Klaus Dieter Domas v Plysell Pty Ltd (Trading as Hills Complete Building) No. SCGRG 94/365 Judgment No. 4539 Number of Pages 5 Practice Summary Judgment

[1994] SASC 4539

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA OLSSON J

CWDS
Practice - summary judgment - Appeal against order of magistrate dismissing an application by the appellant/defendant to set aside default judgment - in dismissing the application magistrate found appellant had no fairly arguable defence on the basis of an affidavit sworn by a principal of the respondent/plaintiff company - magistrate erred in coming to that conclusion solely on affidavit when it was clear a dispute as to the relevant facts existed between the parties.

HRNG ADELAIDE, 3 May 1994 #DATE 3:5:1994

Appellant in person

Counsel for respondent:     Mr Preston

Solicitors for respondent: Von Doussas

ORDER
Appeal allowed.

JUDGE1 OLSSON J This is an appeal against an order of a Stipendiary Magistrate dismissing an application by the present appellant to set aside a default judgment, which was entered against him in the Magistrates Court (Civil Division), in the Mount Barker registry, on or about 1 February 1994.

2. That entry of judgment was part and parcel of a very unhappy saga of events in relation to the conduct of the action in question. In brief, the background history was that, by a summons which was issued at about the end of July 1993 - the precise date is not clear to me - the present respondent sued the appellant and two other persons for an amount of $10,358.15, for materials supplied and work said to have been done in relation to a contract entered into between the relevant parties on or about 12 January 1993.

3. The material and labour related to a building project which, apparently, a firm known as Stratford Homes had contracted to erect for a building owner known as Hodge.

4. It is clear from the documentation of the file that the three defendants named in the proceedings were, at one stage, in partnership trading under the name Stratford Homes but, according to the records of the State Business and Corporate Affairs Office, the present appellant had ceased to be a partner in that firm on 19 January 1993. It is said in the documentation before me that, whilst he had so retired as at that date, he did remain working with the firm for a short time thereafter, as I understand it, on the basis of being an employee.

5. Be that as it may, an attempt was made by the Registrar of the court to serve the summons, inter alia, on the present appellant by post, in accordance with the rules of court. In the event, that service proved to be ineffectual, because the summons was directed to the appellant at an incorrect address. The court file reveals that there is a notification of ineffectual service by post that notice being dated 4 November 1993. The record of ineffectual service was apparently prompted by return, by the postal authorities, of the envelope containing the summons endorsed 'unclaimed, return to sender'.

6. In the meantime, a default judgment had been signed, once again, presumably, according to the court rules, on the 16 September 1993, there having been no defence filed in relation to the summons. That latter situation, of course, was not surprising as the present appellant had never received it. A warrant for sale - I am not sure whether for goods or land, it does not appear which - was issued on 14 October 1993, to enforce the judgment. However, somewhat by accident, shortly thereafter, the appellant became aware of the existence of the proceedings, and attended at the Mount Barker Registry of the court and informed the officials there that he had not received the summons. Accordingly, on 4 November 1993 the clerk of court set aside the judgment on the basis of the ineffectual service of the summons.

7. At the time of his attendance at the registry the appellant notified the court officers involved of his correct address, with the result that, on 22 November 1993, the summons was redirected to him by the court by post. He acknowledges having received it on 25 November 1993. In an affidavit which was filed by him in support of his application to set aside the judgment which was ultimately entered against him, the appellant deposed that, following receipt of the summons, he contacted both the solicitors for the plaintiff and also a Mr C Clarke who was a director of the plaintiff company.

8. On the material before me it appears quite plainly that, in both his communications to the solicitors for the plaintiff and Mr Clarke, he disputed liability on the basis that he was not a partner in the firm Stratford Homes at the time when the relevant liability was incurred.

9. It seems, from the material before me, that somewhat inconclusive exchanges occurred between the appellant and Von Doussas and Mr Clarke over a period of some weeks, no satisfactory conclusion being arrived at. In the event, on or about 1 February 1994, the solicitors for the plaintiff simply signed judgment in the proceedings against the present appellant by virtue of his default in filing a defence to the claim against him.

10. There is no evidence as to whether that signing of judgment was preceded by any warning to Mr Domas that that action was being taken, as I would have expected, and I can only infer, from want of the material before me, that no prior warning was in fact given. I would point out that, as a matter of practice, that was the action that ought to have been taken in the circumstances, so that fair warning was given to the appellant that, as the discussions had not proved fruitful, he was required to file a defence, failing which he would be liable to judgment being entered against him. As it was he was taken completely be surprise.

11. I must record that the request to sign judgment was, in itself, irregular, in that it was never signed as contemplated by the rules of court. There may be some argument as to whether, in the event, judgment was regularly signed, there being no signed request to do so. However, I am not disposed to decide this matter on that basis because the document in question is merely a request; and it was accepted by the Registry, as such, and the appropriate fees were paid at the time. Therefore, no question of the validity of the judgment arises, in the sense that the court was formally being requested by the solicitors for the plaintiff to sign the relevant judgment.

