Michalakas v Gatt
[2009] SADC 129
•23 November 2009
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
MICHALAKAS & ORS v GATT & ORS
[2009] SADC 129
Judgment of Her Honour Judge McIntyre
23 November 2009
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS
Appeal against decision and orders of Master dismissing the defendants' application to strike out the proceedings and extending time for service of the originating process nunc pro tunc to 15 January 2009.
Held dismissing the appeal that:
1. The Master was correct to find that these proceedings were not dismissed under 6R-123.
2. Even if the proceedings were automatically dismissed are there special reasons to reinstate them
3. The plaintiffs did not comply with the requirements of 6R-39(1) but it is possible to extend the time for service under that rule on more than one occasion.
4. It was appropriate to extend time for service nunc pro tunc to 15 January 2009
District Court Rules 1987 R-38, R-39, R-117, R-123; Limitation of Actions Act 1936 , referred to.
Jurowski v Sallis (1984) 36 SASR 261; Acre Development Pty Ltd v National Companies & Securities Commission & Anor (1987) 46 SASR 238; Krawszyk v Graham (1966) SASR 73; Brealey v Board of Management Royal Perth Hospital (1999) 21 WAR 79, considered.
MICHALAKAS & ORS v GATT & ORS
[2009] SADC 129What is this matter about?
The plaintiffs claim that the defendants are jointly and severally liable to repay a loan. They say that the full principal and interest were due on 3 November 2006 but that the defendants have failed to pay. Proceedings were issued on 17 April 2007 seeking judgment for the principal together with continuing interest.
The plaintiffs experienced difficulties serving the proceedings. Various orders were obtained in relation to service of proceedings. Ultimately the defendants issued an interlocutory summons seeking that the originating process be struck out or dismissed on three grounds:
1. There was no endorsement relating to the extension of time for service as required by DCR-38(3)(b).
2.The action had been entered into the inactive list for more then 2 months and was therefore automatically dismissed for want of prosecution under DCR-123(4).
3. Service was defective.
The plaintiffs acknowledge the deficiencies in endorsement and service and issued interlocutory proceedings seeking to remedy these. The plaintiffs issued a further interlocutory summons seeking reinstatement of the action under 6R-123(6).
The learned Master ruled in favour of the plaintiffs. The defendants appealed.
Masters Orders
The orders that are the subject of this appeal are as follows:
1. I find that the proceedings have not been struck out or dismissed and that it is unnecessary for the plaintiffs to apply for the action to be reinstated pursuant to 6R-123(6).
2. If the action has been dismissed, I would, in any event, find that there are special reasons to reinstate the action and do so.
3. I find that this action should not have been entered into the list of inactive cases and order that insofar as it has been placed in that list it is now removed from it.
4. I find that when these proceedings were served by the plaintiffs on 15 January 2009 the time for service had expired pursuant to 6R-39(1) and that by operation of 6R-39(2) the court is precluded from extending the time for more than six months.
5. In those circumstances, pursuant to 6R-117(2)(a) and alternatively in the court’s inherent power, I dispense with the requirement of 6R- 39(1).
6. I extend the time for the plaintiffs to serve the proceedings on the defendants to 15 January 2009 Nunc pro tunc.
Issues
1. Whether the Master was correct to find that these proceedings were not dismissed under 6R-123.
2. If the proceedings were automatically dismissed are there special reasons to reinstate?
3. Was the Master correct to dispense with the requirements of 6R-39(1)?
4. Was it appropriate to extend time for service nunc pro tunc to 15 January 2009.
Background
The Master has set out a comprehensive summary of the history of this matter. I will adopt that summary for the purpose of these reasons. There are however a number of dates which I will highlight in the following chronology as they are particularly relevant to the matters I must decide.
