Leo Muller Motors Pty Ltd v Bancroft
[2001] QDC 60
•21 December 2000
DISTRICT COURT OF QUEENSLAND
[2001] QDC 060
PARTIES: LEO MULLER MOTORS PTY LTD Appellant
And
STEPHEN PAUL BANCROFT RespondentFILE NO: D4810 OF 2000 DELIVERED ON: 2001 DELIVERED AT: Brisbane JUDGE: Judge Forno Q.C. REASONS FOR DECISION
This is an appeal against a decision of a Stipendiary Magistrate in Brisbane by
which she dismissed an application pursuant to rule 290 of the Uniform Civil
Procedure Rules to set aside summary judgment regularly obtained in default of
defence.
In a valiant attempt to identify separate matters to which she should be turning her
mind and to marshall what seems to have been undisciplined early submissions into
some logical order, the learned stipendiary magistrate during argument said :-
“Firstly, there is the explanation for the failure to file … the explanation of the failure to file the defence in time … and then there is the other leg of it … . the merits of the defence.” (page 5 primary hearing transcript certified has having taken place on 21 March 2000 and which the magistrate referred to in reasons about costs on 21 December 2000 as having occurred on 27 March 2000.)
As statements identifying broad categories of relevant areas needing careful
attention, one could not cavil with the magistrate’s language, and counsel understandably did not cavil at the time. However, very soon afterwards, indeed at
the end of the same page of the transcript, Mr J. P. Murphy of counsel, who
appeared below for the respondent as well as before me submitted:-
“One of the considerations … is whether there is or is not a reasonable excuse for the delay in filing a notice of intention to defend and the defence in this case.” (My underlining).
It is misleading at the very least to speak of the requirements to provide an
explanation as being a requirement to advance a “reasonable excuse”. It is the
position that once an explanation is provided, it may be necessary for the court to
look at the nature of it in the process of assessing what the justice of the situation
requires. Whilst the requirement of the providing of an explanation is not absolute,
the failure to provide one in an individual case may tip the scales against a proposed
defendant. On the other hand, in another case, it may be overwhelmingly plain that
the justice of the situation requires that a defendant be allowed the opportunity of a
trial.
The very next thing that Mr Murphy submitted (at the top of page 6 of the same
transcript) was :-
“And the second matter which is relevant to the discretion … is whether there is a sufficiently meritorious defence.” (my underlining).
Such an expression as well in my view is misleading at the very least.
I mention these matters because in my view they may serve to explain how the
magistrate fell into error in some respects.
Dealing with the requirement for an explanation at page 3, line 10 of the transcript
of her decision dated 2 November 2000, the magistrate said the first matter was :-
“Whether or not the defendant has given a satisfactory explanation
for its failure to appear… “ (my underlining.)
There was an explanation put forward by the proposed defendant which had to do
not with deliberate behaviour on behalf of the defendant, but rather with
inadvertence or perhaps incompetence on the part of people on the defendant’s side.
The plaintiff moved at the earliest opportunity under the rules for judgment and the
defendant respondent promptly after that. As properly recognised by the magistrate
there was no suggestion of any prejudice which might be suffered by the plaintiff in
respect of any delay in bringing the application which was before her. So far as
concerns the explanation, the magistrate, having set out the relevant history (which
I need not go into in detail) simply said:-
“I am not satisfied that the defendant has given a satisfactory explanation of its failure or the failure of its solicitors to file a defence in time.” (my underlining).
The magistrate went on to say:
“Nevertheless in my view, this is not the end of the matter… ”
The magistrate didn’t again refer to the matter of the explanation at all. She did not
say what bearing, if any, the explanation given had or could or would have had on
her ultimate decision to refuse the application. It seems to me patently obvious the
magistrate thought she was being called upon to make a value judgment of her own
about the explanation, which seems to be evident from all of the circumstances
including perhaps her use of the word “satisfactory”. What is involved is not
simply a question of whether the magistrate thought an explanation was good
enough or not in isolation, and according to her own moral judgment. The reason
behind the need for an explanation, it seems to me, is so that the court will be
placed in a position of taking it into account in finally exercising the discretion in a
judicial way. If the defence sought to be put forth is tenuous, for example, and the defendant has in its explanation for the delay shown a contumelious disregard for
the processes of the court and the rights of the plaintiff, then the combined force of
those things may be such as to persuade the court to dismiss the application. This is
merely an example. Another example is evident in the case referred to me by the
respondent of Alpine Bulk Transport Co. Inc v. Saudi Eagle Shipping Co. Inc. (the
“Saudi Eagle”) (1986) Vol 2 Lloyds Law Reports 221. See in particular at page
225 where the Court of Appeal said:-
“The conduct of the defendants … in deliberately deciding not give notice of intention to defend because it suited the interests of the group to let the plaintiffs proceed against these defendants, is a matter to be taken into account in assessing the justice of the case. While it does not amount to an estoppel in law, the court can and must consider it. The principal of election in the maximum about approbating and reprobating are, in origin, rules of equity and as such may give some indication of where the justice of a case may lie”.
