Shenton v Touchstone Farms Pty Ltd - [2012] WASCA 261

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: SHENTON -v- TOUCHSTONE FARMS PTY LTD [2012] WASCA 261

CORAM: PULLIN JA
NEWNES JA

HEARD: 9 NOVEMBER 2012

DELIVERED : 9 NOVEMBER 2012

PUBLISHED : 11 DECEMBER 2012

FILE NO/S: CACV 134 of 2011

BETWEEN: RICHARD LAURENCE SHENTON
Appellant
AND
TOUCHSTONE FARMS PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :CURTHOYS DCJ
File No  :APP 57 of 2011

Catchwords:

Practice and procedure - Magistrates Court - Minor case jurisdiction - Claim for damages - Judgment entered in absence of defendant - Judgment for liquidated sum - No evidence of damage - Application to set aside judgment dismissed - Appeal to District Court allowed - Relevant principles on application to set aside judgment - Obligations of court exercising minor case jurisdiction

Legislation:

Magistrates Court (Civil Proceedings) Act 2004 (WA)

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: In person
Respondent: Mr C P Stokes

Solicitors:

Appellant: In person
Respondent: Chris Stokes & Associates

Case(s) referred to in judgment(s):

Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd [1990] HCA 11
Kostas v HIA Insurance Services Pty [2010] HCA 32; (2010) 241 CLR 390
Re Pochi & Minister for Immigration and Ethnic Affairs (1979) 36 FLR 482
Stone v Smith (1887) 35 Ch D 188
Sudath v Health Care Complaints Commission [2012] NSWCA 171

JUDGMENT OF THE COURT: This is an application by the respondent for the appeal to be dismissed under r 43(2)(g)(i) of the Supreme Court (Court of Appeal) Rules 2005 (WA), on the ground that none of the grounds of appeal have any reasonable prospect of success, or alternatively under r 43(2)(g)(ii) on the ground that the appellant has failed to comply with r 32 in relation to the grounds of appeal, submissions and legal authorities.
The appeal arises out of proceedings in the minor case jurisdiction of the Magistrates Court. In those proceedings, judgment was entered against the respondent after it failed to appear at trial. An application by the respondent to set aside the judgment was dismissed. The respondent's appeal to the District Court against that decision was allowed. Curthoys DCJ ordered that the judgment be set aside and the proceedings remitted to the Magistrates Court for trial. The appellant has appealed against that decision.
On 9 November 2012, we dismissed the appeal and said we would provide our reasons later. These are our reasons.

