Rajesh Chadha v ACM Group Pty Ltd - [2018] SASC 171

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
RAJESH CHADHA v ACM GROUP PTY LTD
[2018] SASC 171
Judgment of The Honourable Justice Lovell
22 November 2018
PROCEDURE - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE - ACTIONS TO REVIEW OR SET ASIDE JUDGMENT
The appellant seeks an order setting aside the default judgment entered by a Magistrate. The Magistrate entered default judgment in favour of the respondent following the appellant’s non-attendance in court. The appellant applied unsuccessfully to set aside the default judgment.
Whether the Magistrate erred in refusing to set aside the default judgment – whether the appellant had a reasonable excuse for his failure to attend court – whether the appellant’s defence filed disclosed an arguable defence – whether the appellant’s defence complied with the rules
Held:
The Magistrate did not err in finding that the appellant did not have a reasonable excuse for:
a) his failure to attend court; and
b) his failure to file a defence that complied with the rules.
The Magistrate did not err in refusing to set aside the default judgment.
Appeal dismissed.
Supreme Court Civil Rules 2006 (SA) rules 98 and 99; Magistrates Court (Civil) Rules 2013 (SA) rule 87; Magistrates Court Act 1991 (SA) s 40, referred to.
Westpac Banking Corporation v Chadha [2012] SASC 223; House v The King (1936) 55 CLR 499; Marmandis v Germein & Anor [2017] SASR 103; Sandery v Kowalski & Anor [2016] SASC 175; Watson v Anderson (1976) 13 SASR 329; Cubelic v T & D Lock Pty Ltd [2009] SASC 397; Grimshaw v Dunbar [1953] 1 QB 408, considered.

RAJESH CHADHA v ACM GROUP PTY LTD
[2018] SASC 171
LOVELL J:
Introduction

Mr Chadha (the appellant) held a credit card with St George Bank. The appellant was unable to meet the necessary repayments. He eventually owed $19,528.59 to St George who assigned the debt to ACM Group (the respondent). After nearly five years, the respondent initiated proceedings in the Adelaide Magistrates Court against the appellant for recovery of the debt owing. Default judgment was entered against the appellant following his non-attendance in court. The appellant applied to set aside the default judgment; he was unsuccessful. The appellant seeks to appeal that decision. The appellant also seeks to quash the entirety of the legal proceedings.
Background
To finance his business the appellant and his wife had entered into a series of loans with Westpac in their personal capacity and as directors of a company. The appellant and his wife executed personal guarantees. Between August 2006 and August 2012, the appellant held a credit card with the St George Bank. St George Bank and Westpac Bank merged in 2008 (‘the Bank’).
The appellant’s business fell into financial trouble and the appellant was unable to repay the monies owed including the credit card debt. The appellant became involved in litigation with Westpac Bank in 2012 when Westpac instituted proceedings for the possession of two properties. The orders for possession were contested but the appellant was eventually unsuccessful.
In September 2012, by way of an Assignment of Debt, the respondent purchased the appellant’s liability from the Bank. The appellant was notified in writing of this assignment and informed that the debt was due and payable to the respondent. On August 28 2017, the respondent initiated proceedings for recovery of the debt in the sum of $19,528.59.
The appellant attempted to defend the claim.
First defence
The appellant filed his defence on 18 September 2017. He pleaded that:
·the bank had lent him money when he had no capacity to repay
·the actions of the Bank amounted to unconscionable conduct
·the late action by the Bank after a period of 5 years was vindictive and wrong.
I note that the issues of capacity to pay and unconscionable conduct were issues in the earlier litigation. The defence made no reference to the assignment of the debt to the respondent. The Bank was not a party to the proceedings.
The rules governing pleadings were the Supreme Court Civil Rules 2006 (‘SCCR’). The defence did not comply with the SCCR as to pleadings.
At the initial directions hearing on 30 October 2017, the appellant sought leave to amend his defence. The Magistrate granted the appellant 14 days to file an amended defence which complied with the requirements for pleadings under the SCCR. At the appellant’s request, the proceedings were adjourned until 5 February 2018 to enable the appellant to travel to India to attend his daughter’s wedding. The specific date was fixed to suit the appellant.
Second defence
On 7 November 2017, the appellant filed a second amended defence (‘second defence’). This document added some further details about the home loans which were the subject of the earlier litigation. This amended defence still did not comply with the SCCR as to pleadings.
Default judgment
On 5 February 2018, the appellant failed to attend court despite agreeing to the adjourned date at the initial directions hearing in October. The Magistrate entered a default judgment against the appellant in the sum of $20,744.59.
Application to set aside default judgment
On 1 March 2018, the appellant filed an application to have the default judgment set aside. In his accompanying affidavit, the appellant stated that he had a reasonable excuse to explain his absence as on 5 February he was still overseas taking care of his daughter.
Rule 87 of the Magistrates Court (Civil) Rules 2013 (‘MCCR’) provides a Magistrate with the discretion to set aside or vary a default judgment in certain circumstances. Rule 87 provides as follows:
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.
