Shields v Zakos

[2008] NSWSC 760

CITATION:	Shields v Zakos [2008] NSWSC 760
HEARING DATE(S):	17 March 2008
JUDGMENT DATE :	25 July 2008
JURISDICTION:	Common Law
JUDGMENT OF:	Rothman J
DECISION:	(i) The appeal against the judgment of Culver LCM of 12 October 2007 be allowed; (ii) The judgment of Culver LCM of 12 October 2007, in matters 167/2007 and 266/2007, be quashed; (iii) An order in the nature of mandamus requiring the Local Court to hear and determine, in accordance with law, the motions filed by the plaintiff herein, in matters 167/2007 and 266/2007, seeking to set aside the judgments entered therein on 30 August 2007; (iv) The defendant shall pay the plaintiffs’ costs of and incidental to these proceedings, as agreed or assessed; (v) The defendant shall, to the extent otherwise eligible, be granted an indemnity certificate pursuant to the Suitors’ Fund Act 1951.
CATCHWORDS:	APPEAL – error of law – misconstruction of power – infection of discretion - PRACTICE – default judgment – motion to set aside – dismissal without proper opportunity of adducing evidence – refusal of adjournment.
LEGISLATION CITED:	Civil Procedure Act 2005 Residential Tenancies Act 1987 Suitors' Fund Act 1951
CATEGORY:	Principal judgment
CASES CITED:	Director of Public Prosecutions v Gursel Ozakca and Anor [2006] NSWSC 1425 DJL v Central Authority [2000] HCA 17; 201 CLR 226 Hall Chadwick Pty Ltd v Doyle [2006] NSWSC 1195 Keramianakis & Anor v Regional Publishers Pty Ltd [2007] NSWCA 375 Laws v GWS Machinery Pty Ltd & Anor; Laws v GWS Machinery Pty Ltd & Anor (No 4) [2008] NSWSC 453 Priddle v Fisher [1968] 1 WLR 1478 Sullivan v Department of Transport (1978) 20 ALR 323 Swain v Waverley Municipal Council [2005] HCA 4; 220 CLR 517
PARTIES:	Gail Anne Shields (First Plaintiff) Victor Warren Ollis (Second Plaintiff) Christopher Alexander Zakos (Defendant)
FILE NUMBER(S):	SC 15660/2007
COUNSEL:	C J Dibb (Plaintiffs) J L Gruzman (Defendant)
SOLICITORS:	- (Plaintiffs) Burridge & Legg Solicitors (Defendant)
LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	167/2007; 266/2007
LOWER COURT JUDICIAL OFFICER :	Culver LCM
LOWER COURT DATE OF DECISION:	12 October 2007

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ROTHMAN J

25 JULY 2008

15660/07 Gail Anne Shields & Anor v Christopher Alexander Zakos

JUDGMENT

1 HIS HONOUR: Gail Anne Shields is or was a tenant of Christopher Alexander Zakos. A dispute arose as to their respective rights. It is said that rent was not paid by Ms Shields for a time which includes a period during which, according to Ms Shields, Ms Shields was locked out of the premises in question. The premises are at Ettalong Beach. As a consequence of the dispute, Ms Shields alleges that Mr Zakos has unlawfully terminated the lease and illegally entered into possession of the premises in question.

2 In proceedings for payment of arrears of rent in the Local Court, judgment was entered in default and the motion to set the judgment aside was dismissed. Ms Shields now appeals the last mentioned judgment.

3 On 16 January 2007, Ms Shields commenced proceedings in the Consumer, Trader & Tenancy Tribunal (“the Tribunal”) against Mr Zakos. A complicating factor is that Ms Shields’s partner, Mr Ollis, who lives with Ms Shields, was rendered bankrupt. Some of the pleadings in the matter before this Court (and before the Local Court below) seem to suggest that Mr Ollis was a plaintiff in the proceedings. The summons filed on 9 November 2007 is a little misleading but is taken in the name only of Ms Shields. The effect, if any, of the bankruptcy of Mr Ollis is therefore an irrelevant issue in this aspect of the proceedings. I make no comment on the effect of that bankruptcy, if any, on the lease, which is in the name of Ms Shields.

Facts

4 It is necessary to state briefly the nature of the dispute between Ms Shields and Mr Zakos. There was originally a two year lease in the name of Ms Shields, which was to expire on 30 September 2007.