Background

This, regrettably, is another case where, from modest beginnings, the proceedings have now grown to the point where the costs are out of all proportion to the amount in issue.
At the relevant time, as now, the minor case jurisdiction of the Magistrates Court was limited to monetary claims not exceeding $10,000. It is an informal jurisdiction where ordinarily proceedings are conducted in private and the parties are not entitled to legal representation: s 29, s 30 of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (the Act). The court is not bound by the rules of evidence but may inform itself on any matter in such manner as it sees fit: s 29(4). The primary object of the court in exercising that jurisdiction is to attempt to bring the parties to a settlement acceptable to them: s 27(1). The obvious purpose of the minor case jurisdiction is to enable small claims to be resolved expeditiously, inexpensively and with as little formality as is reasonable.
The proceedings were commenced by the appellant filing, on 15 March 2011, a 'minor case claim' in the prescribed form. The amount of the claim was stated to be $10,000, plus court and service fees, and the claim was expressed as follows:
The claimant claims costs of this action and interest.
The claimant suffered economic loss from the actions of the defendant by poor management methods and unprofessionalism.
The claimant took 15 mares to be impregnated and only three are pregnant - way below normal figures.
The claimant has been refused access and return of horses and documents by the defendant causing loss of earnings and angst.
The claimant suffered damages and loss of earnings by the defendants action, or lack thereof, and refusal to return paperwork.
The defendant has refused to make good an error of paperwork to Magic Million claiming (wrongly) ownership of horses.
The claim was clearly one for an unliquidated sum notwithstanding that the claim was stated to be for an amount of $10,000. The appellant later explained to the magistrate that he had limited his claim to $10,000 to bring it within the minor case jurisdiction.
The respondent filed a notice of intention to defend the claim and the parties were then served with notice of an appointment on 5 April 2011. At that hearing, which was attended by both parties (a director, Mr Glenn Martin, appeared for the respondent), orders were made by Magistrate Jones that within 14 days the appellant was to file and serve a statement of minor case claim together with a statutory declaration and a list of the documents that might be tendered in evidence at the trial. The respondent was to file and serve a statement of defence together with a statutory declaration and list of documents within 14 days thereafter. The claim was listed for trial on 15 June 2011.
The appellant did not file or serve his statement of claim or anything else. He appeared before the magistrate on the trial date, 15 June 2011. The respondent did not appear. The magistrate observed at the outset that he had 'no idea what [the] claim [was] about' as 'the scribble' on the minor case claim was impossible to read. The following exchange then occurred:
Shenton, Mr: The claim is based on the fact that I entered into contract with [the respondent] to take 16 mares to get impregnated by their stallions. Only three of them got impregnated. The paperwork wasn't done. The results weren't done.
His Honour: So what are you seeking?
Shenton, Mr: I am saying I am at loss - I am at serious loss because of that and because of their incompetence. The average in sires and stallions is around about 70 per cent pregnancy. I ended up with about 15 per cent. Their book and their paperwork were not up to date. The Australian stud books stuff is not up to date and I am out of serious pocket [sic].
His Honour: Well, you are out of serious pocket, you're saying. You have limited your claim to $10,000 have you?
Shenton, Mr: Yes, sir.
The magistrate pointed out that neither party had complied with the order of 5 April 2011. The appellant told him that there had been a lot of information exchanged between the parties. The magistrate then ordered that judgment in default of appearance be entered for the appellant in the sum of $10,000 plus costs of $137.95.
On 21 June 2011, the respondent applied to have the judgment set aside. The application was supported by an affidavit of Mr Martin on behalf of the respondent. In the affidavit, Mr Martin said that as he had not received anything from the appellant following the orders of 5 April 2011, he had telephoned the court on about 26 April 2011 and was told that he could not comply with his obligation under the order until the appellant had done so. Mr Martin said he telephoned the court again on about 5 May 2011 and was told there was nothing for him to do. Mr Martin said he asked for the claim to be 'struck off' but was told that it was too early and he would have to wait for the appellant. According to Mr Martin, as the appellant did nothing he thought the respondent had no case to answer and assumed the matter would not go ahead. It was for that reason he did not attend court on 15 June 2011.
On 13 July 2011, the application came before the magistrate. Having heard Mr Martin as to the basis of the respondent's defence, the magistrate concluded that there was a triable issue (ts 5). However, it appears from the transcript that his Honour misunderstood Mr Martin's explanation as to the reason he did not attend court on 15 June 2011. The magistrate appears to have been under the impression that Mr Martin was asserting that he had been told by court staff that he did not have to attend. The magistrate said that what Mr Martin claimed he had been told was not correct and that registry staff would not have given information that was incorrect (ts 6).
His Honour concluded that as there was 'no proper and real reason' why the respondent had not attended court on 15 June 2011, the application to set aside the default judgment should be dismissed.
The respondent appealed against that decision. On 30 September 2011, the primary judge allowed the appeal and ordered that the default judgment be set aside. His Honour found, in effect, that, a triable issue having been raised and there being no substantive reason why the default judgment should not be set aside, the magistrate had erred in dismissing the respondent's application.
The appellant appeals to this court against that decision.

The grounds of appeal

It is unnecessary to set out the grounds of appeal. They are not in conventional form but in substance the main point raised by the appellant was the contention that the primary judge erred in failing to have regard to the reason the magistrate dismissed the application, namely that the magistrate did not accept the respondent's explanation for failing to attend the trial and accordingly found that no proper explanation for the failure to attend had been provided.

