement of Victorian solicitors and the delivery of written reasons to Mr Harley on 20 May 1998, the delay to 9 June 1998 cannot be described as excessive.  Thereafter, the problem lay with Mr Harley.  He did not follow up the instructions to appeal and the absence of the additional $1 000 until 7 August 1998.  Illness then intervened. 
   25 Although the appellant's managing director has not provided any evidence as to whether he enquired about the progress of the appeal between 9 June and 7 August 1998, it is reasonable to infer from his conversation with Mr Harley that he did not make any such inquiry.  Counsel for the respondent suggested that a diligent appellant should have enquired as to progress, but in my view it was not unreasonable for him to assume that the appeal was proceeding.  In my opinion, the vast bulk of the delay if not all of it, appears to be attributable to causes other than the appellant's conduct. 
   26 This was not a case of mere inactivity by a solicitor.  The solicitor specifically declined to act in accordance with his instructions to appeal because the costs he sought in advance were not paid.  Presumably Mr Harley was aware of the time limit and the increasing difficulty of gaining an extension of time as the delay increased.  Notwithstanding that knowledge, he did not contact the appellant until almost two months had elapsed from the receipt of instructions to proceed.  No evidence has been presented that Mr Harley made contact with the Victorian solicitors during that two month period or that he had advised them of the possible consequences of the increasing delay. 
   27 In those circumstances, the issues of substance raised in the proposed appeal and the master's assessment that the appellant has reasonable prospects of successfully challenging some of the magistrate's findings, give rise to a clear case that a refusal to extend time would visit an injustice upon the appellant.  In my opinion, the master erred in placing too much weight upon the failure of the managing director to give what he described as "direct" affidavit evidence.  While there were clear deficiencies in the material provided that I have endeavoured to identify, in my opinion the conclusion that a refusal to extend time would work an injustice upon the appellant was inescapable. 
   28 I have not overlooked the interests of the respondent.  It is unfortunate that this matter has been delayed and that it is exacerbating the ill health of the respondent state manager.  While that prejudice is obviously a relevant factor to be taken into account, the primary question is what the justice of the case requires.  I have also not overlooked the interests of the court and the public in ensuring that the court's business is managed efficiently and in accordance with the rules.  I have been referred to a number of authorities that demonstrate the importance of this factor.   I have borne in mind the remarks of Lander J in Hembrow v Police (unreported judgment delivered 18 March 1996 - S5550) with which I agree.  His Honour observed that although a refusal may work an injustice upon an appellant, the court is from time to time obliged to enforce its own procedures lest those procedures be ignored by those who are obliged to comply with them. 
   29 In my opinion, however, in the particular circumstances discussed the justice of this case requires that an extension be granted.  Having reached that clear view that the appeal against the decision of the master should succeed, in my opinion the application for an extension of time within which to appeal against the decision of the master should be granted. 
   30 I order that the time within which to appeal against the decision of the master is extended.  Secondly, the appeal against the decision of the master of 27 January 1999 refusing leave to extend the time to appeal against the decision of the magistrate given 4 May 1998 is allowed.  Time to appeal against the decision of the magistrate is extended. 
   31 In those circumstances, the parties have agreed that the merits of the appeal against the decision of the magistrate should not be argued at this time.  The respondent is considering its options and the parties have jointly requested the hearing of that appeal be therefore be adjourned.  The hearing is adjourned to the May list of magistrates appeals. 
   32 As to costs, there were two applications.  The first application was to extend the time within which to appeal from the decision of the master.  The second, should that time be extended, was the appeal from the decision of the master.  On the first application to extend the time to appeal against the decision of the master, in the particular circumstances of this case it was necessary to fully argue the merits of the appeal against the decision of the master. 
   33 The appellant succeeded in both applications and would normally be entitled to the costs of the appeal against the decision of the master following that success.  Notwithstanding that the appellant succeeded on the application to extend time, rule 101.02(2)(b) reverses the usual position that costs follow the success of the application and directs that costs occasioned by an application to extend the time, including the costs of any order made on the application, shall unless the court otherwise orders be borne by the party making the application. 
   34 In all the circumstances, in the exercise of my discretion I direct that the appellant pay the costs of the respondent in respect of the application to extend time.  There will be no order as to costs of the appeal against the decision of the master.