| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : PYRCHALLA -v- HOLMAN [2013] WADC 141 CORAM : BIRMINGHAM QC DCJ HEARD : 13 AUGUST 2013 DELIVERED : 13 AUGUST 2013 PUBLISHED : 3 SEPTEMBER 2013 FILE NO/S : APP 97 of 2012 BETWEEN : HELMUT PYRCHALLA Appellant
AND
TREVOR HOLMAN
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA Coram : MAGISTRATE BOON File No : PER GCLM 8404 of 2009 Catchwords: Appeal - Default judgment - Lengthy delay - Prejudice
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Legislation:
Magistrates Court (Civil Proceedings) Act 2004 Result: Appeal dismissed
Representation: Counsel:
Appellant : In person
Respondent : In person
Solicitors:
Appellant : Not applicable
Respondent : Not applicable
Case(s) referred to in judgment(s):
Nil
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1 BIRMINGHAM QC DCJ: (This judgment has been delivered extemporaneously on 13 August 2013 and has been edited from the transcript.)
Background 2 In December 2008, the respondent spoke to his near neighbour, the appellant, and asked him to look after various items of household furniture and other goods until he returned from England or made other arrangements. 3 The appellant gathered the items and stored them at his house. They remained there until February 2009, when the appellant placed them into storage with Storage King in Midland. Thereafter, he expended money to maintain the storage whilst he awaited instructions from the respondent. 4 In early 2009, the respondent attempted to recover the goods. He instructed agents to go to the appellant's house and to collect the goods. They also sought to photograph some of the furniture that was seemingly being used by the appellant. The appellant claimed that the goods in the house were his property. Attempts to obtain possession of the goods in storage was unsuccessful insofar the appellants consent to the release of the goods was not then forthcoming. 5 On 20 April 2009, solicitors instructed by the respondent, wrote to the appellant demanding that the goods be delivered up. They foreshadowed that legal proceedings would be commenced if the goods were not re-delivered. 6 On 20 May 2009 a general summons seeking the return of the goods or their money's worth was issued by the respondent's solicitors. 7 On 14 July 2009 default judgment was entered against the appellant in relation to such claim. 8 The appellant now seeks to appeal the decision of her Honour, Magistrate Boon, delivered 12 November 2012, refusing the appellant's application to set aside the default judgment that had been entered three and a half years earlier. 9 The application requires leave to appeal insofar as it is not commenced within 21 days of judgment. The appellant was out of time by three days. I am prepared to extend the time to enable him to appeal.
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10 It is the appellant's case that the learned magistrate erred in both fact and law, when refusing to set aside the default judgment entered in July 2009 on the basis of the appellant's delay in the bringing his application.
11 Where a judgment in default has been regularly entered it is not to be set aside unless the court is satisfied that there is a defence on the merits. The appellant must put before the court sufficient material that discloses a defence on the merits, and furthermore, explain his or her failure to comply with the rules and any delay in bringing the application. 12 The matter comes before me on appeal pursuant to s 40 of the Magistrates Court (Civil Proceedings) Act 2004 (the Act) by way of a rehearing. 13 A critical issue for consideration is the appellant's delay in the bringing of his application for the period from 14 July 2009 to October 2011 - a period of delay in the order of two and a half years. Accordingly, it is appropriate to recount the history of the matter subsequent to the default judgment being entered on 14 July 2009. 14 On 16 July 2009 the appellant was given notice of an application to assess the respondent's claim for damages. 15 On 14 August 2009 the application for the assessment of the respondent's claim was heard by Magistrate Boon. Her Honour then urged the parties to resolve the matter by the appellant arranging for the goods to be returned to the respondent. The appellant did not attend the hearing however was represented by his solicitor Mr Carlose. 16 I pause to note that Mr Carlose has continued to provide legal assistance to the appellant throughout the proceedings - notwithstanding that he is not entitled to practice - his practice certificate being suspended by the Legal Practice Board and his application for leave to appear on the hearing of the appeal on a pro bono basis being refused by Registrar Hewitt in June 2013. 17 On 29 September 2009, the appellant's solicitor wrote to the respondent's solicitors, MGB Legal, proposing resolution of the matter with the return of the goods, the payment of certain storage costs and mutual releases. The respondent's solicitors submitted a counter proposal by letter dated 6 October 2009. Unfortunately, the matter was not resolved.
