LED Investments Pty Ltd v Schriever Property Trust
[2012] SASC 48
•28 March 2012
SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
LED INVESTMENTS PTY LTD v SCHRIEVER PROPERTY TRUST
[2012] SASC 48
Judgment of The Honourable Justice David
28 March 2012
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - DISTRICT AND LOCAL COURTS PROCEDURE UNDER FORMER LOCAL COURT RULES - PRACTICE - PROCEDURE BEFORE TRIAL - DEFENCE
Appeal against judgment of a Magistrate – the respondent commenced an action in the Magistrates Court seeking to recover $15,035 for rent in arrears which the appellant allegedly owed to the respondent – the Magistrate granted the appellant’s application to vacate the trial date subject to the appellant paying $15,035 into court prior to the adjourned hearing – the Magistrate noted that if the appellant failed to pay such money into court the respondent would be at liberty to apply for judgment at the next hearing – order made extending the time within which the appellant was to make payment into court – at adjourned hearing date, money had not been paid into court by appellant as ordered – Magistrate refused appellant’s application to stay proceedings and entered judgment against appellant – whether it was appropriate for the Magistrate to order the appellant to pay into court the full amount of the claim against it as a condition of vacating the trial date and on the basis that if the appellant failed to pay such money into court, judgment may be entered against it – whether it was appropriate for the Magistrate to enter judgment against the appellant due to their failure to comply with that order.
Held: appeal allowed – the Magistrate erred both in ordering the appellant to pay into court the full amount of the claim against it as a condition of granting an application to vacate the trial date and in ordering that judgment may be entered against the appellant should it fail to pay the money into court.
Magistrates Court (Civil) Rules 1992 (SA) r 8, r 83, referred to.
Grimwade & Ors v Beresford (1974) 9 SASR 157; Edwards v Wallace (1986) 42 SASR 308, considered.
LED INVESTMENTS PTY LTD v SCHRIEVER PROPERTY TRUST
[2012] SASC 48Magistrates Appeal: Civil
DAVID J: The appellant was the defendant at first instance. The respondent was the plaintiff. The respondent had sued the appellant in the Magistrates Court for the sum of $15,035 for rent in arrears which the appellant (a limited company) allegedly owed to the respondent. The gist of the respondent’s complaint on appeal is that an order was made by the Magistrate ordering the appellant to pay the total amount of the claim into court by a particular date otherwise the respondent would be at liberty to apply for judgment against the appellant. The money was not paid by the due date and judgment was entered against the appellant.
The appellant now argues that the entry of judgment on that basis was inappropriate and deprived the appellant of its right to contest the claim on its merits.
In order to fully understand and appreciate the arguments of both sides, it is important to set out a brief chronology of events leading up to the signing of judgment which is the basis of the appeal.
Background and chronology of events
On 15 June 2001 Magistrates Court proceedings were issued by the respondent against the appellant.
On 29 August 2011 an amended defence was filed.
On 21 December 2011 the appellant made an application to vacate the trial which was listed for that day and on 22 December 2011 the following orders were made by the Magistrate:
1.Trial date vacated (22.12.11).
2.Adjourned to a Directions Hearing on Thursday 2nd February 2012 at 9.30am.
3.The defendant is to pay the sum of $15,035.00 into court on or before 4pm on Friday 27 January 2012.
4.If the order set out in paragraph 3 is not complied with, the plaintiff is at liberty to apply for judgment at the adjourned hearing.
5.Question of costs reserved.
On 27 January 2012 an order was made extending the time within which the appellant was to pay the sum of $15,035 into court until 4.00pm on Tuesday 31 January 2012. A further order was made on that day adjourning the matter to 2 February 2012 for directions. On 2 February 2012 judgment was entered against the appellant for the full amount plus costs to be agreed or taxed. At that time an application was made by the appellant to stay proceedings and that application was refused. The Magistrate further ordered that the execution of the judgment would be stayed until 4.00pm on Thursday 16 February 2012.