The Magistrate heard the application on 13 April 2018 and informed the appellant that his second defence did not comply with the SCCR as to pleadings. The Magistrate granted the appellant a further 21 days to file a third amended defence and supporting affidavit.
Third defence
On 1 May 2018, the appellant filed a further amended defence (third defence). This was supported by an affidavit and medical report which provided that the appellant had been overseas during what was a very stressful and busy time for him. Unfortunately for the appellant, his third defence failed to comply with the SCCR as to pleadings.
The third defence filed:
·removed the allegation that the Bank lent money without the appellant having a capacity to pay
·removed the allegation of “unconscionable conduct” although the allegation of ill health resulting from the repossession of the appellant’s properties remained
·maintained that commencing proceedings after 5 years and 5 months was “oppressive and unjustified”
·added the allegation that the appellant did not hold any assets and was on “social welfare benefits”
·added the paragraph:
“It has been well said “declared Lord Coke”, “intrest reipublicae ut sit finis litium” otherwise great oppression might be done under the colour and pretense of law. I humbly request to the honorable court to invoke the equitable principles of common law in the interest of justice. In the above circumstances, I humbly request the honorable court to consider the defendant’s plea in a holistic view and dismiss the plaintiff’s action in the interest of justice.”
Decision of the Magistrate
On 16 May 2018, the Magistrate ruled against the application to set aside the default judgment. The Magistrate delivered ex tempore reasons for her decision.
The Magistrate stated:
Reasonable Excuse
The defendant explained that he did not attend court because he was in India for his daughter’s wedding until 24 February 2018. The defendant stated that he was occupied with the wedding and preparing a visa for his son-in-law. He was too busy and too involved with the wedding preparations and preparing the visa to advise the court that he would not be able to attend. The defendant attached a medical report from his General Practitioner confirming that the defendant was in India and that this was a busy and stressful time for him.
The defendant has been given a number of opportunities to file a defence that complies with the Supreme Court Civil Rules and he has not done so. The court urged the defendant to get legal advice and explained that because the claim is in the general jurisdiction, the pleadings must comply with the Supreme Court Civil Rules.
I am not satisfied that the defendant has a reasonable excuse for not having attended court. He was given a significant indulgence in the length of time for the adjournment, much longer than is usually allowed in this court. If the defendant’s plans changed and he was required to stay in India longer than initially expected he should have at least contacted the court to advise of his circumstances. He did not do so. The defendant has not proffered any excuse for failing to comply with the rules in relation to pleadings.
Parties are not given unlimited opportunities to contest the claim. Commercial litigation has a particular claim to expedition. The defendant has not established the 2^nd limb of r 87(2) that he has a reasonable excuse for his failure to comply with the rules of court and orders of the court.
Arguable defence
The proposed further amended defence does not disclose any arguable defence. The defendant admitted he had a credit card and has not made payments as required. In essence, the defence says that the defendant is not in a position to repay the debt. This is not a defence to the claim.
The defendant has also argued that it was oppressive that the plaintiff delayed for 5 years and 5 months before instituting proceedings. The plaintiff had six years within which to bring this claim. The claim is not statute barred.
As I am not satisfied that the two limbs of r 87 have been made out, I am not able to set aside the default judgment.
The defendant’s application is dismissed.
The Magistrate found that the appellant had not established either of the limbs of r 87 (2) and dismissed the application.
Appeal
The appellant’s grounds of appeal were lengthy and are largely in the nature of arguments. My summary is as follows:
·The Magistrate erred in both fact and law.
·The Magistrate’s finding that the appellant wanted to delay the proceedings of the court action is erroneous and unreasonable, as the appellant had cogent reasons for non-attendance, namely that he was in India for his disabled daughter’s wedding which was a particularly busy and stressful time.
·The Magistrate erred in denying the appellant a trial
·The Magistrate erred in failing to consider the actions of the respondent were oppressive, given that Westpac Banking corporation (of which St Georges is a division of) had already issued proceedings against the appellant with respect to the repossession of three of his properties.
·The Magistrate erred in failing to consider the principles of law as stated by Lord Coke.
·The Magistrate failed to consider that to allow the respondent to recover the debt after 5 years and 5 months was inequitable in the circumstances.
·The Magistrate erred in failing to consider the equitable principles of common law and holistic view in the interests of justice.
The appellant relied upon the same material he put before the Magistrate including his supporting affidavit and medical certificate. The appellant sought an order setting aside the decision of the Magistrate and the default judgment. He also sought an order that I quash the proceedings in their entirety.
Legal principles
This is an appeal pursuant to s 40 of the Magistrates Court Act 1991 (SA) and is by way of rehearing. As it is an appeal against a discretionary order, error must be identified in one of the circumstances identified by House v The King:[1]
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.[2]
(Citations omitted)
[1] (1936) 55 CLR 499.
[2] House v The King (1936) 55 CLR 499, 504-5.
An order made by a Magistrate will not be disturbed on appeal merely because the appellate court would itself have reached a different result.
