Living Australia Pty Ltd v Rans Consulting Group Pty Ltd - [2019] SASC 86

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
LIVING AUSTRALIA PTY LTD v RANS CONSULTING GROUP PTY LTD
[2019] SASC 86
Judgment of The Honourable Justice Hinton
24 May 2019
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE JUDGMENTS AND ORDERS - ACTIONS TO REVIEW OR SET ASIDE JUDGMENT OR ORDER
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
The appellant failed to file and serve a defence to the respondent’s claim in the Magistrates Court within 21 days as required by r 60(1) of the Magistrates Court (Civil) Rules 2013 (SA) (MCCR). The respondent obtained judgment in default on 27 November 2018. When the appellant became aware of the judgment it filed an application seeking orders that the judgment be set aside. The appellant was late for the hearing of the application to set aside the default judgment with the consequence that the application was dismissed. The appellant proceeded to the Registry and immediately made a second application to set aside the default judgment.
On the hearing of the second application no issue was taken with the question of leave to proceed under r 63 MCCR. Rather, the parties joined issue on the question of whether the appellant could establish the preconditions necessary to enlivening the discretion to set aside the default judgment under r 87(2) MCCR. The Magistrate, in dismissing the appellant's application, held that whilst the appellant had a reasonable excuse for failing to file and serve a defence to the respondent’s claim, it did not have an arguable case on the merits within the meaning of r 87(2)(a). Amongst other things, the Magistrate considered that the appellant’s case was one of recent invention.
The appellant appealed to this Court. The appellant’s primary argument was that it was not open to the Magistrate to find that the appellant did not have an arguable case on the basis, in part, that such case was recently invented given that the appellant’s evidence on the application was not challenged. The respondent filed an Amended Notice of Cross-Contention challenging the Magistrate’s findings that the appellant had a reasonable excuse for its absence in Court for the first application and for not filing a defence within the prescribed time limit.
Held, allowing the appeal, the Magistrate erred in finding that the appellant did not have an arguable case on the merits. Exercising the discretion under r 87(2) afresh, the appellant’s second application is allowed and the default judgment dated 27 November 2018 is set aside.
Magistrates Court Act 1991 (SA) s 40(1); Magistrates Court (Civil) Rules 2013 (SA) rr 60, 61, 63, 64, 87; Supreme Court Civil Rules 2006 (SA) r 286(1), referred to.
Attorney-General (SA) v Marmanidis [2019] SASCFC 3; Cubelic v T & D Lock Pty Ltd [2009] SASC 397; Marmanidis v Germein [2017] SASC 103; Sandery v Kowalski [2016] SASC 175; Singh v Minister for Immigration and Multicultural Affairs [1998] FCA 1366; Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138, considered.

LIVING AUSTRALIA PTY LTD v RANS CONSULTING GROUP PTY LTD
[2019] SASC 86
Magistrates Appeal
HINTON J:

This is an appeal against the order of a Magistrate refusing an application to set aside a default judgment. The appellant’s primary contention is that the Magistrate erred in determining that it did not have an arguable case within the meaning of r 87(2) of the Magistrates Court (Civil) Rules 2013 (SA) (MCCR). The respondent disputes this. In addition the respondent has filed an Amended Notice of Cross-Contention in which it contends, amongst other things, that it was not open to the Magistrate to be satisfied that the appellant had a reasonable excuse for failing to file and serve a defence to the respondent’s claim within the time limits prescribed by the rules.
For the reasons that follow I would allow the appeal.
Background
On 25 October 2018 the respondent filed a claim against the appellant for $23,318.92 plus costs (total $24,845.42) and interest. The same day the respondent filed an amended claim, the amendment being the adjustment of the amount to be charged for effecting service of the amended claim.
For reasons that will become apparent, it is necessary to go through the amended claim in some detail.
The amended claim complied with the requirements of Form 2 MCCR. The opening paragraphs set out the amount claimed, the type of claim, the details of the plaintiff, the details of the defendant and the method by which the claim would be served. The amount claimed was $24,845.42 and the claim type was described as “debt”.
The actual pleading in the amended claim commenced by identifying the plaintiff/respondent and defendant/appellant. The respondent, Rans Consulting Group Pty Ltd, is the trustee of the Rans Consulting Group Trust which, it was pleaded, provided consulting services in relation to business growth, advisory, strategic and business advice, profit improvement, and mentoring and coaching. The appellant, Living Australia Pty Ltd, is a company involved in property development, design and management.
The amended claim pleaded that in or about August to September 2017 the respondent agreed to provide consulting services to the appellant in exchange for the payment of a fee. That agreement, it was pleaded, was partly oral, partly written and partly implicit. The oral component of the agreement was derived from conversations between Mr Ransome, a director of the respondent, and Mr Cakar, a director of the appellant, that occurred in the period August to September 2017. With respect to the written component, it was said to be comprised of an email from Mr Ransome to Mr Cakar dated 4 September 2017 in which there is contained the primary term of the consulting agreement, namely, that the respondent would provide 12 to 14 hours of consulting services per month to the appellant in return for payment in the amount of $3000 plus GST. As for the implied component, the claim pleaded that it was implicit in the consulting agreement that the appellant would pay the consulting fee within 14 days of the respondent issuing an invoice. It is unnecessary to summarise the asserted basis supporting the implied term.
The amended claim pleaded the partial performance of the consulting agreement in the period August to October 2017 in that the respondent issued an invoice for services provided (Invoice No 1133) which was paid in full.
The amended claim also pleaded variations to the consulting agreement that occurred in or about October 2017 when the respondent agreed to delay issuing an invoice for consulting services provided during October 2017 until late November 2017. The variation was agreed to because the appellant was experiencing cash flow issues. It was also pleaded that the respondent further agreed to provide the appellant with a monthly discount of 15% to 20% on the consulting fee chargeable in future in return for the appellant agreeing to the consulting agreement remaining in place long term. In addition the appellant agreed to provide the respondent with office space at the appellant’s premises at Unley for a rental of $400 per month with the rental to be deducted from any monthly invoice issued until such time as the office was vacated. The amended claim pleaded that Mr Ransome and Mr Cakar agreed to the variations in the course of one or more conversations in October 2017.
Next the amended claim pleaded that consulting services were provided during the period October 2017 to May 2018 and invoices were issued as follows:
·Invoice No 1146, dated 29 November 2017 in the sum of $4950;
·Invoice No 1169, dated 24 January 2018 in the sum of $3366;
·Invoice No 1176, dated 19 February 2018 in the sum of $2596;
·Invoice No 1193, dated 8 March 2018 in the sum of $2728;
·Invoice No 1197, dated 2 April 2018 in the sum of $1936; and
·Invoice No 1205, dated 2 May 2018 in the sum of $2084.50.
