Sazzi v Chang (No 2)
[2014] SADC 47
•21 March 2014
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
SAZZI v CHANG AND ORS (No 2)
[2014] SADC 47
Judgment of His Honour Judge Slattery
21 March 2014
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM
Schedule (forming part of a cross claim/counterclaim) referred to in pleadings of the defendants but omitted from the pleadings – whether the cause of action upon which the defendants relied was part of the material facts proved during trial and upon which orders could be made absent the Schedule.
Held: Although the schedule was not attached, all of the material facts that were ultimately reflected in the Schedule were the subject of evidence during the trial – no prejudice to plaintiff arising from defendants’ failure to include the schedule in the pleading – defendants entitled to maintain claim based on Schedule.
District Court of South Australia Practice Direction 13.3.1, 13.3.1.1, 13.3.1.2, 13.3, referred to.
Sazzi (SA) Pty Ltd v Chang & Ors [2013] SADC 178; Battye & Anor v Shammall [2005] SASC 138; SP Hywood v Standard Chartered Bank Unreported Supreme Court SA Perry J No. SCGRG 92/678 22 December 1992, discussed.
SAZZI v CHANG AND ORS (No 2)
[2014] SADC 47JUDGE SLATTERY
In my judgment in this matter[1] I said that I was not then prepared[2] to make any final orders in relation to the third cross action (counterclaim) of the defendants in light of the state of the evidence and the pleadings as they stood at the time of that judgment.
[1] Sazzi (SA) Pty Ltd v Chang & Ors [2013] SADC 178.
[2] Ibid at [241] et seq.
The difficulty that I faced was that the pleading of the defendants in its third cross action (counterclaim) filed 6 June 2013 (FDN 148) made reference to a Schedule A, but no such document existed within the filed pleadings or within the trial book. At the time of trial, the Court and the parties did not identify this omission, which had been extant for a very long time since the amended pleading was brought to into this Court in accordance with its leave given to the defendants on 30 April 2013.
Although I was satisfied that the parties had addressed the claims that may otherwise have informed the calculation of the defendants’ cross action (counterclaim), I was not prepared to conjecture that the amount of that counterclaim had been proved. The pleadings sought a payment of $10,232.82 made up of a claim for $2,140.00 for council rates and the sum of $8,188.52 for rent and outgoings. The defendants had, in their defence at paragraphs 14, 15 and 16, sought a credit for the costs in the Magistrates Court awarded in their favour in an amount of $1,700.00. The defendants sought a set off of this sum against any claim of the plaintiff. There is also a further complication in that I did not allow some of the claims of the defendants (on its counterclaim) that were the subject of evidence in the trial: an example in any distraint costs and expenses. Absent some form of Schedule A there was likely to be confusion and this confusion would require resolution by me.
The history of the relevant pleadings was as follows. In the third defence and counterclaim (FDN 88), filed on 21 September 2010, the defendants pleaded a counterclaim as follows:-
“Counterclaim of defendants 1-4
(1) The defendants 1-4 repeat paragraphs 1-11 inclusive of the defence and counterclaim against the plaintiff the sum of $8,188.52 being arrear (sic) of rent and outgoings and council rates of $2,140.00 and cost (sic) of $1,700.00 awarded to the defendants 1-4 under Magistrate Court civil action No. 5708 of 2007 between the plaintiff and the defendants 1-4 making a total of $12,028.52.
(2) The defendants 1-4 claim against the plaintiff:
a. $12,028.52
b. Interest
c. Costs”
The final pleading filed by the defendants was the fifth defence and third cross action (counterclaim), which was filed with the Court on 6 June 2013 (FDN 148). The third cross action and (counterclaim) read as follows:-
“The plaintiffs by counterclaim (the defendants) counterclaim against the plaintiff Sazzi (SA) Pty Ltd.