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18 On 7 October 2009 upon the hearing of the respondent's assessment of damages the learned Magistrate adjourned forhearing to 4 November 2009. The learned Magistrate further ordered that: first, the appellant return the goods that were then claimed by the respondent (as listed in the respondents affidavit dated 4 August 2009) on or before 21 October 2009; secondly, if the appellant complied with the order, the respondent was to lodge and serve a further affidavit in support of his application; thirdly, should the appellant fail to return the goods as directed, then the respondent was to lodge an affidavit testifying to such fact and the respondent's damages would be assessed in the sum of $30,000 together with interest from 25 May 2009. Mr Carlose appeared for the appellant on the hearing of that application.
19 On 4 November 2009 the respondent's damages were assessed in the sum of $30,000 with an order that the appellant then pay interest on the sum calculated from 29 May 2009. The court record of appearance indicates that the appellant was in attendance for the hearing of the assessment. 20 On 6 April 2010, the appellant having failed to pay the judgment sum, the respondent caused a means inquiry summons to be issued. That application was heard on 20 April 2010. The appellant was ordered to pay $31,892.79 inclusive of costs and interest to 20 April 2010 by instalments of $50 per week, commencing on 30 April 2010. 21 On 3 March 2011, the appellant have failed to pay the instalments as ordered, a default inquiry summons was issued. Upon the return of the summons the appellant acknowledged the order and the judgment. The learned magistrate then found that the appellant was in contempt in failing to pay the money in accordance with the order. The appellant was fined $200 with costs of $57.20 and directed to pay the instalments as ordered. 22 On 29 April 2011 a further application for default inquiry was issued returnable on 22 June 2011. The inquiry was adjourned to 8 July 2011 upon the application by the appellant solicitor Mr Carlos who then foreshadowed that an application to set aside the default judgment would be made. On 19 July 2011 material in support of the application was filed.
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23 On 7 October 2011, without hearing from the respondent, her Honour, Magistrate Musk set aside the judgment entered in default of appearance in July 2009 and gave the appellant leave to defend the respondent's action.
24 The respondent's appealed Magistrate Musk's decision to allow the appellants application to this court. 25 On 4 April 2012 his Honour Judge Keen set aside the decision and remitted the appellant's application to set aside the default judgment to the court below to be reheard. 26 On 12 November 2012 the appellant's application to set aside the judgment was dismissed by her Honour, Magistrate Boon. In her opinion, there was doubt as to the merit of the appellant's defence and further, the appellant had failed to adequately explain the lengthy delay in seeking to set the judgment aside. 27 In the course of this appeal, I have been referred to the very substantial affidavits that have been filed by both parties over time in relation to this matter. Allegations and counter allegations are made, many of which are not relevant to any of the proceedings and the true issues involved. 28 The starting point in considering this appeal is the issue of the merit of the appellant's defence to the respondents claim. I will return to the issue of delay in due course. 29 The respondent's claim against the appellant was for the return of goods that were in the appellant's possession. In essence, through whatever circumstance, be it as a good-natured neighbour, through friendship or otherwise, the goods were bailed by the respondent to the appellant to be held by him in safe custody until he was called upon to deliver them up to the rightful owner. 30 As a matter of general principle, the owner of goods has a right to immediately possess the same against his bailee. In this instance it is the appellant as bailee with possession of the goods who was obliged to re-deliver them when called upon to do so. The terms of the bailment agreed between the appellant and the respondent are not clear. What is clear, however, is that the terms agreed at the beginning were that the goods would be placed in the appellant's custody and that he was to retain them and thereafter re-deliver the same to the respondent when requested to do so.
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31 Each entered into the agreement on the hopeful expectation that the matter might be resolved in a short period of time and not over an extended period. As it happened however, the matter dragged on. What is further apparent is that the respondent attempted to recover the goods from the appellant from in or about February 2009 through to March/April 2009. In the interim, the appellant had placed the goods into storage under his own name.
32 Attempts by the respondent through the use of agents to obtain possession of the goods were unsuccessful. It was then that lawyers were instructed and litigation commenced. 33 What is further apparent is that the goods then being claimed by the respondent were held by the appellant. The goods were the property of the respondent and it was the duty of the appellant to deliver such goods up when called upon to do so. 34 A bailee of goods placed in his possession with an express promise to deliver them up impliedly represents that he would retain them in his possession. If he surrenders possession of those goods to some other person, he commits a breach of his obligation as a bailee. A bailee who does not deliver up goods may be said to convert the goods to his own use. If the goods are not delivered up and are abandoned or dealt with in a manner inconsistent with the bailment, the bailee might be said to have converted them to his own use. 35 The appellant acknowledged during the hearing of the appeal that he had possession of the respondent's goods, however maintained that the goods claimed by the respondent were either not amongst those goods that he had received, and furthermore that if they were, they were not the worth the amount claimed by the respondent. 36 The position adopted by the appellant in acknowledging the goods albeit with some dispute as to the quantum, quality and value of the goods is an issue that is seemingly live on the papers. 37 It was acknowledged by the appellant during the hearing that the goods were maintained by him in a storage facility at Midland until in or about December 2009. At that time, the appellant took the locks off the containers (in which the goods were stored) and abandoned the goods.