The total amount due and payable was $17,660.50. For each of the invoices, save Invoice No 1205, a 20% discount consistent with the variation to the consulting agreement referred to above was applied. In relation to Invoice No 1205, a 15% discount was applied. The total amount of the discount applied across the six invoices issued amounted to $4395.
The amended claim pleaded that the respondent vacated the office at Unley in May 2018 and that an amount of $2200 was deducted from the balance of the invoices in satisfaction of the monthly rental for the office space provided from November 2017 to May 2018.
The respondent further pleaded that the appellant breached the consulting agreement by failing to pay the invoices issued as and when they were due or at all and that, as a consequence of the appellant’s breach, the consulting agreement was terminated in early May 2018. In view of the appellant’s breach, the amended claim pleaded that the appellant was not entitled to the discounts in relation to the invoices issued as its conduct brought about the early termination of the consulting agreement.
Under the heading, “Loss and Damage”, the claim pleaded:
17.Despite demand, the Defendant has failed, refused and/or neglected to make payments of the Invoices.
18.In the premise, the Plaintiff has suffered loss and damage in the sum of $17,660.50.
19.In the premise, the Plaintiff has also suffered loss and damage in the sum of $4395.00 being the total quantum of discount applied in accordance with Variation Two.
And, under the heading, “The Relief Claimed”, it was pleaded:
23. The Plaintiff claims against the Defendant;
23.1. The sum of $23,318.92;
23.2. Interest.
23.3. Costs.
In the Alternative
23.4. Damages for breach of contract.
On 26 October 2018, Mr Sankey, a legal practitioner acting on the instructions of the respondent, sent by prepaid post addressed to the appellant at its registered office in Unley, a copy of the amended claim accompanied by a Form 17 which, amongst other things, advised the appellant that it had 21 days in which to file a defence.
On 22 November 2018 Mr Sankey swore an affidavit in which he deposed to the fact of his having served the claim upon the appellant by pre-paid post on 26 October 2018. The original of Mr Sankey’s affidavit was filed in the Magistrates Court that same day.
Rule 47 MCCR permits service of documents (including claims) by a number of methods including by prepaid post. Rule 52(1)(d) provides that, when a document is served, including by prepaid post, it is deemed to be received four business days after the date of posting, here 1 November 2018.
No defence was filed by the appellant on or before 22 November 2018.[1]
[1] Rule 60(1) of the Magistrates Court (Civil) Rules 2013 (SA) provides that "[s]ubject to Sub-rule (4), where a party has been served with an action (other than an action under Rules 26, 37, 39 and 40) 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".
On 27 November 2018 the respondent filed a Form 18 seeking to sign judgment. Judgment was signed in default that same day in the sum of $24,995.42.
By interlocutory application dated 5 December 2018 the appellant applied for the judgment entered on 27 November 2018 to be set aside and for orders granting it leave to file a defence or defence and counterclaim (the first application). That same day Mr Cakar swore a brief affidavit in support of the first application. In that affidavit he deposes no reason as to why the claim was not disputed within 21 days but exhibited a letter addressed to Mr Ransome, dated 21 August 2018 and written by DW Fox Tucker Lawyers, to which further reference is made below.
The first application was listed for hearing on 19 December 2018 at 10.30 am. On that day the application was called on in the Magistrates Court. No-one was in attendance for the appellant. The application was dismissed. As it turns out, Mr Cakar attended at the Magistrates Court a short time later, and, upon discovering that the first application had been dismissed, immediately went to the Registry where registry staff assisted him in filing a second interlocutory application (the second application).
In support of the second application Mr Cakar filed two affidavits, sworn 19 December 2018 and 5 February 2019. In his affidavit of 19 December 2018 Mr Cakar briefly deposed to not disputing the claim within 21 days because he did not receive it. In his affidavit of 5 February 2019 Mr Cakar explained his absence on 19 December 2018. He said that shortly after 10.30 am he attended at the Magistrates Court only to be informed that his matter had already been called on and that the application had been dismissed. He immediately attended at the Registry where he was assisted to prepare and file the second application. His affidavit contained no explanation as to why he was late.
Mr Cakar then explained why it was that the appellant did not file a defence to the amended claim within the 21 days required by the MCCR. He said he did not receive service of the claim. He said that he had checked the records of the appellant and had failed to locate any record of the respondent’s claim. He further explained that all mail to the appellant was delivered to the reception at the appellant’s premises where it was opened by Ms Moloney, an employee, and then distributed to the relevant staff member. Mr Cakar said that he became aware of the judgment in early December 2018 when he attempted to arrange finance for a construction project in which the appellant was involved. That prompted him to make enquiries of Ms Moloney. She told him that she had no recollection of receiving a claim from the respondent.
Mr Cakar further deposed that on or about 28 June 2018 he received a document from the respondent entitled, “Overdue Accounts Notice”. He forwarded that document to his solicitors, DW Fox Tucker, who prepared a letter responding to the Notice. A copy of that letter, dated 21 August 2018, is exhibited to Mr Cakar’s affidavit. In it, through its solicitors, the appellant makes plain that it disputes the claim for unpaid consulting services. Moreover, the appellant contended that it was not indebted to the respondent at all. The appellant’s position was made plain; the invoices were not due and payable because the consulting services provided were provided in return for the respondent’s use of the Unley premises. Further, and in any event, the services provided by the respondent were unsatisfactory. On these two bases liability for payment of the invoices in their entirety was denied. The letter included the following:
Further, should you take this matter further, our client will provide a fulsome defence, will seek to recover the costs associated with the preparation of the same and will counterclaim for the value of the accommodation provided to the Rans Group; which we are instructed would be in excess of $4,000.00 per month.
As is plain from the narrative above, the respondent did not serve its claim on the solicitors for the appellant.
Returning to Mr Cakar’s affidavit; he deposed to being advised by his solicitors that they did not receive a response to their letter of 21 August 2018. He contends that the letter of 21 August 2018 put the respondent on notice of the appellant’s intention to defend any proceeding instituted and that the appellant had retained solicitors.
In his affidavit Mr Cakar then turned to the question of the appellant’s defence to the claim. He exhibited a draft defence which, if the second application was granted, the appellant intended to file and serve. The thrust of the defence was, consistent with the letter of 21 August 2018, that the appellant agreed to provide office space and the use of the appellant’s premises and facilities to the respondent rent free in exchange for provision of services by the respondent to the appellant. The respondent, it was deposed, occupied office space at the appellant’s premises between October 2017 and May 2018. In that time, the respondent did not pay rent. Mr Cakar estimated the value of the respondent’s use of the appellant’s office space and facilities at approximately $1000 per week. He further deposed that the services provided by the respondent to the appellant were not satisfactory and that the appellant requested the respondent to vacate the appellant’s premises in May 2018. The respondent sent the “Overdue Accounts Notice” to the appellant after vacating the appellant’s premises.