The disposition of the appeal

The parties have proceeded throughout on the basis that the judgment in question was a default judgment which had been regularly entered. For reasons we will come to, there may be some doubt about that assumption but, as it puts the respondent's position at its highest, the appeal can be disposed of on that basis.
The decision of Curthoys DCJ was, with respect, plainly correct. Where a default judgment has been regularly entered the discretion to set aside the judgment is unfettered, but it must be exercised judicially. The primary consideration will ordinarily be whether there is an arguable defence on the merits. That is not to say that other considerations will never be relevant. It is incumbent upon the defendant to explain the default which led to judgment being entered, and, where they arise, considerations of delay and prejudice to the plaintiff if the judgment were set aside (beyond prejudice of a sort which can be remedied by an appropriate order of the court) will always be relevant. Other factors may also be relevant.
It is evident that in this case the magistrate refused to set the judgment aside because he rejected as inherently improbable the explanation for the default which he thought Mr Martin had proffered; namely, that he (Mr Martin) had been told by court registry staff that the respondent did not have to attend the trial. The magistrate therefore concluded there was no explanation for the default. However, as mentioned above, it is apparent from the transcript that the magistrate had misunderstood Mr Martin's explanation. His explanation was that, having been told by registry staff that he would have to await compliance by the appellant with the court's orders of 5 April 2011, and the appellant having not complied, he had assumed the trial would not proceed on 15 June 2011. That was an unwise assumption but, in the circumstances, it was not, for a layperson, an inexplicable one.
Accordingly, once the magistrate found, as he did, that there was an arguable defence on the merits, there was no proper basis upon which to refuse to set aside the judgment. The default had been explained, the respondent's application was brought promptly, and it was not suggested there would be any significant prejudice to the appellant if the judgment were to be set aside. The magistrate erred in refusing to set aside the judgment. It follows that Curthoys DCJ was plainly correct in allowing the appeal, setting aside the judgment and ordering the respondent (Mr Shenton) in that appeal to pay the appellant's (Touchstone Farm's) costs to be taxed.
The appellant in this court (Mr Shenton) contended that Curthoys DCJ erred in ordering him to pay costs. He submitted that that was unfair because the error was made by the magistrate. We consider the order for costs was the correct order. Mr Shenton appeared and opposed the appeal in the District Court. If, as he said at one stage, he agreed that the magistrate erred in not setting aside the judgment, then he should not have opposed the appeal. Having chosen to oppose it, the costs order was appropriate.
It was for those reasons we concluded that none of the grounds of appeal had any reasonable prospect of success and the appeal should be dismissed.
It is, however, appropriate to make some observations on two other issues in connection with the appeal, although they are not necessary for its determination.
The first relates to the nature of the judgment entered in the Magistrates Court. We have mentioned that the parties had proceeded on the basis that the judgment was a default judgment that had been regularly entered. Two matters were raised by the court in the course of argument on the appeal which may go to the correctness of that assumption. First, the appellant's claim was one for unliquidated damages, whereas judgment was entered as if it were a claim for a liquidated sum, rather than being judgment for damages to be assessed. Secondly, the judgment was not a default judgment in the usual sense that it was entered upon default in compliance with a rule or order of the court relating to some interlocutory procedure by reason of which the court is empowered to enter judgment without trial (see, for instance, r 20 of the Magistrates Court (Minor cases Procedure) Rules 2005 (WA)). Rather, it was entered upon the failure of the respondent to attend the trial itself. Generally, where a defendant fails to attend the trial it is necessary for the plaintiff to prove its case before judgment can be entered: see Stone v Smith (1887) 35 Ch D 188, 190; Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 304.
However, we have not had the benefit of any substantive submissions on these matters in the context of the minor cases procedure, and it is unnecessary to reach a final view on them.
The second, related, matter concerns the material upon which judgment was entered. As mentioned earlier, the object of the minor case jurisdiction is to enable small claims to be resolved expeditiously, inexpensively and with as little formality as is reasonable. Consistently with that object, pursuant to s 29(4) of the Act the court may inform itself on any matter in such manner as it sees fit. However, that procedural freedom is not unlimited. In the first place, the court must observe procedural fairness. Secondly, the decision‑making of the court must be rational and it must therefore be founded upon information which provides a logical basis for the findings the court makes. The court cannot make a decision based on no information or on information which provides no logical basis for the decision.
In Kostas v HIA Insurance Services Pty [2010] HCA 32; (2010) 241 CLR 390, French CJ said in relation to s 28(2) of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), which is in similar terms to s 29(4) of the Act, as follows:
[The Tribunal] is not bound by the rules of evidence and may inquire into, and inform itself on, any matter in such manner as it thinks fit, subject to the rules of procedural fairness. That freedom is enjoyed by many administrative tribunals. The term 'rules of evidence' does not lay out with precision its metes and bounds. Nor does it exclude the discretionary application of such rules. But the authority of the Tribunal to 'inform itself on any matter in such manner as it thinks fit' indicates that it is able to act upon information whether or not it is embodied in evidence which would be admissible in a court of law.
There are qualifications upon the Tribunal's procedural freedom. One, which is explicit, is the requirement to observe procedural fairness. The Tribunal's modus operandi must also serve its function, which, in this case, was to hear and determine a building claim. That function implies a rational process of decision-making according to law. A decision based on no information at all, or based on findings of fact which are not open on information before the Tribunal, is not compatible with a rational process [15] ‑ [16]. (footnotes omitted)
Similarly, in Sudath v Health Care Complaints Commission [2012] NSWCA 171, Meagher JA said of a provision to the same effect:
Although the Tribunal may inform itself in any way 'it thinks fit' and is not bound by the rules of evidence, it must base its decision upon material which tends logically to show the existence or non-existence of facts relevant to the issues to be determined. Thus, material which, as a matter of reason, has some probative value in that sense may be taken into account: Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 36 FLR 482 at 491 ‑ 493; R v The War Pensions Entitlement Appeal Tribunal; Ex parte Bott [1933] HCA 30; (1933) 50 CLR 228 at 249 ‑ 250, 256 [79].
See also Re Pochi & Minister for Immigration and Ethnic Affairs (1979) 36 FLR 482, 492 (Brennan J).
It is important to emphasise that the informality of the procedure of the court does not detract from its obligation to observe the requirements of procedural fairness and to ensure that claims are determined on a proper, rational basis. Indeed, given the informality and the absence of the public scrutiny that is afforded by proceedings in open court, it is especially important the court is assiduous in ensuring that those obligations are met.
In the present case, the only material before the magistrate was the minor case claim form (which the magistrate said he could not decipher) and what was said in the exchange between the magistrate and the appellant which is set out above at [9]. There was nothing in that upon which the magistrate could find that the appellant was entitled to damages in the sum of $10,000 or any sum. That was not, however, a matter upon which the appellant sought to rely in this appeal.