5 On 24 August 2006, Mr Zakos purported to increase the rent on the property as of 1 October 2006. Ms Shields maintains, in these proceedings, that the increased amount of rent was invalid by operation of s 45(2) of the Residential Tenancies Act 1987 and therefore not payable: see s 45(5) of that Act.

6 On 1 November 2006, rent was paid, at the increased level, for the month of November. On 8 December 2006, Ms Shields contacted Mr Zakos and requested the supply of bank account details to enable electronic transfer. Mr Zakos refused to provide those details. On 14 December 2006, Ms Shields paid the rent for December by bank cheque, less the amount allegedly over-paid for the month of November (assuming the rent increase was invalid).

7 On 15 December 2006, the bank cheque was returned as not accepted, because it was not for the correct amount. Ms Shields and Mr Ollis were away from Ettalong when the cheque was returned and, allegedly, it did not come to their attention.

8 On or about 15 January 2007, Mr Zakos locked-out the cleaner engaged by Ms Shields and Mr Ollis and changed the electronic access recognition, preventing Ms Shields from regaining access to the premises.

9 As earlier stated, on 16 January 2007, Ms Shields commenced proceedings in the Tribunal. On 23 January 2007, Mr Zakos provided access for the purpose only of moving the possessions contained within the leased premises out of the premises.

10 On 13 March 2007, Mr Zakos commenced proceedings in Manly Local Court to recover the arrears of rent. These proceedings were commenced by statement of claim, naming Ms Shields as the only defendant. Ms Shields is the named tenant on the lease.

11 On 30 March 2007, the proceedings in the Tribunal were transferred to the Manly Local Court by consent and, on 8 May 2007, both relevant proceedings in the Manly Local Court were consolidated. The proceedings were adjourned until 26 June 2007.

12 On 26 June 2007, Manly Local Court fixed a hearing date for 17 September 2007 and directed evidence in chief to be filed and served by 16 August 2007. The matter was listed for review on 30 August 2007.

13 On 30 August 2007, at Manly Local Court, there was no appearance for Ms Shields. His Honour Magistrate George dismissed Ms Shields’s claim and entered a verdict for Mr Zakos on his claim. As may be clear, these orders were made by default. On 5 September 2007, Ms Shields filed two notices of motion to set aside the verdict and judgment of 30 August 2007. The motions, of which notice was given on 5 September, were given a return date of 12 October 2007, at which time a date for hearing was to be assigned.

14 On 12 October 2007, her Honour Magistrate Culver declined to set down the motions for hearing and dismissed both motions.

Magistrates’ Proceedings and Decisions

15 The judgment of his Honour Magistrate George is, understandably, succinct. It is appropriate to set out not only the judgment, but a short discussion that occurred prior thereto.

16 The transcript records:

“HIS HONOUR: Well what do you want to do with it Mr Legg? I could enter a judgment for you today, but I wonder whether it would be set aside.


LEGG: Your Honour that would be the course I prefer. We, my instructions are to seek that and we’d be prepared to take the risk of whatever might occur afterwards.


HIS HONOUR: Shields v Zakos. There is no appearance of the plaintiff on the review date, nor is there any evidence of any material being supplied in accordance with the Registrar’s orders. In the circumstances there is a verdict for the defendant.


In the matter of Zakos v Shields there is no appearance of the defendant. The claim was in the sum of $16,229.38.


LEGG: That’s the amount sought your Honour.


HIS HONOUR: THE PLAINTIFF HAVING PROVIDED EVIDENCE TO SUPPORT ITS CASE, THERE IS A VERDICT FOR THE PLAINTIFF, JUDGMENT IN THE SUM OF $16,229.38 TOGETHER WITH INTEREST TO BE CALCULATED BY THE REGISTRAR. Do you seek costs in respect of each matter separately?


LEGG: Your Honour I’ll just ask for costs on the matter in which you’ve entered judgment if that suits the Court.


HIS HONOUR: What costs do you seek?


LEGG: $2000.


HIS HONUR: JUDGMENT, INTEREST AND COSTS TO BE PAID WITHIN TWENTY EIGHT DAYS.”

17 The summons does not challenge or seek to appeal the judgment of his Honour Magistrate George.

18 On 12 October 2007, her Honour Magistrate Culver dealt with the matter on a number of bases. It is necessary to set out one aspect of the proceedings before her Honour in particular. Ms Shields swore an Affidavit (although, regrettably, the Affidavit does not make clear whether it was sworn or affirmed), in part, in the following terms:

“13. I am informed and verily believe that because he [Mr Dibb, her counsel] had not seen the evidence he had been waiting for, my barrister missed attending on the review date of 30 August 2007.”