Mr Cakar concluded his affidavit of 5 February 2019 by stating that the appellant intended to make a counterclaim against the respondent, but no further detail of any such counterclaim was provided.
In reply the respondent filed an affidavit sworn by Mr Ransome on 13 February 2019. In his affidavit Mr Ransome advised that as the Director of Rans Consulting Group he provided business advisory services to a large range of government and private sector clients. In that connection he first met Mr Cakar in late August 2017. He agreed to provide advisory services to the appellant in relation to projects that the appellant was involved in. He exhibited to his affidavit an email dated 4 September 2017, addressed to Mr Cakar in his capacity as director of Living Australia, setting out the terms of Mr Ransome’s engagement. Mr Ransome deposed that on 4 September 2017 he met with Mr Cakar at the appellant’s Unley premises at which time his terms of engagement were acknowledged and agreed. In the light of that agreement Mr Ransome issued an invoice for his initial fee of $3,300 that same day (Invoice No 1133) which Living Australia paid on 5 October 2017.
Mr Ransome further deposed that on 5 October 2017 he again met with Mr Cakar. Mr Cakar advised that Living Australia was having cash flow problems and asked if Mr Ransome could hold off sending September’s and October’s invoices until late November. Mr Ransome agreed. He subsequently invoiced Living Australia for the services that he provided during September and October on 29 November 2017. That invoice contained a notation referring to the extension that Mr Cakar had requested on 5 October 2017.
Mr Ransome also deposed that on or about 14 November 2017 it was agreed with the appellant that he could use a small office at the Unley premises. That office was mainly used when Mr Ransome was undertaking consulting work for the appellant and on occasion was used for unrelated consulting. He deposed that there was never a formal agreement, written or otherwise, in relation to his use of the office nor was the topic of its use or his being charged for its use ever discussed. Nonetheless, mindful of the appellant’s cash flow issues, he deducted $300 or $400 per month from the invoices issued to the appellant in payment for the use of the office at Unley. The amount that he deducted depended on how often the office was used during the month to which the invoice related.
Mr Ransome further deposed that prior to 26 April 2018 Mr Cakar indicated on a number of occasions that he was experiencing cash flow problems and had requested a personal loan from Mr Ransome. Initially, Mr Ransome declined to assist, however on or about 26 April 2018 Mr Ransome relented lending the appellant $10,000 after Mr Cakar again advised Mr Ransome that he was suffering cash flow problems and that he needed to borrow money for expenses and salaries. The loan was to be repaid within two weeks. By 10 May 2018 the loan had not been repaid. Mr Ransome deposed that as at that time the respondent was owed $17,665.50 for services that had previously been provided to the appellant and for which the invoices referred to above had been issued.

On 17 May 2018 Mr Ransome advised Mr Cakar that he was concerned about the appellant’s indebtedness. Mr Ransome deposed that an employee and associate of Mr Cakar, Mr Kadi, was present. Six days later Mr Cakar handed Mr Ransome a cheque for $10,000 in repayment of the loan. That cheque was honoured upon presentation. Mr Ransome contends that Mr Cakar was unhappy about being questioned by him regarding monies owed.
On 30 May 2018 Mr Ransome had a heated discussion with Mr Kadi at the Unley premises. Mr Ransome left the premises shortly thereafter. When he returned the locks had been changed.
In his affidavit Mr Ransome deposed that between August 2017 and 21 August 2018 (the date upon which he received the letter from DW Fox Tucker) neither Mr Cakar nor the appellant had ever raised the question of payment for his use of the Unley premises. Nor had they at any time raised any question or complaint about the services he had provided.
Mr Ransome deposed:
I believe the statements paragraphs 15 - 17 of Cakar’s affidavit sworn 5 February 2019 in respect of the office space (the Room) [asserting that the agreement was one of services in exchange for office space and office facilities], as well as those at paragraph 18 in respect of the quality of the Services provided are simply recent inventions concocted by the Cakar to avoid payments Living Australia is unable or unwilling to make and to bolster Living Australia’s changes [sic] of setting aside the judgment in these proceedings to avoid and or frustrate the currently underway winding up proceedings against Living Australia in the Federal Court of Australia.
The Magistrate’s reasons
In her reasons, after setting out the background to the matter and articulating the applicable legal principles, the Magistrate first considered the application of r 63 MCCR and whether the appellant should be granted leave to file the second application. The Magistrate held:
14The defendant’s director Mr Cakar filed an affidavit claiming that he did attend on 19 December 2018 ‘shortly after 10.30am’ but was told by court officials that the matter had already been dealt with. He then immediately attended at the Registry to file his application. The date stamped on the current application is the same date of the hearing, 19 December 2018.
15It is not clear how late Mr Cakar was for the hearing. The hearing was listed for 10.30am that day and the court records indicate that the action was held in the list until 10.45am pursuant to MCR r 101 when, there being no appearance by the defendant, the court ordered that the application be dismissed.
16Given the unchallenged deposition by the defendant that he did attend on that day, but missed the determination of the application by a short time and thereafter immediately attended at the court Registry where he filed the second application, and that the fact of this is supported by the court record, I consider I am bound to accept that unchallenged evidence and am prepared to find that the defendant has a reasonable excuse for his non-attendance on that day.
Next the Magistrate turned to consider the question of whether the appellant had a reasonable excuse for failing to file a defence within the 21-day time limit. The Magistrate recorded that the appellant relied upon the affidavit of Mr Cakar sworn 5 February 2019. She added that the respondent had objected to a number of paragraphs in that affidavit on the basis that they contained hearsay or lacked particularity in respect of statements made. She said she had taken those objections into account in considering the evidence and its reliability. The Magistrate noted, for example, that no affidavit had been filed by Ms Moloney and that the conversation deposed to between Mr Cakar and Ms Moloney was hearsay. Nonetheless, there was no application to cross-examine Mr Cakar on his affidavit. The Magistrate said:
20It is not disputed that the claim was served by post to the defendant’s registered office, which would appear to be the office from which the defendant operates.
21It is also noted that the parties had previously communicated, through their lawyers, regarding the proposed claim and the defendant was aware the plaintiff proposed to pursue its action by commencing proceedings. The evidence indicates that the defendant intended to defend the claim and had engaged solicitors for that purpose. I consider that it naturally follows from the evidence of the conduct of the parties prior to the claim being issued, that the defendant, if it had been aware of the claim, would have filed a defence to it. I consider that this supports the unchallenged evidence that the defendant did not file a defence because it did not receive the claim.