The appellant submits that the magistrate’s decision not to set aside the default
judgment was wrong because –
(a) she wrongly excluded hearsay evidence sought to be relied on by the defendant; and/or
(b) she did not properly apply the criteria laid down by authority relevant for the setting aside of default judgments and her discretion
therefore miscarried.
It seems to me there is not much in the submissions concerning wrongly excluded
hearsay evidence. I have had some regard to the transcripts of the submissions
below and have reached the conclusion that at least for the most part, if what had
been objected to on the basis of hearsay had been left in, it should not have made
much difference to the ultimate decision. It seems to me there was not any hearsay material which was not dealt with in a direct way in other affidavits. In my view
there is nothing in the submission in the written outline of argument of the appellant
that the exclusion of the affidavit material on the basis of hearsay left the
defendant/applicant without material before the court by which it was able to
address the criteria by which the discretion to set aside is exercised. In fact Mr
Daubney in oral submission referred me to a body of positive evidence extracted
from the material which he submitted showed that the defendant had done all that
was required based on that material to require the setting aside of the judgment. It
seems to me the appellant is not disadvantaged if I confine my attention to that
body of evidence.
The important question, as the magistrate recognised, in the case before her was
what should be made of the defence proposed. It may be said that it is relevant to
look at the merits of such a defence in the sense of looking at the quality or the
worth (or lack thereof) of it, but that is true only to the extent that it is necessary to
decide whether what is proposed amounts to a prima facie case on the merits. That
is not, in my view, the same as saying that what has to be shown is a “meritorious
defence”. The word “meritorious” to my mind, means something which is
praiseworthy or deserving of commendation for thoroughness, etc. If all that was
intended by the magistrate in the use of that expression was that what had to be
shown was a defence having some merit, as distinct from one which has no merit
whatever, then there is some argument for the aptness of that expression. I note that
the appellant’s written outline also uses that unfortunate expression (see paragraphs
10 and 15 thereof.)
It seems to me it is less confusing to refer consistently and exclusively to the classic
phrase “ a prima facie case on the merits”. In my view that means a case which is
factually capable of belief and which, if believed, would result in a favourable
decision on fact and law for the defendant in relation to the case alleged by the
plaintiff.
The nature of the proceeding which was before the magistrate is such that if the
defendant were successful in having the judgment set aside, rights which the
plaintiff has regularly obtained will be removed. This is to be contrasted with the
situation in which a defendant seeks leave to defend. The quality of the case to be
demonstrated in the former is necessarily higher than in the latter.
There is some confusion, it seems to me, in the submissions from the plaintiff’s side
about the meaning of “prima facie case”. In submissions to me Mr Murphy said
(page 52 line 10 transcript appeal argument):-
“But you see, what the magistrate below had to do… according to
law is to make an estimate of what will be – given this material - …
what prospects are there one way or another on trial because if therearen’t any real prospects then the judgment should stand.”
If one substitutes the word “assessment” for “estimate” the submission has some
accuracy about it. However at page 41 line 10 before me Mr Murphy submitted:-
“The cases, Your Honour knows them well, Grimshaw v. Dunbar, Evans v. Bartlam and so on all require that the defendant should show a defence on the merits and it’s normally said that other than in exceptional circumstances, that should be done not only saying what the defence is but showing that it has real prospect of success. So it goes more than just showing a prima facie case.”
In my view the second sentence quoted is inaccurate.
