Louis Langanis v Neville Roberts No. SCGRG 93/545 Judgment No. 4043 Number of Pages 4 Inferior Courts

[1993] SASC 4043

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA MULLIGHAN J

CWDS
Inferior courts - South Australia - local courts practice - Appeal against dismissal of application to set aside judgment in default of filing a defence - reasonable excuse for default despite omission of solicitor - usually party not have to bear the consequences of neglect of solicitor - arguable case on the merits - appeal allowed - judgment set aside.
Collins Book Depot Pty Ltd v Bretherton (1938) VLR 40 at 44, Gamble v Killingsworth and McLean Publishing Co Pty Ltd (1970) VR 161, Kostokranellis v Allen (1974) VR 597, Taylor v Taylor (1979) 53 ALJR 629, Hill v Parke Davis and Co Ltd (1986) 41 SASR 349 at 354, Davies v Pagett (1986) 70 ALR 793 and Watson v Anderson (1976) 13 SASR 329 referred to.

HRNG ADELAIDE, 9 July 1993 #DATE 15:7:1993
Counsel for appellant:     Mr R B Nunn
Solicitors for appellant:    Nyland Haines
Counsel for respondent:     Mr C J Townsend
Solicitors for respondent: Cowell Clarke

ORDER
Appeal allowed.

JUDGE1 MULLIGHAN J This is an appeal against the order made by a learned Special Magistrate sitting in the Civil Division of the Magistrates Court of South Australia on 19th March 1993 dismissing the application of the appellant to set aside the judgment entered in favour of the respondent in an action between the parties in default of filing a defence. 2. Eastboard Pty. Ltd. ("Eastboard"), at all material times, carried on the business of a dance club at Norwood and, by agreement with the respondent, employed him as a consultant to its business for a period of three months from 24th March 1992 at $750 per week. The respondent claims that he was not paid in accordance with this agreement, having received one payment of $200 and two payments of $450. The respondent alleges that Dimitrios Langanis and the appellant, on behalf of the respondent, entered into that agreement with him. On 9th December 1992 the respondent brought an action against Eastboard, Dimitrios Langanis and the appellant, in the Magistrates Court claiming $7,900, the amount said to be due under the contract, together with costs and interest. This claim is pleaded as against Eastboard or, in the alternative, against Dimitrios Langanis and the appellant. The claim was served on the appellant on 13th January 1993. He instructed his solicitor on a date which has not been specified but shortly before the time within which to file a defence expired on 2nd February 1993. On 3rd February 1993 the respondent's solicitor caused a praecipe for entry of judgment against the appellant to be filed and judgment was entered against him on 4th February 1993. On that day the appellant's solicitors, unaware that judgment had been entered against the appellant, sent a letter by facsimile to the respondent's solicitors advising that they were acting for him and that they would be filing a Defence. A Defence was prepared and filed at the Magistrates Court on 5th February 1993 but eventually was not accepted as judgment had been entered. A copy of the Defence was sent to the respondent's solicitors on 10th February 1993. By that time there had been discussions between the respective solicitors and it was made clear that the respondent would not consent to the judgment against the appellant being set aside. 3. It seems that the application to set aside the judgment was filed and served on 2nd March 1993. An affidavit in support of that affidavit sworn by the partner of the appellant's solicitors having the conduct of the matter was also filed and served. It is noteworthy by its brevity. It does not disclose when the instructions to prepare the Defence were given and contains very little as to the reason for not filing the Defence in time or as to the merits of the proposed Defence to the Claim. However, the nature of the defence can be ascertained from the Defence which was on the court file and, therefore, before the learned Special Magistrate. The application came on for hearing on 12th March 1993 and was adjourned to 19th March 1993. 4. The application was opposed. After hearing argument, the learned Special Magistrate dismissed the application and gave brief reasons which have been recorded as follows:-
    "First hurdle passed by defendant re not filing defence. As
    defendant's defence amounts to saying plaintiff did the work but
    not going to pay him for his work, and no good reason put forward,
    defendant fails second limb of test." 5. The application was brought on pursuant to R.87 of the Magistrates Court Rules 1992 which provides:-
    "(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.
    (3) When setting aside a judgment the Court may order -
    (a) payment to the other party of costs thrown away;
(b) payment or security under rule 81." 6. In referring to the "first hurdle" and the second "limb of test", the learned Special Magistrate was no doubt referring to the two matters set out in R.87(2). In the reasons for judgment given by me on this day in S.A. Repairs and Painting Pty. Ltd. v Trenka Pty. Ltd., I considered the true interpretation of R.87. I need not repeat what I said in that case. It is sufficient to say that, in my view, a judgment in default is not a final judgment and so R.87 applies to an application of this nature and before consideration may be given to exercising the discretion to set aside a judgment as provided in R.87(1), the applicant must pass the threshold tests set out in R.87(2). 7. The appellant complains that the learned Special Magistrate erred in concluding that the appellant had not established that he had an arguable case on the merits. The respondent contends that the learned Special Magistrate was correct in that conclusion but should also have decided thatthe appellant had not shown that he had a reasonable excuse for not having filed the Defence within time. 8. Despite the paucity of information in the affidavit of the appellant's solicitors in support of the assertion that the appellant has a reasonable excuse for not filing the Defence in time, it appears that he did instruct his solicitors, but they did not act, within time. Usually, in this context, a party will not have to bear the consequences of the neglect of his solicitor: Collins Book Depot Pty. Ltd. v Bretherton (1938) VLR 40 at p 44, Gamble v Killingsworth and McLean Publishing Co. Pty. Ltd. (1970) VR 161 and Kostokranellis v Allen (1974) VR 597, Taylor v Taylor (1979) 53 ALJR 629, Hill v Parke Davis and Co. Ltd. (1986) 41 SASR 349 at p 354 and Davies v Pagett
(1986) 70 ALR 793 are examples of neglect, and in some instances substantial neglect, on the part of legal practitioners and where the party in default has been permitted to prosecute or defend proceedings. Of course, these cases were not decided in the context of a threshold test before the exercise of a discretion is to be considered, but they do accept that the conduct to be excused is usually that of the litigant, not the solicitor. The delay of the solicitor, in the present case, although amounting to default, when measured in terms of time was only relatively slight and, in my view, the learned Special Magistrate was correct in her conclusion that the appellant had established a reasonable excuse for not filing the Defence within time. 9. The reasoning of the learned Special Magistrate as to whether the appellant had a arguable case on the merits appears to have been based upon a misunderstanding of the defence which he wished to advance. The appellant denies that he entered into any agreement with the respondent. He asserts that he was an employee of Eastboard and that he had no authority to employ anyone. It is unnecessary to set out the detail of his proposed Defence. It is sufficient to say that if the defence is accepted, the appellant would have a complete answer to the respondent's claim. 10. In my view, the appellant did establish that he had satisfied the requirements set out in R.87(2) and the discretion had to be exercised. There is no reason to exercise the discretion unfavourably to the appellant. There has not been undue delay in applying to set the judgment aside and there is no prejudice to the respondent in the relevant sense in doing so: Watson v Anderson (1976) 13 SASR 329. 11. In my view, the learned Special Magistrate erred in refusing the application. I allow the appeal and set aside the judgment. The appellant is to file the Defence within seven days from this day.