19 Ms Shields had attested, in an earlier paragraph of her Affidavit, that she had received Mr Zakos’s evidence on 27 August 2007 and that she, as an initiating party in one part of the proceedings, was relying on the evidence already filed before the Tribunal.

20 During the course of the hearing, Ms Evans (who was then appearing for Ms Shields) made clear that she had attended before the learned Magistrate on the understanding that the matter had been listed for mention only and that she was required simply to obtain a hearing date. At page 4 of the transcript of the proceedings, her Honour raises with Ms Evans the relevance or persuasiveness of the notion that Mr Zakos’s evidence had not been filed before 27 August, or at all, as a reason for not attending on 30 August. In the course of the exchange, Ms Evans says:

“EVANS: That’s correct your Honour and perhaps I should have started off, perhaps the best place to start would have been to apologise to the court for Mr Dibb’s absence on 30 August.


HER HONOUR: No apology needed, none at all, but I’m looking at a situation where I’m asked to list a notice of motion for hearing where I have to assess whether or not it’s proper to do so and frankly if no valid ground is disclosed for the next motion I’m not going to clog up this list with an unnecessary listing….”

21 During the proceedings, her Honour referred, once more, to the matter of the timing of service of evidence being a “red herring” and the only evidence being that Ms Shields says “her barrister told her that he didn’t think he needed to do anything because he hadn’t heard of any evidence for the plaintiff. That’s not how court proceedings work.” The following exchange then occurs:

“EVANS: No your Honour. I don’t understand that to be his - -


HER HONOUR: Position.


EVANS: No.


HER HONOUR: That’s the affidavit material before me.


EVANS: Your Honour I understand it to really hinge on, first of all I should’ve apologised to the court for his absence. That’s the first thing I should have done. I understand - -


HER HONOUR: It seems Mr Dibb has been absent a bit. Look he wasn’t required to be here today, so there’s no need for apology there.


EVANS: Thank you your Honour. Well I mean for the 30 August appearance, not for this appearance your Honour but at para 9, sorry at para 13 it does mention that I’m informed .. (not transcribable) .. because he’d not seen the evidence that .. (not transcribable) .. in court. .. (not transcribable) .. attending. Now that’s how Gail Shields has, that’s her sworn evidence. I don’t suggest that that’s Mr Dibb’s version of what happened. I submit that he missed the 30th. I’m instructed he missed the 30th unfortunately and as I’ve said apologises to the court for that and orders were made in his absence and I submit he should be given the opportunity to put on any further evidence in a short time.”

22 The learned Magistrate then draws attention to the fact that, if evidence were sought to be adduced in relation to the notice of motion, an opportunity for the adducing of that evidence had already been given.

23 The judgment of her Honour, given ex tempore, recites a short history of the matter, relies on paragraph 7.5 of the Guidelines of the Chief Magistrate (Practice Note 1) and the requirement that any exercise of discretion must be dealt with in a way which best achieves the cheap, quick and just disposal of matters.

24 Her Honour then refers to the decision of the learned Magistrate on 30 August 2007 and the fact that the judgment of the learned Magistrate was expressed as a “verdict”. Her Honour then expresses the following opinion:

“It is my view that this court does not have the proper power to overturn another magistrate’s findings of fact in a matter. I am aware of the breadth of r 36.16 sub rule 2 para (b) and I’ve been given the opportunity of reading some commentary from the Ritchie Service in that regard and certainly I have read para 36.16.10 and I thank Ms Evans for her assistance in that regard and certainly it says that the general rule is that the court ordinarily has no power to set aside a final judgment once it has been passed and entered and this rule deals with several exceptions to that general rule. I accept that insofar as that paragraph gives commentary about a judgment. I am being asked to overturn a verdict as well as a judgment and I am of the view that it would be an improper basis for me to be asked or for another magistrate to be asked to overturn a finding of fact by a magistrate who dealt with the matter on its merits and not just simply automatically entered a default judgment.”

25 The learned Magistrate then dealt with the matter on alternative bases. One such alternative was that the Magistrate’s orders were made on the basis of the Chief Magistrate’s Guidelines. As I understand it, her Honour took the view that, if there were a departure from those Guidelines, there might be some power for the Court to consider the issue. That issue was not finally determined by her Honour.