Part 1:
The facts and basis of the counterclaim are
1. The plaintiffs by counterclaim repeat paragraph 1 of the third defence
2. The lease contained a term whereby the defendants by counterclaim agreed to pay rent to the plaintiffs by counterclaim for the premises during the term of the lease at the rate of $46,128.00 per annum plus GST.
3. The lease contained a term whereby the defendants by counterclaim agreed to pay and discharge all outgoings, which are assessed or imposed in respect of the premises.
4. As at 31 August 2007, the defendants by counterclaim owed rent and outgoings as per the attached schedule marked “A” in the sum of $8,188.52 plus council rates in the sum of $2,140.00.
Part 2:
The orders sought are:
1. Judgment against the plaintiff in the sum of $10,328.52.
2. Interest.
3. Costs.”
It will be seen that the general approach within the third cross action (counterclaim) and the counterclaim of defendants 1-4 in the third defence and counterclaim are largely the same. There is no Schedule A to the third cross action (counterclaim). Hence, the uncertainty and the reason why I was not earlier prepared to make any final orders in relation to the counterclaim. That said, it is quite apparent that the relevant issues were rent, outgoings and council rates allegedly due under the lease.
At the delivery of the judgment in this matter, I invited parties to make further submissions. I received written submissions from the parties and both parties were given an opportunity to make further oral submissions.
It was submitted by the defendants that Schedule A was the JADS Group Pty Ltd’s Trust Account dated 6 August 2007.[3] In submissions, it was described by the defendants as the “August account”. This document was addressed by both parties in evidence in the trial and in their submissions. JADS Group Pty Ltd was the authorised agent of the defendants and Mr Wong was the principal of that company.
[3] Exhibit P1 pages 165-166.
Having reviewed all of the materials again and having received both written and oral submissions from the parties, I am satisfied that the material facts, which would otherwise have been disclosed within Schedule A (if it had been included within the pleadings) were also canvassed numerous times in evidence throughout the trial, both in a consideration of the contents of Exhibit P1 and in respect of submissions put concerning the August account.
The position has been reached that, although Schedule A was not filed with the Court in the amended pleadings, I am satisfied that I may still act upon the matters that have been proved in evidence on the pleading and may have been reflected in Schedule A for the following reasons:
1. Paragraph 4 of the third cross action (counterclaim) (filed 6 June 2013) and the content of the pleadings (FDN 88) the third Defence and counterclaim were not amended in either the fourth or fifth Defence and cross action (counterclaim) and that the particulars sufficient to show the calculation of the counterclaim stand as part of the pleadings before the Court by reason of their inclusion in the third defence and counterclaim.
When the third defence and counterclaim (21 September 2010) (FDN 88) and the third cross action (counterclaim) (FDN 148) are compared, the detail is the same and the references to the amounts are the same. Therefore, a common sense reading of the counterclaim in the third defence and counterclaim discloses the same material as was referred to and repeated in the third cross action (counterclaim). In the earlier pleading there was no reference to a Schedule A but in the later pleading, although there was a reference to a Schedule A, it was not included although the claims were the same. The absence of the Schedule A made no difference. In summary, the parties always understood the claims and issues that they were dealing with and that is how the trial proceeded.
2. The defendants conducted their case based upon the matters stated in Schedule A. Although there was no Schedule A, there was sufficient material within the documentary evidence tendered at trial and the oral evidence associated with it, to be satisfied that the parties understood what was being referred to when there was a claim for rent and outgoings.
I place no weight upon the submission of the defendants that at no time during the trial did either the plaintiffs’ counsel or the Court raise the issue of Schedule A being missing from the file version of the fifth defence and counterclaim. The question of the inclusion of Schedule A (or not) is a matter for the defendants. In my opinion, in the administration of justice, the essential issue is whether the parties clearly understood the issues before the Court, the evidence (including documentary evidence) before the Court concerning and relating to the issue and the resolution of all of the issues by the Court based upon the whole of the evidence put before it at the hearing. I am satisfied that the parties at all times understood the defendants’ claim in respect of unpaid rent and outgoings under the lease with the plaintiff, in the sum of $8,188.52. I am satisfied that no prejudice has been suffered by the plaintiff in that respect. That contention was not seriously put by Mr Ross-Smith on behalf of the plaintiff.