I agree with the submissions to the effect that something more must be shown than
a triable issue or an arguable case (compare the position concerning setting aside a
summary judgment i.e. not by default). However, all that has to be shown is a
prima facie case on the merits. Some assistance is gained from some of the old
quasi-criminal cases referred to in Kennedy Allen The Justices Act (Queensland)
and I quote for convenience sake a note from that work at page 277.8 as follows:-
“A magistrate is clearly bound in the exercise of a sound discretion not to commit anyone unless a prima facie case is made out against him by witnesses entitled to a reasonable degree of credit. Cox v. Coleridge (1822) 1 B.C. 37 per Bailey J. at pages 50-51; 107 E.R. 15 at page 20. In determining whether they will commit for trial, justices should not balance the evidence and decide according as it preponderates which would be trying the case, but should consider whether or not the evidence makes out a strong or probable or even a conflicting case of guilt, in any of which events they should commit. If, however, from the slender nature of the evidence, the unworthiness of the witnesses, or the conclusive proof of innocence produced on the part of the accused they feel that the case is not sustained and that if they set it for trial, he must be acquitted they should discharge the accused. Douglas on Summary Jurisdiction Procedure 9th Edition page 349.”
The magistrate used the expression “meritorious defence” perhaps interchangeably
with the expression “prima facie defence on the merits” and so I need to be careful
about what I make of the use of that expression. It no doubt would not be
appropriate to hold that the magistrate erred merely on the basis of the use of that
expression. In the whole of the circumstances however, that included, it seems to
me clear that in assessing the worth of the defence the magistrate has strayed onto
the path of weighing up the evidence as if she were the tribunal of fact on a trial. It
seems to me that in doing so the magistrate has relevantly erred.
I move now particularly to the question in the case concerning whether or not the
defendant has demonstrated there is a prima facie case on the merits. The case
concerns the plaintiff’s purchase of a used Peugeot motor car which allegedly had a
defect which allowed substantial water penetration into the cabin in very heavy
rain.
From page 5 line 30 of the magistrate’s reasons dated 2 November 2000, the
magistrate purported to commence to set out the “facts”. This recitation went on
until page 7 line 40. I think that what the magistrate meant for the most part in
using the word “facts” was the undisputed body of fact, but whether that came from
he pleadings or the affidavits or somewhere else, or a combination of all three, is
not clear. In the course of the recitation, however, the magistrate referred to a claim
in an affidavit by one Nainby whom she said :-
“deposed in an affidavit filed by the plaintiff that the vehicle had
leaked, while he had owned it, in very heavy rain.”
The magistrate then proceeded, apparently in reliance upon that allegation at least
in part, to regard the existence of such a leak (which she rightly said is a substantial
aspect of the claim by the plaintiff) as if the existence of it or perhaps more
correctly the existence of a defect giving rise to substantial amounts of water
leaking into the vehicle, were an established fact. It is convenient at this point to
look at the available material as to the alleged rainwater defect. It is questionable
whether the affidavits of Nainby and one Binder should have been considered by
the magistrate and they may have been considered over objection below. However
no point was made about that before me by senior counsel so I think it is not
unreasonable to take the view that the magistrate was entitled to have regard to
them. This was evidence then that rainwater defect existed at relevant times. I turn to the question whether there was evidence to the contrary. Senior counsel before
me claimed to be hamstrung on that point because of lack of access to the vehicle
for inspection purposes. That may simply be one of the unfortunate results of the
defendants not having entered a defence in time. Be that as it may, all there is from
the defendants’ side is Muller’s reference to rainfall events during the time the
vehicle was outside at the appellant’s premises and also some material from
Mosseveld and Walker. Paragraph 23 of Muller’s affidavit goes to show there were
periods of rainfall during relevant periods. Paragraph 44 of the proposed defence
speaks of likelihood of the extent of that rainfall on to the vehicle. Van
Mosseveld’s affidavit speaks of cars being washed and Walker speaks of repairs to
the vehicle, none of which resulted in any reported leaks. None of this evidence it
seems to me could possibly be regarded as adequately putting in issue the existence
of the rainfall defect for the purposes of the application before the magistrate and in
those circumstances the magistrate it seems to me was entitled to proceed on the
basis there was such a defect at relevant times.
Not only however did the magistrate regard the defect I have just spoken of as
established but she treated the defendant as being required to plead in parts of the
defence on the basis that such a defect did exist. At page 23 of the magistrate’s
decision from line 1 the following appears:-
“in relation to the issue of whether the car was of merchantable quality, the defendant has not anywhere in its evidence asserted that the vehicle was merchantable – that is, within the definition of His Honour Mr Justice Dixon; that if the plaintiff had been fully acquainted with the facts and known what hidden defects existed, including, most relevantly the rainwater defect, which was a serious defect, he would have bought the vehicle without any reduction in the price, without any special conditions. The defendant does not assert that the plaintiff would, having known of the rainwater defect, still have purchased the vehicle, nor does the defendant assert that despite the rainwater defect, the vehicle was still fit for its purpose.”