In relation to the orders made on 2 February 2012 the Magistrate gave the following short reasons:
This matter has a short but complex history. Originally the parties attempted to mediate their dispute without success and following the failure of mediation I thought it appropriate to list the matter for trial. The matter was listed for trial in November after which time the [appellant] sought legal advice. The trial date was then adjourned. On the adjourned trial date the [appellant] sought a further adjournment on the basis that there was a police inquiry into the conduct of the [respondent].
The transcript on the court file regarding that application on 22 December shows that [I] was unimpressed by the application for an adjournment at that late time but I indicated I would entertain it if the [appellant] was in a position to secure the [respondent’s] claim. At the time the [appellant] accepted that condition. Subsequently, the [appellant] made an application which effectively attempted to put it in the same position it would have been had I granted the adjournment on 22 December without conditions. I saw no reason to grant that application. The [appellant] has now appealed my orders on 27 January 2012 to the Supreme Court.
An appeal does not operate as a stay. I saw no reason not to enter judgment. The [appellant] then says I should stay the judgment until such time as the appeal is heard. The appeal was from a discretionary order. The discretion was exercised so that an indulgence sought by the [appellant] didn’t cause undue prejudice to the [respondent]. I can’t imagine that the orders made have great prospects of being successfully appealed.
In all the circumstances, I am not prepared to stay the judgment pending the hearing of the appeal. I will stay the judgment for 14 days to allow the [appellant] to seek a stay in the Supreme Court if it so wishes. Execution of the judgment will be stayed until 4.00pm on Thursday 16 February 2012.
It is further noted that the argument for an adjournment by the appellant on 22 December 2011 was on the basis that the appellant wanted to investigate investigations by the South Australian Police of fraud allegations against the respondent. It appears that these investigations went nowhere.
The appellant now argues that the order of 22 December 2011 for money to be paid into court, the failure of which would allow the respondent to apply for judgment and the entering of judgment on that basis, was erroneous.
Appeal
Mr White, for the appellant, argues that from the Magistrate’s short reasons it is unclear what was the basis of the Magistrate entering judgment. Mr White argued that if it was r 8 of the Magistrates Court (Civil) Rules 1992 there would be no basis for doing so. Rule 8 provides:
8.(1)Where a party wishes to obtain –
(a) summary judgment in, or the disposal of the whole or part of, an action; or
(b) immediate relief,
he or she may do so on application accompanied by an affidavit specifying –
(c) why the other party does not have a good action or defence on the merits on any possible view of the facts or law; or
(d) why such relief should be granted.
(2)The Court may -
(a) enter judgment accordingly;
(b) grant the whole or part of the relief sought, and order that the action continue in relation to the part not disposed of;
(c) make an order for an early trial; or
(d) make any other order.
(3)The Court may accept an Enforceable Payment Agreement verified by an affidavit of one party to it as proof of the matters contained in it.
There is no indication in the Magistrate’s reasons that the appellant did not have a good defence on the merits on any possible view of the facts or law. It would appear, on Mr White’s argument, that it was r 83 of the Magistrates Court (Civil) Rules 1992 upon which the Magistrate was relying. Rule 83 provides:
83.The Court may give judgment against a party who fails or refuses to comply with an order of the Court, on proof that the terms of the order have been given in writing to the party and the order has not been complied with.
In other words, by ignoring the order of the Court to pay in money the appellant was liable to judgment being signed against it pursuant to the above rule. Mr White argues that the inferential use of r 83 is inappropriate as the Magistrate should have determined the matter on the merits and that the paying of money into court should not be a penalty for a defendant in action to in fact argue his case. He said there are many other remedies that could have been adhered to as a result of the failure to pay money into court, but to deny him his right of defending the action was fundamentally wrong.