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38 The conduct of the appellant in taking possession of the goods and thereafter refusing to re-delivering them to the respondent and abandoning them would constitute a breach of the bailment. It would entitle the respondent to damages.
39 The damages claimed by the respondent in the action were assessed prior to the goods being abandoned. The goods could have been delivered up to the respondent when the appellant was directed to do so in October 2009. 40 In the circumstances, the extent to which the appellant would appear to have a defence to the respondent's claim, is seemingly limited to challenging the amount of damages that might have been assessed in respect of the value of the goods converted when the appellant dealt with them in a manner inconsistent with the terms of the bailment. 41 Additionally, there is a question as to whether the appellant might be entitled to set off against the amount claimed by the respondent, those costs that he lawfully incurred in dealing with the goods and maintaining their storage. It is important to bear in mind, however, that generally a person has accepted goods to be held in his custody at one place, in the absence of some agreement to the contrary, is under an implied duty to keep the goods in his possession and not subcontract their custody to a third party. To do so constitutes a breach of bailment: Palmer, Norman E, Bailment (2nd ed, 1991) 836. 42 Whilst one can readily sympathise with the appellant in placing the goods in storage when he was perhaps left without instructions and unsure as to what to do, however, having dealt with the goods as he did, it fell to him to ensure that the goods were safely secured. 43 I turn to the question of the default judgment and whether it ought to be set aside. 44 Whilst there is some merit in the appellant's defence to the respondents claim, it goes no further than challenge the amount of the judgment for which the goods were assessed in August 2009 by her Honour, Magistrate Boon. 45 Furthermore, the appellant was then given the opportunity to return the goods - as is apparent from the correspondence between the parties' solicitors – however the appellant failed to avail himself of that opportunity.
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46 The appellant says that he is an unsophisticated man, did not have the benefit of legal advice or assistance and was acting as he thought in the best way possible. The appellant is bound by the acts of his solicitor Mr Carlose in relation to these matters. It is open to find during the negotiations between the parties relating to the re-delivery of the goods, the appellant was fully aware of his rights and fully aware of his obligation to deliver-up the goods. That the appellant chose to abandon the goods to the world at large in December 2009 is not to his credit and furthermore provides strong support for the view that the respondents claim for damages ought to be maintained.
47 Whilst there is some force in the appellant submission as to the value of the goods claimed by the respondent, that is an argument that has since been debated and the damages assessed in court when there was an opportunity to do so. The appellant thereafter allowed the judgment to stand and the matter to proceed to a means enquiry. The appellant did not seek to set the default judgment aside at that time. 48 The appellant advised the court that in November/December 2010 he was involved in a substantial motor vehicle accident. He said that his injuries prevented him addressing this matter promptly. It is to be noted however that the application to set aside judgment was not made until July 2011. The motor vehicle accident in November 2010 provides no explanation for the delay that occurred between July 2009 and at least November 2010 during which period the appellant was seemingly represented by Mr Carlose in relation to the matter. 49 In my view the learned magistrate was correct in finding that there was no satisfactory explanation for the delay that occurred in the bringing of the application to set aside the default judgment. 50 There has been further delay subsequent to the making of the application, however such period has not been considered in this assessment. 51 The appellant's delay in this case is important. Had the application been made promptly, or at least within the period from when the judgment was being entered and the damages assessed - at a time when the appellant was represented by his solicitor, it would then have been possible to deal with all of the issues that he now seeks to argue at trial. The goods were then in existence. Further, the witnesses who might be called and able to testify in relation to the matter are likely to have had fresh and clear recollection of the events that occurred.
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52 In this case, I am satisfied that the delay in bringing the application has occasioned prejudice to the respondent that cannot be overcome by the payment of costs or otherwise. There is now no opportunity to recover the goods or property bailed. The respondent's remedy is limited to damages. The assessment of the damages, as occurred in 2009, cannot be redone now, insofar as the goods are no longer available for inspection and valuation. The respondent's ability to prosecute his claim has been lost - the subject matter of the claim has been lost.
53 In the circumstances, I consider that the delay is so significant and the prejudice so great that to set aside the default judgment, now three and a half years after the entry of such judgment would be wrong. 54 Accordingly, I dismiss the appeal.
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