During the course of submissions, I referred counsel to the decision of Gray J in the Full Court decision in Battye & Anor v Shammall.[4] Gray J, with whom the other Justices of appeal agreed, quoted with approval from the decision of Perry J in SP Hywood v Standard Chartered Bank.[5]
[4] [2005] SASC 138.
[5] Unreported Supreme Court SA Perry J No. SCGRG 92/678 22 December 1992.
In that case, a cause of action upon which the plaintiff was entitled to rely was not pleaded but the relevant facts sufficient to ground that cause of action had been proved in evidence. Having found those relevant facts proved, and in the absence of a pleading in relation to them, Perry J then fashioned a remedy based upon those facts. Perry J said at paragraph [52] as follows:-
“[52] …All causes of action are at large at the end of the trial, in the sense that judgment made be given upon any cause of action open on the evidence as proved, irrespective of the manner in which the plaintiff’s case has been presented or argued.”
During submissions, Mr Ower for the defendants relied upon the Full Court decision in Battye & Anor v Shammall and the decision of Perry J in SP Hywood. He submitted that although Schedule A was missing from the most recent iteration of the pleadings, the trial was nonetheless conducted on the basis of the existence of Schedule A because Schedule A was, in another form, a document in evidence approximately five times. For the reasons that I have already expressed, I accept that submission. Ultimately, Mr Ross-Smith for the plaintiff, acknowledged that although Schedule A was not pleaded during the trial, all of the material facts had been clearly stated and argued during the trial and he could point to no prejudice being suffered by the plaintiff as a result of the absence of Schedule A.
The Amount Claimed in Schedule A
The total amount claimed in Schedule A was $8,188.52. In my judgment, I made findings in respect of the elements that made up this figure. In summary, those findings were as follows:
1. Outstanding rent: I found that the outstanding rent owing was $2,642.90.[6]
2. Outstanding outgoings and council rates: I found that the outgoings were also outstanding under the lease. As at 31 May 2007, the outgoings amounted to $2,231.45.[7] An additional amount of $196.08 was subsequently incurred.[8] The total for outstanding outgoings was therefore $2,427.53. The amount owing for outstanding council rates was $2,140.00.
3. Fees and charges relating to the February 2007 distraint: I found that the total fees and charges were $750.00 for legal fees, $660.00 for professional fees and $240.00 for locksmith fees[9] with the total amount being $1,650.00. I disallowed this claim. I also disallowed any claim for any fees and charges in respect of any later attempted distraint.
[6] Judgment paragraph [155], [163].
[7] Judgment paragraph [167].
[8] Viz invoice 1384 12 June 2007.
[9] At paragraph [61], [62] and [241].
Set off
In paragraphs 14, 15 and 16 of the fifth defence and third cross action (counterclaim) the defendants pleaded an entitlement to set off against any claim of the plaintiff, in the sum of $1,700.00 awarded as costs in favour of the defendants against the plaintiff in Magistrates Court of South Australia action number 5708 of 2007. No contrary submission was put by the plaintiff in respect of this claimed set off, nor in respect of the amount of the set off. In paragraph 15 of that pleading, the defendants also sought an award of interest under Rule 124 of Magistrates Court Civil Rules in an amount of five per cent per annum. I did not allow the claim for such interest as the defendants hold the funds from the sale of the furniture of the plaintiff and so were not put out of their money.
It is appropriate therefore that I set out in a table the amounts that I am prepared to allow claims on the counterclaim in the amount $8,910.43, the calculation of which is reflected in the following table.