26 The third aspect of the judgment of her Honour, on 12 October 2007, was the requirement to deal with the matter cheaply, quickly and justly. Reference was then made to case management aspects and her Honour said:

“Even if I were to accept that there was a prima facie defence available and even if I were to take the evidence filed in support of the Notices of Motion by the applicants in those matters at its highest I am of the view that there is no proper issue for litigation disclosed by that evidence, even taken at its highest.


It is for the reason primarily that the matter was listed for 30 August with knowledge to all parties. All parties were represented. There was no appearance on that date. The guidelines by the chief magistrate would have been known to all parties. Any issue as to lateness and service in my mind is irrelevant because the guideline does not concern itself with that particular issue. It would have been known to all parties that failure to attend on the day could very well have resulted in a determination, a proper determination of the matters and for a verdict and judgment to be entered.


Whatever the reason for non-attendance on behalf of the applicants in the Notices of Motion on that date is a matter that can perhaps be taken up elsewhere but I do not see that this court, given that it needs to dispose of the matters in a cheap, just and quick way, should take up further court time by listing these Notices of Motion for hearing because even taken at its highest the evidence does not disclose any proper issue for litigation.


I am asked by Ms Evans to afford a further week’s adjournment for the purpose of further evidence being filed. In view of the evidence already filed I cannot see that further evidence could properly address that issue without in any way traversing what has already been filed.


I furthermore must acknowledge Mr Legg’s submission on behalf of the respondent to these Notices of Motion that this is a case where ample opportunity has been afforded to the applicants and the respondents should not yet again have to suffer a further stay of proceedings in the absence of there being a proper issue for litigation disclosed.


IN THOSE CIRCUMSTANCES I AM OF THE VIEW THAT THE CHEAP, JUST AND QUICK DISPOSAL OF THE MATTER IN THE INTERESTS OF JUSTICE IS ONLY SERVED BY ME DISMISSING THE NOTICES OF MOTION BEFORE THE COURT WITH COSTS.”

27 The reference by the learned Magistrate to the Chief Magistrate’s Guidelines is a reference to paragraph 7.5 of Practice Note No. 1 of 2005 (amended 16 February 2007). That paragraph is in the following terms:

“ 7.5 The Review
The Magistrate at the Review shall ensure that the proceedings are ready for trial and the Court’s directions have been complied with. If the Court’s directions have not been complied with, the Court may make orders including dismissing the proceedings, striking out a defence or cross-claim, directing a party to pay the whole or part of the costs of another party or making such orders as it considered appropriate (s 61(3) and s 61(4) CPA).”

28 This Practice Note should be understood in the context, as the learned Magistrate stated, of the provisions of ss 56, 57, 58 and 59 of the Civil Procedure Act 2005, which require the Court to give effect to:

(a) an overriding purpose to facilitate the just, quick and cheap resolution of the real issues in the proceedings;

(b) the requirement for case management, having regard to the just termination of proceedings, being the efficient disposal of the business of a court and the efficient use of available judicial and administrative resources;

(c) the dictates of justice, limited not only to those parties involved in the proceedings but the wider considerations that may otherwise flow; and

(d) the avoidance of delay.

29 In the Local Court, the issue of case management is extraordinarily important by virtue of the volume of cases that are listed before any Magistrate on any or every day. Further, it is more likely in the Local Court that proceedings will be commenced without a continuing intention to proceed and/or that proceedings commenced for small debts will remain undefended.

30 Nothing in that which follows ought be taken to undermine the importance, in any court, but particularly in the Local Court, of case management considerations.

The Power To Set Aside Default Judgment

31 The general rule is that a judgment, once entered, is final and there is no power to set aside such final judgment after it has been entered: DJL v Central Authority [2000] HCA 17; 201 CLR 226 at 245. The history of these matters and the exceptions to the general rule were discussed by me in Hall Chadwick Pty Ltd v Doyle [2006] NSWSC 1195. Further, in Laws v GWS Machinery Pty Ltd & Anor; Laws v GWS Machinery Pty Ltd & Anor (No 4) [2008] NSWSC 453, I recite a summary of the principles applicable to setting aside an entered judgment as being limited to:

(a) the ‘slip’ rule;

(b) the power to amend an order where the intention of the Court is not manifested in the judgment;

(c) the capacity to allow the opening of orders made in chambers.

32 Further, there is a capacity to set aside judgment peculiar to certain particular kinds of orders, e.g. default judgment and consent orders: Laws, supra, at [33].