The Magistrate then turned to assess the truthfulness and reliability of the content of Mr Cakar’s affidavit. Even though the respondent had not applied to cross-examine Mr Cakar the Magistrate considered that a court could reject unchallenged evidence if it was patently incredible or completely unreliable. She concluded:
24Having considered the evidence put on behalf of the defendant that it did not receive the claim, that it has reviewed its records including making an inquiry of the employee who receives mail, that it was aware of the likelihood of the claim being issued and intended to defend it including by the retention of solicitors, I consider that it is not patently incredible that the defendant was unaware of the claim and therefore has a reasonable excuse for not filing a defence.
The Magistrate then turned to consider whether or not the appellant had an arguable defence on the merits. The Magistrate commenced by observing that the draft defence did not contain a specific plea, but rather assumed that the appellant’s denial of liability for the amounts subject of the invoices was based on a variation of the agreement. The Magistrate then referred to the judgment of Doyle J in Sandery v Kowalski and the requirement that in order to meet the test contained in r 87(2)(a) MCCR the merits of a defence must be sufficiently particularised so as to enable the Court to make an assessment of the genuineness of the defence and whether it is arguable on the merits.[2] The Magistrate noted that Mr Cakar’s affidavit repeated the plea in the draft defence that office space had been provided by the appellant in exchange for services for approximately six months between October 2017 and May 2018. The Magistrate noted that the affidavit deposed to an approximate value of the respondent’s use of the appellant’s office space at $1000 per week. No material had been provided to support that value. Further, none of the dates on which the respondent occupied the appellant’s premises, or the term of the alleged rental agreement, the space or area agreed to be occupied, and the rent alleged to have been agreed, had been pleaded.
[2] [2016] SASC 175.
The Magistrate then referred to Mr Ransome’s affidavit and his evidence of the acceptance by the appellant of the terms of engagement forming the agreement and the details of the invoices issued. Having regard to the content of Mr Ransome’s affidavit the Magistrate said:
31In my view it is reasonable, on the evidence, to consider that the claim by the defendant of the right to receive rent for the use of the office is a recent invention designed to avoid an obligation to pay the plaintiff’s invoices for services.
The Magistrate then referred to the assertion in Mr Cakar’s affidavit that the respondent was required to vacate the appellant’s premises because its services were not satisfactory. The Magistrate observed that there was no evidence or detail provided supporting that assertion and no mention was made of it in the draft defence. In the circumstances, the Magistrate assumed that it was not intended to form a plank in the defence. In any event the Magistrate observed “more than a bare assertion would be required for it to amount to an arguable defence that had any possibility of success”.
Next the Magistrate referred to the reference in Mr Cakar’s affidavit to the intention to file a counterclaim. Nothing further, the Magistrate observed, was provided in the way of detail as to the nature of any counterclaim. In those circumstances the Magistrate thought that the stated intention was no more than conjecture and did not amount to an arguable defence.
The Magistrate concluded:
34In my view, the evidence does not support a finding that the defendant has raised a plausible defence either in law or in fact to the claim made by the plaintiff. Whilst I do not pronounce on the law or the facts in these reasons, this court must have before it materials which enable it to find that there is some possibility of success of the defendant defending the action.
35In my view an arguable defence would require some evidence from the defendant of an agreement by the plaintiffs to pay rent for the room. There is no such evidence. In addition, the fact that the defendant’s assertion of this alleged obligation on behalf of the plaintiff was not raised until late 2018, supports a finding that it was only raised in response to the plaintiff pursuing its claim for payment on its outstanding invoices for the services.
36It is my view that the defendant has fallen short of establishing an arguable case on the merits.
The appeal to this Court and the Notice of Contention
In its Amended Notice of Appeal the appellant contends that the default judgment was irregularly obtained in that the judgment was not one for a wholly liquidated amount. Further, if the judgment was regularly obtained, it is said that the Magistrate erred in finding the appellant’s claim to rent was a recent invention, in finding that there was no evidence adduced by the appellant as to an agreement to pay rent, in finding that the rent was only raised upon the respondent commencing the proceedings for the unpaid invoices, and in finding that the appellant had not established that it had an arguable case on the merits.
In its Amended Notice of Cross-Contention the respondent contends that the Magistrate erred in finding that the appellant had a reasonable excuse for the purposes of rr 63(4)(b)(i) and 87(2)(b) MCCR.
I intend to deal with the question of whether the default judgment was regularly obtained first and then the application of r 63(4)(b)(i) MCCR before turning to the arguments dealing with the application of r 87(2) MCCR.
Whether or not the default judgment was regularly obtained turns on the application of rr 60(1) and 61(1) MCCR. Those rules provide:
60.(1)   Subject to Sub-rule (4), where a party has been served with an action (other than an action under Rules 26, 37, 39 and 40) 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.
…
61.(1)     Where a party signs judgment for a claim:
(a)    for a debt or liquidated sum; or
(b)for the cost of repairs to, or the loss of, property and any other consequential loss;
the party will have judgment for the claim, plus costs on the scale applicable to the claim, but the party has no entitlement to pre-judgment interest except if it is awarded by the Court on an interlocutory application.
In this case the respondent contends that the claim was one for a debt or a liquidated sum within the meaning of r 61(1)(a). The appellant contends that, insofar as the claim was for the amount due and payable under the six invoices referred to in the amended claim, it is a claim for a liquidated sum. However, to the extent that the claim also seeks to recover the total amount of the discounts afforded the appellant, it cannot be said to be either wholly a claim for a liquidated sum or wholly a claim for a debt.
The amended claim pleads that the discount was afforded the appellant in consideration for agreeing that the consulting agreement would continue long term. Each of the six invoices to which the amended claim refers state expressly the discount applied to the fee charged for the service provided. That discount is described separately and in addition to the discount allowed for the provision of office space.
In Attorney-General (SA) v Marmanidis (Marmanidis) Blue J observed:[3]
… The law draws a clear distinction between liquidated claims and unliquidated claims in the context of default judgment. A liquidated claim is one where the amount to which the plaintiff is entitled has been predetermined (by or pursuant to agreement or legislation) by reference to a fixed amount, scale or formula before the matter reaches court. This is reflected in the definitions in the Supreme Court Rules of a liquidated claim as “a claim for a specific amount or a claim for an amount that can be precisely calculated” and an unliquidated claim as “a claim for an amount that requires assessment by the court” (rule 229(3)). A claim for damages for negligence is a quintessential unliquidated claim because it involves the exercise of a discretion by the court and cannot be upset on appeal in the absence of error of the type articulated by the High Court in House v The King.
Since at least the Judiciary Act 1875, plaintiffs have been able to obtain default judgment for the amount claimed when the claim is for a liquidated sum but have been required to proceed to an assessment of damages when the claim is for unliquidated damages. This is the position that has always pertained and still pertains in the Supreme Court and the District Court.