Date Description 17/4/07 Summons Issued 17/10/07 Time for service expires – extended to 17/4/08 21/4/08 Orders for presumptive service 24/4/08 Registry issues Notice of Intention to place matter in list of inactive cases 2 & 5/5/08 (Ineffective) service on defendants 30/5/08 Notice of entry into inactive cases sent by Registry. 13/6/08 Application for default judgment by plaintiff 18/1/09 Master dismisses application for default judgment on the basis that orders for service were not complied with. 15/1/09 Plaintiff serves proceedings on defendants in line with orders made for presumptive service 19/1/09 Address for service filed by defendants Were these proceedings dismissed under 6R-123?
The defendants argue that this matter should have been dismissed automatically under 6R-123(4) within two months of its entry into the list of inactive cases. It is said that the matter was entered into that list on 30 May 2008. I note that there appears to be some confusion as to whether this matter was in fact placed into the inactive actions list by the registry on that date, or any other, given the endorsement on the court’s record of outcome on 18 September 2008 “prevent entry into inactive actions list”. For the reasons that follow I do not consider that it is critical to make a finding on that point.
The defendants say that, the matter having been entered into the inactive cases list on 30 May 2008, it should have been dismissed as at 30 July 2008 because none of the actions outlined in 6R-123(2) occurred. That is, no defence was filed, the plaintiff did not obtain a judgment in default of defence and the court did not make orders that the action is not to be entered or to remain on the list of inactive cases.
The difficulty with this proposition, as the learned Master determined, was that the case was not appropriately entered into the list of inactive cases. The learned Master, in my view, correctly pointed out that the only basis on which an action can be entered into the list is under 6R-123(1). A matter only becomes liable for entry on the list three months after the time for service has expired if one of the matters set out in 6R-123(1)(a)(b)(c) has occurred. In this case time for service did not expire until 17 April 2008. The three months contemplated by 6R-123(1) did not therefore expire until 17 July 2008. The plaintiffs issued an application for default judgment on 13 June 2008. The matter ceased to be liable to be placed in the list of inactive cases after the issue of that application.
The registry issued a notice of intention to place the matter in the list too early. The earliest that notice of intent should have been sent was 17 June 2008. It was in fact sent on 24 April 2008. The earliest the matter could have been entered into the list of inactive cases was 17 July 2008. Accordingly, if the matter was placed in the list on 30 May 2008, as the defendants contend, this was not in accordance with the relevant rule.
The argument of the defendants appears to rest on 6R-123(4) which provides that the action is automatically dismissed for want of prosecution if it remains on the list of inactive cases two months after being entered on the list. In my view however there must be a presumption that the matter was validly entered on the list for the automatic dismissal to take place.
In any event I consider that the learned Master was correct in his finding the action neither was, nor should it have been, dismissed at any time for want of prosecution.
If the matter was dismissed, are there special reasons to reinstate?
For the reasons outlined above it is not strictly necessary for me to consider this issue however if I am wrong about the issue of the automatic dismissal it is my view that the learned Master properly found that there were special reasons for the reinstatement of the action under 6R-123(6). The special reasons are outlined at paragraph 166 of the learned Master’s reasons.
In addition to those matters it is my view that the inappropriate entry of this matter onto the list of inactive cases represents a special reason as does the fact that notwithstanding the notice of 30 May 2008, the Registry continued to accept and list applications issued by the plaintiffs. This clearly would have led the plaintiffs to understand that the matter did not remain on the list of inactive cases. Finally there is the confusion, referred to above, about the endorsement on the court’s record of outcome on 18 September 2008.
The matter was far from inactive given that the plaintiffs were of the belief that they had complied with orders for service of the defendants and were in the process of obtaining default judgment. In my view these matters are sufficient to constitute special reasons within the meaning of the rule.[1] The facts and circumstances of this case justified the learned Master in treating this matter as one that falls out of the ordinary line of cases.
[1] Jurowski v Sallis (1984) 36 SASR 261 and Acre Development Pty Ltd v National Companies & Securities Commission & Anor (1987) 46 SASR 238
Was the Master correct to dispense with requirements of 6R-39(1)
The plaintiffs did not comply with the provisions of 6R-39(1). 6R-39(1) required the plaintiffs to serve the proceedings within six months of issue. This did not occur and the plaintiffs obtained an extension of time for a further six months until 17 April 2008 under 6R-39(2) which provides:
The Court may, from time to time, extend the period for serving originating process for a primary or third party action for a period of up to six months.