Type of cost incurred by the Defendants
Amount ($AUD)
Judgment paragraph reference
Costs from the Magistrates Court action
1,700.00
[239]
Council rates
2,140.00
[240]
Outstanding rent
2,642.90
[155], [163]
Outstanding outgoings
2,427.53
[167]
TOTAL
8,910.43
Although there was some early contest about the matter, the total value of the goods seized from the premises was ultimately accepted by both parties as being the value of the goods achieved at the public auction. The amount realised from the auction was $18,725.00.[10] The set off amount owing to the plaintiff is therefore $9,814.57.
[10] Exhibit P1 pages 188-189.
Pre Judgment Interest
I have made a general assessment in relation to pre judgment interest in respect of the set off amount standing to the credit of the plaintiff after the amounts owing to the defendants have been taken into account. I refer to Practice Direction 13.3. I have decided to implement Practice Direction 13.3.1, 13.3.1.1 and 13.3.1.2. As a matter of discretion, I am not able to identify any reason to apply any different rate than that which is prescribed in that practice direction. I immediately acknowledge that the Courts currently generally use the interest rate of 6.5%. In my opinion, this practice does not in any way fetter my discretion. Insofar as it may be necessary to state reasons, I am of the view that in respect of my assessment of the applicable rate of interest, there are good grounds to depart from what may be considered to be the “usual”. The plaintiff was put out of its money after an illegal distraint that failed to observe the statutory requirements about “abandoned goods”. Despite the fact that the illegal distraint should have been apparent to the defendants and those advising them, no steps were taken to bring the situation into proper order. No timely assessment was made about outstanding rent or outgoings. No timely assessment was made about a proper reconciliation of the whole position so that a more objective assessment of that whole situation could have occurred.
I have made a series of calculations, which are disclosed in the schedule 1 attached to these reasons. I am satisfied that the average rate of interest applicable in this situation was 8.375% and the basis of that calculation is set out in Schedule 1 hereof. Applying that rate of interest to the amount owing to the credit of the plaintiff provides the following:-
1.
Set off amount
$9,814.57
2.
Average rate of interest
8.375%
3.
Interest per annum
$821.97
4.
Interest per day
$2.25
5.
Number of days
2,396
6.
Total amount of interest
$5,395.73
7.
Total amount
$15,210.30 ($9,814.57 plus $5,395.73)
The total amount of the plaintiff’s claim allowed on its pleading, inclusive of interest, is therefore $15,210.30. I so order.
In my opinion, this is the judgment order from which an appeal may lie. I am cognisant that the plaintiff has already lodged a Notice of Appeal in this matter and has incurred the expense of a lodgement fee for that appeal. The only effect of this judgment is to clarify the amount of the plaintiff’s claim on which it has been successful, and the amount of the defendants’ cross action (counterclaim) on which they have been successful. These, of course, are matters for the Registrar.
SCHEDULE 1
Start date End date RBA decision date Cash rate Add 4%
(as per Practice Direction 13.3)01-Jul-07 31-Dec-07 06-Jun-07 6.25 10.25 01-Jan-08 30-Jun-08 5-Dec-07 6.75 10.75 01-Jul-08 31-Dec-08 4-Jun-08 7.25 11.25 01-Jan-09 30-Jun-09 3-Dec-08 4.25 8.25 01-Jul-09 31-Dec-09 3-Jun-09 3.00 7.00 01-Jan-10 30-Jun-10 2-Dec-09 3.75 7.75 01-Jul-10 31-Dec-10 2-Jun-10 4.50 8.50 01-Jan-11 30-Jun-11 8-Dec-10 4.75 8.75 01-Jul-11 31-Dec-11 8-Jun-11 4.75 8.75 01-Jan-12 30-Jun-12 7-Dec-11 4.25 8.25 01-Jul-12 31-Dec-12 6-Jun-12 3.50 7.50 01-Jan-13 30-Jun-13 5-Dec-12 3.00 7.00 01-Jul-13 31-Dec-13 5-Jun-13 2.75 6.75 01-Jan-14 30-Jun-14 4-Dec-13 2.50 6.50 Average rate 8.375
0
2
0