As observed above, rules 61 and 62 preserve the traditional dichotomy between a claim for a liquidated sum and an unliquidated sum, with one qualification. If the claim is for property damage and the plaintiff serves with the Claim the requisite evidence of the quantum of damages, the plaintiff can obtain judgment for the amount claimed. In this respect the position is equated to the position in respect of a liquidated sum but ex hypothesis it is not for a liquidated sum. The construction of rule 61 advanced by the Attorney-General and Mr Germein would undermine and subvert the trichotomy created by rules 61 and 62.
[footnotes omitted] [emphasis in original]
[3] [2019] SASCFC 3 at [77]-[79].
One of the authorities relied upon by Blue J in articulating the nature of a liquidated claim in Marmanidis was that of Spain v Union Steamship Co of New Zealand Ltd.[4] In that case one of the questions for determination by the High Court was whether a claim based upon a clause in an award that entitled an employee to reasonable expenses incurred in the service or interests of the employer was a claim for a liquidated amount. Knox CJ and Starke J considered the argument that the claim was not one for a liquidated amount “untenable”.[5] Referring to Odgers Pleading and Practice,[6] Knox CJ and Starke J considered that a liquidated claim was one “whenever the amount to which the plaintiff is entitled … can be ascertained by calculation or fixed by any scale of charges, or other positive data, it is … liquidated”.[7] Isaacs and Rich JJ were of a like mind in that if the plaintiff succeeded he was entitled to an amount “in law ascertained”.[8] The fifth member of the Court was Higgins J. He agreed that the claim was for a debt or liquidated demand without further elaborating.[9]
[4] (1923) 32 CLR 138.
[5]    Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 at 142.
[6]    Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 at 142.
[7]    W Blake Odgers, The Princples of Procedure Pleading and Practice in Civil Actions in the High Court of Justice (1903, 5th ed, Stevens and Sons Limited: London) at 41.
[8]    Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 at 145.
[9]    Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 at 158.
In my view, having regard to the judgments in Spain v Union Steamship Co of New Zealand and to Blue J’s observations in Marmanidis, the amended claim in the present case is a claim for a liquidated sum. Both the amount due and payable under the invoices for services provided and the related discounts can be ascertained by calculation from the face of each invoice. In those circumstances:[10]
Rules 60 and 61 operating in conjunction provide that, if the claim is said to be for a liquidated sum, the Registrar is empowered to enter judgment for the amount claimed if and only if four conditions are satisfied, namely the claim is for a liquidated sum, the plaintiff proves service of the Claim on the defendant, 21 days have elapsed since service and the defendant has not filed a defence.
[10] Attorney General (SA) v Marmanidis [2019] SASCFC 3 at [100] (Blue J).
In my view each of the four criteria were satisfied. True it is that no separate invoice for the total amount subject of the discount offered in consideration for the consulting agreement continuing long term was issued, but, as I have said, the discount is expressly stated in each invoice and is readily ascertainable from both those invoices, and, alternately, from the amended claim.
I appreciate the fact that the respondent seeks damages in the amended claim in the alternative to the claim for the specified amount enumerated. That does not alter my opinion. The claim for damages is pleaded in the alternative and would only become an issue in the event of any trial. Accordingly, it does not prevent judgment being signed on the primary basis that the claim goes forward, namely, as a claim for a liquidated sum.
In the circumstances I reject the argument that the amended claim was not a claim for a liquidated sum in relation to which judgment could be signed under rr 60 and 61. Accordingly, I dismiss the fifth ground of appeal contained in the Amended Notice of Appeal.
I turn to the question of whether the Magistrate was right to grant the appellant leave to file the second application. Rule 63(4) MCCR provides:
(4)(a) Where a person seeks to file an interlocutory application in respect of a matter that has been determined on a previous interlocutory application, the Registrar must not receive it unless the person has leave of the Court to file it.
(b)Leave under paragraph (a) may only be granted if -
(i)the determination on the previous interlocutory application was made in the absence of the person and the person has a reasonable excuse for such absence;
(ii)in any other case, if the person establishes that there were material facts or circumstances not known to, or which could not reasonably be expected to be known by, that person at the time of making the original interlocutory application.
It is unnecessary to engage in an in-depth analysis of r 63(4) MCCR. It is enough to observe that the discretionary power vested in the court to grant permission to file an application to which the rule applies is an exception to the norm, conditioned on the court forming either of the opinions set out in rr 63(4)(b)(i) and (ii). Although the power vested in the court is discretionary, an appeal that challenges the formation of either of the opinions is not one challenging the exercise of a discretion. Rather, it is one that challenges a finding of fact or formation of an opinion. In those circumstances, one way in which error may be established is to satisfy this Court that the opinion or fact was not one open on the evidence.
Form 21, the requisite form for the making of an interlocutory application in the Magistrates Court Civil Division,[11] has six panels the fourth of which is devoted to prescribing the date, time and venue for the hearing of the application and the orders that will be sought. It opens with the question, “Have you made a previous interlocutory application for this order?” followed by yes and no tick boxes. Neither box was ticked by the appellant. However, in what follows in that same panel the appellant stated that the first of the orders it sought was “Leave to file this Application.” In any event, the appellant’s affidavit of 5 February 2019 would have served to put both the respondent and the Magistrate on notice that the second application concerned a matter previously determined and was thus one to which r 63(4) MCCR applied.
[11] Magistrates Court (Civil) Rules 2013 (SA), r 64(1).

Before the Magistrate no mention was made by either party of r 63(4). Counsel joined issue solely on the two limbs of r 87. Neither party was heard on r 63(4) and the question of whether the appellant had a reasonable excuse for being absent when the first application was dismissed.[12] No complaint is made on this appeal of any lack of procedural fairness being afforded to the parties or either of them. Rather the respondent now seeks to argue that the appellant’s explanation for his absence at the hearing of the first application as contained in Mr Cakar’s affidavit of 5 February 2019 did not amount to a reasonable excuse within the meaning of r 63(4)(b)(i) and the Magistrate was wrong to accept it as such.
[12] Clearly r 63(4)(b)(ii) of the Magistrates Court (Civil) Rules 2013 (SA) was not in play.
It is true that in the affidavit of 5 February 2019 Mr Cakar does not explain why he was late for court on 19 December 2018, nor how late he actually was. Plainly he was more than 15 minutes late. The tenor of his affidavit is to the effect that he arrived at Court not long after the 15-minute indulgence extended by r 101 MCCR had elapsed. That is to say, he was minutes not hours late. He then acted immediately to fix matters. Two observations should be made here; first, his actions are consistent with those of a litigant who is genuine in their pursuit of their application. Second, and perhaps an extension of the first, his actions are an example of the sort of immediate response courts rightfully expect of litigants who have failed to attend.