Reasonable excuse
The requirement of a “reasonable excuse” was carefully considered by Hinton J in Marmandis v Germein & Anor where he observed: [3]
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.[4]
[3] [2017] SASC 103.
[4] [2017] SASC 103 [83].
In this case the appellant was required to establish, pursuant to r 87(2)(b), that he had reasonable excuse with respect to two separate issues. First that he had a reasonable excuse for failing to attend court on the 5 February 2018, and secondly that he had a reasonable excuse for failing to comply with the rules of pleadings.
Failure to attend court
The Magistrate, in her reasons, made reference to arguments of the appellant namely that he was “too busy and too involved with the wedding preparations to advise the court he would be unable to attend”. The Magistrate emphasized that the appellant had already been granted a “significant indulgence” with respect to adjourning the proceedings “much longer than usually allowed”.
The Magistrate considered the evidence produced by the appellant and his submissions. The appellant was unable to point to any factual error or any misapplication of legal principle by the Magistrate. The Magistrate found that the appellant did not have a “reasonable excuse”. That finding was open on the evidence. No error has been demonstrated. I would not interfere with the exercise of the discretion of the Magistrate.
That is sufficient to dispose of the appeal. However, I will consider the other aspects of the appeal.
Failure to file a defence that complied with the Rules
The appellant has filed a defence and sought to amend it twice. None comply with the SCCR. At the first directions hearing, the Magistrate informed the appellant that his defence did not comply with SCCR and suggested that the appellant obtain legal advice. It appears that the appellant did not obtain such advice as neither of the following amended defences complied with the SCCR.
Recently, Doyle J in Sandery v Kowalski & Anor,[5] outlined the rationale behind the interpretation and enforcement of court rules in commercial proceedings:
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 the 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 parites may not require that they be afforded a further opportunity. But certainly once regard is had to the interests of 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. [6]
[5] [2016] SASC 175.
[6] Sandery v Kowalski & Anor [2016] SASC 175 at [29].
The Magistrate clearly provided the appellant with significant opportunities to comply with the rules. He has consistently failed to do so; he is still in breach. He did not provide any reason to the Magistrate for his failure to comply nor could he do so on appeal.
No error has been identified in the approach of the Magistrate. I would not interfere with the exercise of her discretion.
Arguable defence
Under the first limb of r 87(2)(a), the appellant was required to establish that he had an arguable defence to the claim made by the respondent. To do so, it was necessary for the appellant to adduce sufficient evidence to support a contention that he had a possibility of success.[7] As Walters J determined in Watson v Anderson: [8]
… a mere statement by a defendant that he has a good defence is not sufficient to justify a review of the exercise of a judicial discretion. He must go further and demonstrate “a very compelling reason” for his failure to appear in the action, and, further, that he has a plausible defence either in law or in fact. True it is that on an application to set aside a judgment by default, the court does not pronounce on the law or the facts, but it seems to me that before allowing a defendant to come in and defend, the court should have before it materials which enable it to say how it came about that the defendant found himself bound by a judgment regularly obtained; that the defendant genuinely desires to be allowed to come in and present his case; and that issues are raised in such form as to require serious consideration of the defence which he would put forward. In the words of Jenkins L.J. in Grimshaw v Dunbar “the judge is entitled to satisfy himself that the party applying has a bona fide intention of defending the action, and that there is some possibility of his doing so with success.[9]
(Citations omitted)
[7] Grimshaw v Dunbar [1953] 1 QB 408, 416.
[8] (1976) 13 SASR 329.
[9] Watson v Anderson (1976) 13 SASR 329 at 341.

This principle was applied by Duggan J in Cubelic v T & D Lock Pty Ltd.[10]
[10] [2009] SASC 397.
The appellant was given two chances to amend the original defence. None of the defences establish that he has a good defence to the proceedings. Indeed as the Magistrate noted the final defence asserts that he can’t pay the amount. That is not a defence to the action.
The action is not statute barred and there is nothing oppressive about the respondent bringing the action within time.
No error has been established. The Magistrate was clearly correct in finding that there was no arguable defence pleaded.
Finally I mention the remaining grounds of appeal namely the “principles of law as stated by Lord Coke” and the fact that the Magistrate failed to consider “the equitable principles of common law and holistic view in the interests of justice”.
The Magistrate had before her application to set aside a default judgment. She considered the facts and applied the correct principles of law. The appellant has not been able to establish that the Magistrate erred in her approach.
The appellant was urged, at the hearing of the appeal, to concentrate on the issues relating to the order made by the Magistrate dismissing his application. I mean no disrespect to the appellant but he simply would not do so. The appellant earnestly referred me to a decision of the Indian Supreme Court as well as some well-known High Court authorities. I have no doubt they were correctly decided. However, they are simply not relevant to the issues before me. The authorities cited do not support the existence of “the equitable principles of common law and a holistic view in the interests of justice” enticing though that proposition may be to the appellant.
The appellant has not made out his grounds of appeal.
Order
The appeal is dismissed.