The reference to evidence in that passage is confusing. One could hardly expect a
defendant who denies the existence of a defect of the kind in question should be
expected to produce evidence that if the defect did exist the plaintiff would still
have bought the vehicle without any reduction in price and without special
conditions. (See Australian Knitting Mills Ltd v. Grant (1933) 50 CLR 386 at 418.)
The short point to be made of course is, however, that in the circumstances there is
no material on the subject from the defendant.
Sometimes the dividing line between what is permissible and what is not in
deciding these matters may be a fine one, but I have concluded with respect that the
learned stipendiary magistrate crossed it in a number of respects. The magistrate
was persuaded in effect to disbelieve assertions by one Van Mosseveld (trainee
salesperson) in his affidavit relied on by the appellant that he made in effect no
representations about the nature or worth of the vehicle in question. Mr Murphy
made rather vehement submissions to the magistrate along the lines that salesmen in
general cannot be expected to behave in that way. What is alleged in effect by the
appellant is that the plaintiff was adamant about wanting the particular car. I do not
think it can be said in the affairs of human-kind that such a scenario must be
patently untrue. It seems to me the magistrate must have weighed up the above
evidence in a way that is appropriate to a tribunal of fact which process is
impermissible. At page 11 of her decision the magistrate said:-
“In the course of my consideration of the evidence that is admissible, it is necessary for me of course, to consider whether some of the assertions made by witnesses, and, in particular Van Mosseveld, the car salesman, were indeed inherently believable.”
Later at page 18 line 39 the magistrate said:-
“The salesperson, Van Mosseveld, asserted, effectively, that he said nothing to the plaintiff as to the quality or otherwise of the vehicle, nor of the merits of the associated contract into which the plaintiff entered, at the time of entering into the contract or the acquisition of the vehicle. I was invited by Mr Murphy to find that his denials that he made any representations of any kind to the plaintiff to induce him to acquire the vehicle were inherently unbelievable and I consider that is a reasonable submission. The job of Van Mosseveld was to show prospective customers around the car yard and it is difficult to believe that he would not have said at least something of the nature of what is pleaded by the plaintiff.”
Having apparently disbelieved Van Mosseveld’s evidence the magistrate was
critical of the defendant’s not having produced material which might indicate that
the plaintiff was not influenced by representations. See at page 18 line 19 when the
magistrate said:-
“As I have already noted, the onus is on the defendant/applicant to prove that the respondent did not rely on those representations even in a minor way. As I assessed the affidavits of the defendant they do not seek to address that evidential onus in any obvious way.”
The magistrate may have been intending her remarks in this respect to apply to
implied representations, but they are tied in with the alleged oral representations,
and so it does not make sense to expect a defendant who denies the oral
representations to produce evidence that the plaintiff did not rely to any extent on
representations. After all, if the allegation that no representations were made
happens to be established, no further proof is necessary.
The plaintiff relies heavily in his statement of claim on conversations amounting to
oral representations by the plaintiff and information given to the plaintiff by the
defendant, all of which conversations are disputed by the appellant in the sense that
they are both denied and also different conversations are alleged in their place.
These oral representations are set out in paragraphs 13, 17, 18 and 21 of the
statement of claim. A further implied representation is alleged in paragraph 3 of the statement of claim. This seems to me is bound up with the alleged oral
conversations.
In my view, it is not possible to conclude that all or any of the conversations as
alleged by the appellant are patently untrue or unreliable to the extent of justifying a
finding that they do not demonstrate a prima facie case on the merits as to those
parts of the plaintiff’s claim which rely on oral representations.
The appellant argues that the plaintiff’s right to relief is wholly dependant upon his
version of the facts being accepted so as to enliven legislative provisions relied
upon. When one looks at the plaintiff’s written statement of claim the submission
appears to be correct. At page 15 of the magistrate’s reasons, however, it was said:
“as to the issue of fitness for purpose under the Sale of Goods Act, the plaintiff pleads that, by implication, he made known to the defendant the purpose for which he was purchasing the vehicle – that is for his personal transport – and that it might be inferred that his attendance at the premises of the defendant who is in the business of selling vehicles to the public for private use and by his selecting a vehicle from the stock made available for sale by the defendant, it might be inferred that the plaintiff relied on the skill of the defendant to select reliable used cars for sale to members of the public which were worth the price for which they were advertised.”