Armed with Mr Cakar’s affidavit of 5 February 2019 the respondent did not see fit to insist on any further explanation being provided. No affidavit has been provided to suggest that r 63(4) was overlooked by counsel. As I have said, before the Magistrate the parties immediately launched into submissions on the application of r 87. That may have been the product of a forensic decision. The Magistrate did not seek submissions from the parties on r 63(4). Bearing in mind the respondent’s attitude, had the Magistrate nonetheless been dissatisfied with Mr Cakar’s explanation, she would have been obliged to raise the issue and give him the opportunity, if sought, to enter the witness box to supplement his affidavit.
I consider that the Magistrate was right to conclude that she was bound to accept the explanation given, such as it was. Bearing in mind the respondent’s attitude, I think she was also right to accept the explanation given as satisfying r 63(4)(b)(i). That may be generous, but the point was not taken, and, implicitly, the parties, represented by counsel, had determined that the Court only need decide whether the default judgment should be set aside under r 87.
Whether an explanation for a party being late or absent is reasonable will turn on whether the ordinary person would consider the explanation one that warrants forgiveness for the shortcoming. In forming that opinion the ordinary person will be cognisant of the court’s need to dispose expeditiously of business, particularly in a high volume court such as the Magistrates Court, and the expectation that litigants, even unrepresented litigants, must familiarise themselves with the rules of court and make their best endeavours to be compliant. The ordinary person will also take into account the inconvenience and expense caused to the other party, the other party’s attitude and any prejudice they may suffer.
In the present case, in view of the respondent’s attitude the Magistrate could be forgiven for thinking that the appellant’s transgression was of an order that did not merit insistence on any greater explanation than that given. In those circumstances, I do not think it can be said that it was not open to the Magistrate to conclude as she did. I would dismiss the first ground of the Amended Notice of Cross-Contention.
There remains the appellant’s attack on the Magistrate’s conclusion that the appellant had failed to establish that it had an arguable case on the merits as required by r 87(2)(a) MCCR and the respondent’s contention that it was not open to the Magistrate to be satisfied under r 87(2)(b) that the appellant had a reasonable excuse for failing to file and serve a defence within the 21-day period required by the rules.
At the heart of the appellant’s submission on the application of r 87(2)(a) was the contention that it was not open to the Magistrate to conclude that the appellant’s defence (that the agreement was one of office space and facilities in return for consulting services) was a “recent invention designed to avoid an obligation to pay the plaintiff’s invoices for services”. Whilst the respondent objected to certain paragraphs in Mr Cakar’s second affidavit as hearsay and opinion, it did not seek to cross-examine Mr Cakar on his sworn evidence as to the agreement between the appellant and the respondent. Without more then, there was no basis upon which to conclude that Mr Cakar was any less credible than Mr Ransome.
Counsel for the respondent submitted that the Magistrate’s comment was not the basis upon which she rejected the appellant’s submission. Rather, the conclusion reflected the absence of any detail provided regarding the content of the agreement as asserted by Mr Cakar.
Paragraph 31 of the Magistrate’s reasons is set out above.[13] On one view it amounts to an observation that it is reasonable to consider that Mr Cakar has lied and that he constructed his lie at a time after he was obliged to pay the respondent’s invoices. That observation assumes that Mr Cakar was obliged to pay the invoices. On what basis was it open to reach that conclusion? Any finding or preliminary view that Mr Cakar was obliged to pay the invoices could only be made if Mr Ransome’s evidence was accepted as truthful and reliable and Mr Cakar’s evidence was not. Mr Ransome was not cross-examined on his assertions as to the content of the agreement between the appellant and the respondent. Normally, when a party declines to cross-examine the deponent of an affidavit read as part of the other party’s case, the trier of fact may act on the facts deposed to in the affidavit. The Magistrate appears, at least in relation to Mr Ransome, to have adopted such course. But, the respondent did not apply to cross-examine Mr Cakar. How then has the Magistrate purported to decide the credibility clash against Mr Cakar?
[13] At [42].
Before the Magistrate it was counsel for the respondent who suggested that the defence was recently invented, seemingly taking up Mr Ransome’s assertion. But as I have said, no application to cross-examine Mr Cakar was made. I readily accept that it is open to counsel to submit that unchallenged evidence should not be accepted, but if it is not challenged then such submission can only be made and entertained if the evidence is glaringly improbable or contrary to incontrovertible fact.[14] That is not this case. Mr Cakar’s evidence can only be rejected if Mr Ransome’s evidence is accepted. And then, Mr Cakar’s evidence can only be considered recent invention if there is evidence that allows one to conclude as much. Here I cannot discern a principled basis upon which Mr Ransome’s evidence could be preferred over Mr Cakar’s without the Magistrate having had the benefit of hearing the witnesses and the benefit of their evidence being tested in cross-examination.
[14] See generally, Gaunt v Hooft [2009] WASC 36.
Despite counsel for the respondent’s submission, the application was fought on the basis that the appellant’s case taken at its highest remained incapable of satisfying the criteria contained in r 87. In those circumstances I do not think it was open to counsel to make the submission he did (the recent invention submission) nor was it open to the Magistrate to find as she did. If Mr Cakar’s credit was to be challenged on the hearing of the application, and if it was to be asserted that the defence was recently invented, as much should have been made clear and counsel should have applied to cross-examine Mr Cakar on his affidavit. I accept that to so proceed would give rise to the question of how far a credibility clash that also goes to the heart of the substantive matter could or should be pursued on an application of the type before the court. However, as I have said, I cannot see how the Magistrate could arrive at a conclusion of recent invention without hearing the evidence of the protagonists.
There is an additional unfairness here. Where an assertion of recent invention is made it must be made specifically as it will enliven a right to call evidence of any prior out of court statement that tends to show that the evidence was not recent in origination. In this regard in Singh v Minister for Immigration and Multicultural Affairs Weinberg J observed:[15]
A finding of “recent invention” is one which is generally devastating to the credibility of the witness against whom it is made – so much so that the ordinary rules which preclude evidence of prior consistent statements from being led are subject to an exception in the case of an allegation of this nature – Nominal Defendant v Clements (1960) 104 CLR 476 at 477-80 per Dixon CJ, at 486-90 per Menzies J, and at 490-6 per Windeyer J. Although the term “recent” is frequently used in connection with this doctrine, “the adjective ‘recent’ is a misnomer and … the doctrine is concerned with any fabrication subsequent to the events in question but anterior to the trial”: Wentworth v Rogers (No 10) (1987) 8 NSWLR 398 at 401.
[15] [1998] FCA 1366.