12. When the matter came before the learned magistrate he had before him the facts as I have outlined them, and read the affidavit which had been prepared by the appellant personally. That document set out the basis upon which the appellant sought both to have the judgment set aside and also leave to defend the proceedings. The learned magistrate further had an affidavit sworn by Clarke, in which Mr Clarke briefly deposed to the circumstances which, on his account, gave rise to the transaction which founded the alleged cause of action.

13. In essence, in the affidavit filed by Clarke, he asserts that the contract by which his company supplied goods and services on behalf of Stratford Homes was consummated prior to the date on which the present appellant retired as a partner of Stratford Homes and that, accordingly, the appellant was liable, in concert with his other partners, for the debt as a liability of the then existing partnership.

14. It was deposed by Mr Clarke that he was never aware that the appellant had resigned as a partner until well after the event. On the other hand, it is equally clear from the material and, in particular, the affidavit of Mr Clarke, that, in dealing on behalf of the plaintiff with Stratford Homes, the relevant negotiations were essentially as between himself and one Jones, who was another partner in the business.

15. When the matter came before the learned magistrate, he declined to make the order sought, essentially upon the basis that he was not satisfied that it had been demonstrated that there was a fairly arguable defence available at the instance of the present appellant. In essence, that conclusion was arrived at on the basis of the affidavit which had been sworn by Mr Clarke.

16. In the course of reasons for dismissing the application expressed by him, the learned magistrate referred to the fact that, in the affidavit, it was said that the relevant tender price had been accepted on 12 January 1993 and that, although work did not actually commence until 22 February 1993, nevertheless, the contract had been consummated some seven days before the appellant left the partnership. He went on to say:-
    "Whilst it may be that Mr Domas' involvement with Mr Clarke
    has been of a very limited nature indeed, the fact is that
    at that date when this tender was accepted he was a member
    of the business and was carrying it on, no matter that he
    subsequently left. Mr Domas says that he had limited,
    indeed almost no contact with Mr Clarke, and I accept that
    that may well be the case."

17. The learned magistrate went on to comment:-
    "I accept, as does Mr Clarke, that Mr Domas resigned as a
    partner on 19 January 1993, but, from a purely formal point
    of view, until his resignation Mr Domas shared with his
    partners joint liability, and that is what brings him to
    court today."

18. Whilst I can accept that judgment against him was entered on a date after he apparently ceased to be involved in the business, namely 16 September 1993, and that it was not until the warrant of sale that Mr Domas became aware that there were proceedings against him, nevertheless, on the merits, it does not appear that a defence is available to Mr Domas.

19. One of the problems which exists in this matter is that, at all relevant times, the appellant has sought to appear in person and present his own argument and, of course, he has been at a serious disadvantage in doing that; and in, perhaps, raising points which clearly ought to have been raised. Indeed, it seems, from what he has put to me this morning, that there is other relevant evidence which he now has and which, I infer, may not have been available to him at the time of the magistrate's order, which tends to cast considerable doubt on whether it could fairly be said that the relevant contract, the subject of the action, was consummated as early as 12 January 1993.

20. Be that as it may, it seems to me, with respect, that in a sense, the learned magistrate has misdirected himself in the manner in which he has gone about determining the application before him. In effect, he has purported to come to a conclusion of law, or an apparent conclusion of law, on the basis of what is solely affidavit material, against the background in which there is clear dispute between the parties as to what the relevant facts or circumstances were.

21. This matter did not fall to be decided upon the basis of conflicting affidavits, but upon the basis as to whether or not, in all of the circumstances, it appeared that, taking his apparent case at face value, the present appellant had a fairly arguable defence.

22. In my view, whilst it is true that certain of the material upon which the appellant now seeks, apparently, to rely was not before the magistrate, nevertheless, I consider that it was inappropriate to dispose of the matter on the basis of the material actually relied upon by the learned magistrate in the sense of merely accepting the affidavit of Mr Clarke.

23. Moreover, I think that a matter which must be considered as to the merits is the apparent failure to warn the appellant that, if he did not file a defence, following the negotiations that were had between the relevant parties, then judgment would be signed against him. Whilst I do not suggest that there was any misconduct in the technical sense, it was certainly a very undesirable practice by the solicitors concerned, to adopt in the circumstances.

24. In my view, the situation was so unsatisfactory as it stood before the learned magistrate that leave ought to have been given to the appellant to defend the proceedings on the merits. I think the learned magistrate fell into error in disposing of this matter on the simple basis of the allegations in the affidavit of Mr Clarke, given the circumstances which were known to him at the time.

25. In my view, the appropriate course is to allow the appeal, to set aside the order of dismissal, and to substitute for it an order setting aside the default judgment and giving the appellant leave to defend.