In support of the above proposition, Mr White referred to the decision of Walters J in Grimwade & Ors v Beresford where his Honour said:[1]
Initially I cite the propositions of law stated by Travers J. in William Charlick Limited v. MacMahon where, in allowing an appeal from an order of the then Master granting conditional leave to defend upon terms that the defendant pay a fixed sum into Court, the learned Judge said:
The three principal cases dealing with this matter are: Jacobs v. Booth’s Distillery Co.; Fieldrank Ltd v. E. Stein; Morgan & Son Ltd. v. S. Martin Johnson & Co. Ltd. In my view the net result of these decisions is:
(a) That if the facts placed before the court disclose a state of affairs which might reasonably constitute a defence to the action, the defendant should be unconditionally allowed to defend.
(b) That if the court takes the view that the circumstances are so suspicious that although it could not be said that they could not constitute a defence, the court thinks, nonetheless, that it is unlikely that they would do so, or thinks that the contemplated defence is only a sham, the court may order a payment in to be made as a condition of defending.
(c) The court should decide what view it takes of the facts placed before it, and if it subscribes to the view set forth in paragraph (a) above, then it has a duty to allow the defendant to defend, and it is not within the court’s discretion in that event to order payment to be made as a condition of defending.
(Footnotes omitted)
[1] (1974) 9 SASR 157 at 159.
Mr White cited the above dicta though that case was in the context of a different procedure but nevertheless involving an application for summary judgment. That case was supported by the decision of the Full Court in Edwards v Wallace[2] in which there was an appeal against an interlocutory order of a Local Court Judge that the defendant in that case bring into court the sum of $35,000 as a condition of being allowed to defend an action. The Court quashed the order requiring the payment of the amount into court. O’Loughlin J said:[3]
Cases of this nature must be decided upon the particular facts of the case; it is for this reason that I have come to the conclusion that the views of Lord Diplock are appropriate to those cases where the intended defence is suspect or, as Travers J. said in William Charlick Limited v. MacMahon, “the circumstances are so suspicious that although it could not be said that they could not constitute a defence, the court thinks, nonetheless, that it is unlikely that they would do so, or thinks that the contemplated defence is only a sham”. In the present appeal, the appellant was lax in the extreme; he made no attempt to inquire about the practices and procedures of the Local Court; but even so, it is a sufficient consequence that he have imposed upon him the burden of all costs thrown away. Although the plaintiff has twice been denied his judgment, no apparent prejudice has been made out and it is sufficient protection for the plaintiff that he have his costs. It is for these reasons that I was disposed to agree that the appeal should be allowed subject to the condition as to costs to which I have already referred.
(Footnote omitted)
[2] (1986) 42 SASR 308.
[3] (1986) 42 SASR 308 at 316.
Mr Quartuccio, for the respondent, argues that the Magistrate had given the appellant great latitude when allowing a number of adjournments and was making orders that were not being complied with. He puts in argument that the Magistrate really had no other real option in using what he describes as the inherent power in r 83 to make sure that the process was not being frustrated. He points out that the appellant was given notice on at least two occasions what would happen if the money was not paid into court.
Conclusion
I can understand the difficulty the Magistrate faced. However, I find that the Magistrate erred both in ordering the appellant to pay into court the full amount of the claim against it as a condition of granting an application to vacate the trial date and in ordering that judgment may be entered against the appellant should it fail to pay the money into court. It would be rare to impose upon a defendant a condition to pay money into court before a claim could be defended. I find the present case was not an appropriate occasion to do so.
I find that the Magistrate’s order that the appellant pay the sum of $15,035 into court by Tuesday 31 January 2012 will be set aside. It follows that I find that the entering of judgment on 2 February 2012 will also be set aside.
I allow the appeal and make the following orders:
1.The order of the Magistrate of 22 December 2011 ordering the appellant to pay the sum of $15,035 into court on or before 27 January 2012, as extended by the order of 27 January 2012 until Tuesday 31 January 2012 be set aside.
2.The judgment for the respondent in the sum of $15,035 plus costs to be agreed or taxed be set aside.
3.The matter be remitted to the Magistrates Court to be heard before another Magistrate.
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