I reject the suggested dilution of the significance of the Magistrate’s statement at paragraph 31. True on one reading it is no more than an observation, but the Magistrate returns to the issue of recent invention in the penultimate paragraph of her reasons[16] and refers to it in terms that, in my view, make plain that her view of the defence as being recently invented is one of the reasons why she has determined that the appellant did not have an arguable case on the merits. To so conclude provides reason to set aside the Magistrate’s order. It also renders it unnecessary to consider the second ground in the Amended Notice of Contention and the Magistrate’s application of r 87(2)(b).
[16] Paragraph 35 set out above at [45].
Should this Court exercise the power contained in r 87 MCCR afresh?
Section 40(1) of the Magistrates Court Act 1991 (SA) (MCA) provides that “[a] party to a civil action (except a minor civil action) may, in accordance with the rules of the Supreme Court, appeal against any judgment given in the action”. Judgment is defined in s 3 MCA as including an interlocutory judgment. Rule 286(1) of the Supreme Court Civil Rules 2006 (SA) (SCCR) provides that an appeal is by way of rehearing. Rule 286(3) SCCR relevantly provides:
(3) Subject to any limitation on its powers arising apart from these Rules, the Court may—
…
(b)amend or set aside the judgment subject to the appeal and give any judgment that the justice of the case requires;
…
Having regard to r 286(3) SCCR it seems plain that, error being established, this Court may exercise the power contained in r 87 MCCR afresh. Bearing in mind that the second application was fought “on the papers”, this Court is in as good a position as the Magistrate to determine the application. The combined effect of the appellant’s attack on the Magistrate’s decision regarding r 87(2)(a) and the respondent’s attack on the Magistrate’s decision regarding r 87(2)(b) has had the consequence that the parties have made full submissions in this Court on the application of r 87 to the material before the Magistrate and this Court. In the circumstances I proceed to determine the second application afresh.
Should the default judgment be set aside?
Rule 87 MCCR provides:
87.(1) The Court may set aside or vary a judgment (not being a final judgment).
(2)The Court must not set aside such a judgment unless the party seeking to set it aside establishes 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 or proceeding.
In Marmanidis v Germein I said:[17]
[17] [2017] SASC 103 at [78]-[85].
A default judgment within the meaning of rule 60 MCCR is not a final judgment within the meaning of rule 2(1) MCCR and is thus a judgment in relation to which the power contained in rule 87(1) MCCR may be exercised.
… the first observation to make, is that rule 87 MCCR operates in a context of a judgment having been regularly obtained. A judgment irregularly obtained may be set aside ex debito justitiae. A judgment irregularly obtained would also be liable to an order in the nature of certiorari made by this Court.
It is clear that the exercise of the discretionary power vested in the Magistrates Court by rule 87(1) MCCR is conditioned by rule 87(2) MCCR. That is, the discretion vested by rule 87(1) cannot be exercised unless and until the party seeking to have the non-final judgment set aside establishes that it has both an arguable case on the merits, and, a reasonable excuse for not having complied with the rules, or an order of the Court, or any time limit fixed by the rules or order of the Court, in respect of the action or proceeding. It may also be said that rule 87(2)(a) and (b) are in the nature of jurisdictional facts in that the discretion vested by rule 87(1) MCCR is not enlivened unless and until the Magistrate forms the opinion that the applicant has an arguable case and a reasonable excuse for non-compliance with the rules and orders of the Court and any time limits set by the Court. In this connection, in Plaintiff M70/2011 v Minister for Immigration and Citizenship French CJ said:
The term “jurisdictional fact” applied to the exercise of a statutory power is often used to designate a factual criterion, satisfaction of which is necessary to enliven the power of a decision-maker to exercise a discretion. The criterion may be “a complex of elements”. When a criterion conditioning the exercise of statutory power involves assessment and value judgments on the part of the decision-maker, it is difficult to characterise the criterion as a jurisdictional fact, the existence or non-existence of which may be reviewed by a court. The decision-maker’s assessment or evaluation may be an element of the criterion or it may be the criterion itself. Where a power is expressly conditioned upon the formation of a state of mind by the decision-maker, be it an opinion, belief, state of satisfaction or suspicion, the existence of the state of mind itself will constitute a jurisdictional fact. If by necessary implication the power is conditioned upon the formation of an opinion or belief on the part of the decision-maker then the existence of that opinion or belief can also be viewed as a jurisdictional fact. ...
(footnotes omitted).
That an evaluative judgment needs [to] be made with respect to the criteria contained in rule 87(2)(a) and (b) does not alter the nature of those criteria as being in the nature of jurisdictional facts.
As to rule 87(2)(a), in Saunders v Esanda Finance Corporation Ltd Lander J said:
It is not possible on an application of this kind, to resolve disputed questions of fact, primarily when those answers will depend upon the credibility of the parties (Watson v Anderson (1976) 13 SASR 329 at 334).
The appellant is not called upon to establish that his defence will be made out, but merely that he has an arguable case. To that end, the appellant must establish that upon the facts, as the appellant alleges them to be, the appellant has an arguable defence. The appellant must go further than assert that he has a defence, he must bring forward sufficient information and material to show that he is bona fide and intends to defend the action and that there “is some possibility of his doing so with success” (Grimshaw v Dunbar [1953] 1 QB 408 at 416).
As to rule 87(2)(b), a reasonable excuse is one which in all circumstances the ordinary person would consider warrants forgiveness for non-compliance. Here it is necessarily the case that the ordinary person will appreciate the high premium that the community places upon compliance with rules of courts and orders of courts in order that justice be administered effectively and efficiently. That appreciation reflects an understanding of the importance to the functioning of the community of the effective and efficient exercise of judicial power to quell controversies arising in the community. With this understanding, the community, no less than the courts, expects litigants to discharge the obligations placed upon them by the law and the courts.
If both of rule 87(2)(a) and (b) are satisfied the discretion vested by rule 87(1) is, as I have said, enlivened. As to the exercise of that discretion, in Saunders v Esanda Finance Corporation Ltd Lander J said:
In the circumstances where both of the matters referred to in the rule have been made out, and the delay in the application explained, and no real prejudice established, it would be appropriate to exercise the Court’s discretion in favour of the appellant.
“The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case of the party upon whom the limitation is sought to be imposed.” (Davies v Pagett (1987) 70 ALR 793)
The exercise of the power conferred by rule 87(1) MCCR, conditioned as it is by rule 87(2), is reviewable by this Court for legal unreasonableness in the sense explained below in relation to each of the jurisdictional facts and the exercise of the overall discretion exercised upon those facts being satisfied.