The plaintiff did not plead that by implication he made known the purpose but
rather he pleads that he orally stated that to the appellant’s representative. The
allegations as to what was orally made known by the plaintiff to the defendant are
contained in paras. 12 (which refers back to 11); 20; 22; 23; 24. The plaintiff’s
counsel before me made submissions about what should be implied by the
plaintiffs walking into the premises of the appellant a well known and respected
car dealer trading in his own vehicle and taking out insurance on the purchased
vehicle and so on. I do not know whether the magistrate used the word “pleads” in lieu of “submits”. It seems to me that there is a great deal of force to the plaintiff’s
argument that the undisputed facts would necessarily lead to the conclusion by a
trial court that if not expressly at least by implication the plaintiff made known to
the seller the particular purpose for which he required the vehicle so as to show
that he relied on a seller’s skill or judgment. Clearly on the undisputed facts the
goods are of a description which it is in the course of the seller’s business to
supply and in all of those circumstances s.17 of paragraph (a) of the Sale of Goods
Act would apply. It seems to me also on the undisputed facts that the vehicle was
bought by description from the seller who dealt in goods of that description. In
those circumstances an implied condition of the goods shall be of merchantable
quality applies to the contract under s.17(c) of the Sale of Goods Act. In all of
those circumstances I could not imagine a trial court not giving the plaintiff the
opportunity to amend allegations of direct oral representations or notifications to
include in the alternative representations and notifications by implication from the
circumstances.
Once that stage is reached it is difficult to find substantial fault with the
magistrate’s reasoning as a result of which she reached the conclusion that on
substantial heads of claim the defendant has not shown a prima facie case on the
merits. I therefore dismiss the appeal.
In relation to the appeal so far as concerns the award of costs on an indemnity basis
made by the magistrate it is clear the application to set aside judgment by default
went on for an inordinately long time. I do not have transcript for the whole of the
time and I am content to accept the magistrate’s summary of what happened on
those days for which I do not have transcript. On 28 January all of the material was in and substantial arguments were foreshadowed by the plaintiff about admissibility
of hearsay material in affidavits sought to be relied upon by the defendant. On 21
March (according to the certification of the transcript I have) or on 27 March as the
magistrate said in her costs’ decision of 21 December 2000 the matter came back on
and lengthy argument ensued. At the start of that appearance I note that the
magistrate reminded the legal representatives that she had previously directed that
lists of objections be exchanged in an effort to facilitate possible agreement. It
seems that nothing much had been done about that although the magistrate said she
thought that might have been an economical approach. Admissibility argument
continued for that day and was continued on 4 May 2000 for a whole day.
The magistrate in the course of all of this ruled hearsay to be inadmissible contrary
to the submissions of defendant’s counsel. His Honour Judge McGill in an
application relative to this matter before it came before me observed that the rules
allowed for hearsay to be included in affidavits on applications such as the one in
question here.
I have already observed that it seemed to me whether hearsay was in or out did not
make any practical difference to this case, there was direct evidence to the same
matters. There was in my view accordingly fault on both sides in allowing what
clearly was an academic argument in the circumstances to develop to the ridiculous
extent it did.
The magistrate cast the blame as it were on the defendant appellant for prolonged
proceedings. She said in part that even if she were wrong about inadmissibility of
hearsay evidence then some of the material was inadmissible on other grounds. It seems to me that does not add anything to the basis for indemnity costs being
awarded since it does not detract from my assessment of the argument as being
purely academic in this case.
The magistrate went on to say that in any event the defendant’s material, in effect,
was not sufficient to make out a defence to all heads of claim and it was not well
drafted and so on. The magistrate did not indicate how that, if at all, contributed to
the length of the proceeding.
It is not a proper exercise of the discretion to award indemnity costs to punish a
party merely for sloppy drafting or simply having failed to succeed, which the
magistrate seems to be indicating.
I am satisfied the magistrate’s discretion miscarried and I am satisfied that in a
proper exercise of a discretion the order should be that the plaintiff have his costs
on the standard basis. I therefore quash the order as to costs made by the magistrate
on 21 December 2000 and order in lieu thereof that in respect of the appearances on
29 January 2000, 27 March 2000 (or 21 March 2000 whichever is correct), 4 May
2000, 2 November 2000 and 21 December 2000 the applicant defendant pay the
respondent’s costs on the standard basis to be assessed.
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