The plaintiffs did not serve the proceedings within that time.
The Master concluded that it is only possible to extend time for service for up to six months. In other words, although there may be an application on more than one occasion the total period of extension can only be up to six months. I do not consider this a correct reading of 6R-39(2). The inclusion of the words “from time to time” suggests that there can be an extension of time for up to six months on more than one occasion. This in my view is the plain reading of the section and is consistent with the philosophy of the rules as outlined by the Master in his reasons for decision. The court seeks to maintain control over proceedings and to ensure that appropriate case flow management processes are undertaken by parties. There is good reason not to extend the time for more than six months at a time given that the original time frame for serving originating proceedings is six months but I see no reason in principle why parties should not get more than one extension if there is good reason for such an extension.
In this case the Master indicates that there was good reason in his view owing to the difficulties of serving the defendants and in particular the suspicion that one of the defendants was actively attempting to evade service. I agree with his conclusion. That this must be the case is apparent from a reading of 6R-39(3) which enables the court to exercise its discretion to extend time even though time for service under the rule has expired and even though the time for commencing an action has expired. In this case the plaintiffs have six years within which to issue proceedings under the Limitation of Actions Act 1936. Even to date the plaintiffs are within time to issue proceedings. In those circumstances it is challenging to ascertain why it would be inappropriate for a plaintiff to obtain an extension of time within which to serve proceedings if it could simply discontinue those proceedings and reissue further proceedings. This is particularly the case in a situation where a defendant has been attempting to evade service. Defendants have a remedy following service of proceedings in that they can challenge the basis upon which a renewal was granted seeking to have that set aside. The further limit upon a plaintiffs ability to continually extend time for service is of course 6R-123 relating to entry into the inactive list.[2]
[2] See comments above
It is further noteworthy that the expired summons is invalid only for the purposes of service. Its expiration is an irregularity which may be waived.[3]
[3] Krawszyk v Graham (1966) SASR 73 and Brealey v Board of Management Royal Perth Hospital (1999) 21 WAR 79
Accordingly when Master Norman made the orders for presumptive service on 21 April 2008 it would, in my view, been possible for him to extend the time for service for a further six months under 6R-39(2). It is plain that the Master would have extended time if he had been made aware of the fact time had expired. Albeit he would have done it under a different rule. Proceedings were not served strictly in accordance with the granting of presumptive leave and accordingly when they were served on 7 August 2008 that service was ineffective. It appears that the plaintiffs’ solicitors did finally comply with the orders for presumptive service on 15 January 2009. Of course this was irregular service on the basis that time had not been extended to that date under 6R-39(2). It is however my view that the Master could have done this and could have done it as part of his orders on 8 January 2009 when he ruled that the service in August 2008 was not in accordance with the orders that he made. That he would have done so, had he thought it permissible, is apparent from his reasons.
Was it appropriate to extend time for service nunc pro tunc to 15/01/2009
The Master exercised a discretion to extend time for service nunc pro tunc to 15 January 2009. He did so under 6R-117. I do not consider that it was necessary to resort to 6R-117. I consider that the Master could have extended time under 6R-39(2) for the reasons set out above.
If I were wrong about 6R-39 however I agree with the Master that 6R-117 permits him to make the order that he made and to regularise service on the defendants. The Master has exercised his discretion under that rule. It has not been demonstrated that his discretion erred in any sense that would entitle the court to interfere with it. He did not apply the wrong test or take into account matters that he ought not. He identified all of the relevant criteria with respect to the exercise of his discretion.[4] For the reasons outlined above I agree with the Master.
[4] Paragraph 158
Conclusion
For the reasons above I dismiss the appeal and confirm the orders made by the Master albeit for slightly different reasons.
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