[footnotes omitted]
I do not understand the Full Court decision in Marmanidis to have held the above distillation of principle erroneous in any respect.[18] I proceed, then, in accordance with the principles as I set them out in Marmanidis v Germein. I add two additions. First, in Sandery v Kowalski[19] Doyle J referred to Duggan J’s treatment of the predecessor to r 87 in Cubelic v T & D Lock Pty Ltd[20] and said:[21]
Cubelic v T & D Lock Pty Ltd represents a relatively rigorous approach to the setting aside of judgments. However, that approach is required by r 87(2), particularly when interpreted in light of the overarching requirements of r 3(1)(a). In the case of commercial litigation, there is an imperative to ensure that the rules are interpreted and enforced in a manner conducive to the expeditious determination of proceedings. While this should not occur at the expense of doing justice to the parties and more generally, which remains the paramount concern of the courts, this does not mean that parties will be given unlimited opportunity to pursue or contest a claim. If they have not taken an earlier opportunity reasonably available to them to identify and pursue a proper basis for contesting a claim, then even achieving justice between the parties may not require that they be afforded a further opportunity. But certainly once regard is had to the interest in the just and expeditious administration of civil justice more generally, and in particular the need to ensure that the public’s confidence in the courts’ ability to efficiently determine matters is not undermined, it can readily be seen that there must be limits to the parties’ entitlement to contest claims where they have fallen into default in their conduct of the litigation.
Some rigor in the courts’ approach, as demonstrated by the reasons of Duggan J in Cubelic v T & D Lock Pty Ltd, is consonant with, if not required by, the approach of the High Court to applications to amend in Aon Risk Services Australia Ltd v Australian National University. As the reasons of the various members of the Court in that case make plain, commercial litigation has a particular claim to expedition. Delay and disruption in the ordinary course of litigation not only exacerbate the time, cost and inconvenience to the parties, and the uncertainty and strain of litigation to which they are subjected, they also have an undesirable impact on the availability of judicial and court resources to other parties, and upon the public’s confidence in the courts’ ability to administer justice in a commercial setting.
[footnotes omitted]
[18] [2019] SASCFC 3.
[19] [2016] SASC 175.
[20] [2009] SASC 397.
[21] [2016] SASC 175 at [29]-[30].

Second, in Marmanidis Nicholson J expressed the tentative view that r 87(2)(b) should be read “distributively so as to apply to the particular failure to comply that has resulted in the default judgment under challenge”.[22] Whilst it is unnecessary to decide in the present case, I am inclined to think Nicholson J’s tentative view is correct.
[22] [2019] SASCFC 3 at [160].
It is convenient to deal with r 87(2)(b) first.
I agree with the Magistrate’s conclusions and, generally, with her reasons on this issue. On the unchallenged evidence of Mr Cakar the appellant did not receive the claim. I accept that the appellant’s explanation relies in part on hearsay evidence, but as counsel for the respondent accepted in the court below, it is generally the case that hearsay evidence may be adduced on an interlocutory application. It remained open to the respondent to test the excuse proffered by questioning Mr Cakar about such matters as office processes and whether he had ever known mail to go missing in the past. In any event, the hearsay evidence aside, the appellant contends that, in effect, the controlling mind of the company did not receive the claim. If this is correct, and, as I have said, on the evidence there is no reason to doubt it, the appellant had no feasible opportunity to file a defence before judgment was entered. In my view, non-receipt of a claim is a reasonable excuse for not filing and serving a defence to such claim within the 21-day time limit prescribed by the rules. I consider the default one which in all the circumstances the ordinary person would consider warrants forgiveness.
Turning to r 87(2)(a), from the authorities referred to above, it is apparent that the Court is not confined in determining whether a party has an arguable defence to the consideration of a draft defence. It follows that imperfections or inadequacies in pleading will not necessarily carry the day. I do not understand either Doyle J or Duggan J in Sandery v Kowalski and Cubelic v T & D Lock Pty Ltd respectively to demand perfection in pleading on an application such as this or to exclude resort to materials extraneous to the draft defence. In Watson v Anderson, Walters J spoke of issues “raised in such form as to require serious consideration of the defence”.[23]
[23] (1976) 13 SASR 329 at 341.
Focusing on the draft defence exhibited to Mr Cakar’s affidavit of 5 February 2019, it strikes me as an adequately pleaded defence. That is not to say that further particulars may need to be provided, but the draft defence makes plain that the appellant does not dispute the existence of a contract in the period August to October 2017 where a fee was charged for services provided. The defence disputes the content of variations said to have taken effect from October 2017 pleaded in the amended claim. Both the amended claim and draft defence contend that a variation or variations were orally agreed. True the draft defence gives rise to questions about, for example, the basis upon which it is said the value of the rent approaches $1000 per week, but I do not think that the absence of such detail necessarily translates into the appellant not having an arguable case. Services provided up until October 2017 were paid for. Thereafter, the respondent occupied an office in the appellant’s building and, it seems, used office services available. The respondent provided services to the appellant until sometime in May 2018. At this stage it seems the case will be one of oath against oath as to the terms of the variation or variations. I cannot say the defence case as elaborated upon in Mr Cakar’s affidavit is fanciful. Until such time as Mr Cakar’s credibility and reliability is determined it cannot be said that the appellant’s case is not arguable.
I accept that the draft defence makes no mention of substandard services and that there is no detail as to why it is said the services provided were substandard. However, the short answer to this observation, it seems to me, is that substandard services do not form any part of the defence. Similarly, whilst Mr Cakar refers to the possibility of the appellant making a counterclaim, the fact is, there is none. That does not mean that the draft defence is not reasonably arguable.
There is then the invoices issued and their content. The draft defence denies both the issue of the invoices and the content. That demonstrates the nature of the credibility clash inherent in the action.
In all the circumstances, I consider the draft defence and Mr Cakar’s affidavit of 5 February 2019 establish that the appellant has an arguable defence.
Being satisfied of the two jurisdictional facts prescribed in rr 87(2)(a) and (b), the remaining question is whether in the exercise of the discretion enlivened the default judgment should be set aside.
In my view the DW Fox Tucker letter of 21 August 2018 demonstrates that the appellant is genuine in its desire to defend the amended claim. Mr Cakar’s actions in attempting to set aside the default judgment do so likewise. The period of time that lapsed between judgment being signed and the application to set aside was not by any means excessive. The respondent was put on notice that the appellant had expressed the intent to defend any action based on the Overdue Accounts Notice and had engaged solicitors. It would have been prudent to serve the amended claim on DW Fox Tucker in view of the content of the letter of 21 August 2018, but I do not go so far as to conclude that the respondent is at fault in any way for not doing so.
I am persuaded that the application to set aside the default judgment should be granted.
Orders
I order:
1. Appeal allowed.
2.The orders made by the Magistrates Court on 8 March 2019 are set aside.
3.The second application is allowed and the default judgment dated 27 November 2018 is set aside.
I will hear the parties further on the question of the costs of the second application and of the appeal.