33 There are interesting aspects of the application of the rules (Uniform Civil Procedure Rule 36.16 and, by reference, Uniform Civil Procedure Rule 16.1-16.10) as to whether a default judgment, issued in the circumstances of the Practice Note, is consistent or otherwise with the Rules. It is unnecessary for the Court to examine that aspect or the appropriate relationship between the Rules and Practice Notes.

34 It is sufficient to comment that the reasons for judgment of her Honour Magistrate Culver depend upon a distinction between a default judgment, on the one hand, and a judgment that is expressed as a “verdict”, on the other hand.

35 There are obvious historical and practical differences between the verdict of a jury and a judgment of the court: see Swain v Waverley Municipal Council [2005] HCA 4; 220 CLR 517; and Keramianakis & Anor v Regional Publishers Pty Ltd [2007] NSWCA 375.

36 Regardless of the terms of the judgment, and whether any part of those terms is described as a “verdict”, it is nevertheless a judgment, issued as a result of the default of Ms Shields and not a jury verdict. Nor is it a judgment that has dealt with the statement of claim on its merits, in any sense that would preclude the operation of the principles that apply to the setting aside of a default judgment.

37 The error of law, in misunderstanding the power reposed in the Court to set aside the judgment, infects the whole of the exercise of discretion by the learned Magistrate below. In those circumstances, it is necessary to overturn the exercise of discretion.

38 Further, if, as is alleged, Ms Shields was relying only on material already filed, there had been no default of the requirements of the Court that would satisfy the strict terms of paragraph 7.5 of the Practice Note.

39 Next, the matter came before her Honour Magistrate Culver for the purposes of a mention only and not for the purpose of a hearing of a motion. While I accept that, if a motion is manifestly unarguable and/or untenable, a court may be permitted to deal, at a preliminary stage such as the mention, with such issues, it can do so only in a manner which provides a sufficient opportunity for the moving party to prepare and to present its case.

40 In the proceedings before the Court, the learned Magistrate concentrated on the terms of paragraph 13 of the Affidavit. This is an understandable focus, given that the Affidavit, settled by the legal representatives of Ms Shields, was filed for the purpose of supporting the notice of motion. Nevertheless, counsel for Ms Shields, appearing before her Honour, made clear that the understanding of Ms Shields as to the reason for non-attendance was not the understanding of counsel originally briefed in the matter. As has been extracted from the transcript, Ms Evans apologised on behalf of Mr Dibb, the original counsel, and explained that counsel had missed the date and that counsel’s understanding was not consistent with Ms Shields’s sworn testimony.

41 While counsel’s inadvertence is extremely regrettable, and may have other consequences in costs, it is part of a class of conduct which, but for the question of costs, should not permanently prejudice a party that appears before a court. The position of counsel is often submitted from the bar table without affidavit. Ms Evans sought, and was refused, an opportunity to put that explanation on affidavit. Further, Ms Evans made clear that she was not briefed in a way which would allow her to argue, fully or otherwise, the issues on which it was necessary to address the Court in relation to the arguability or success of the motion.

42 It is necessary for tribunals and courts to remind themselves, from time-to-time, that a refusal to grant an adjournment can constitute a failure to give a party to proceedings the opportunity of adequately presenting their case. In this case, an application for such purpose was made and refused. Even in the absence of an application for adjournment, there may be a requirement to grant one. The failure of a court or tribunal, required to act judicially, to adjourn a matter may, conceivably, and in this case does, constitute a failure to allow the party the opportunity of properly presenting their case: Priddle v Fisher [1968] 1 WLR 1478; Sullivan v Department of Transport (1978) 20 ALR 323 (per Deane J); Director of Public Prosecutions v Gursel Ozakca and Anor [2006] NSWSC 1425 at [11]-[13], [18]-[22].

43 Nothing in the foregoing minimises the issue of case management which, as earlier explained, is an even greater consideration in the Local Court, given the volume of cases that are required to be heard and the pressures on any and every magistrate. However, the principles of case management cannot obviate the necessity of allowing a party the opportunity to prepare and to present its case. In the circumstances of this refusal of adjournment, Ms Shields was denied that opportunity.

Conclusion

44 For the foregoing, reasons, there has been an error of law and a denial of natural justice. The Court makes the following orders:

(i) The appeal against the judgment of Culver LCM of 12 October 2007 be allowed;

(ii) The judgment of Culver LCM of 12 October 2007, in matters 167/2007 and 266/2007, be quashed;

(iii) An order in the nature of mandamus requiring the Local Court to hear and determine, in accordance with law, the motions filed by the plaintiff herein, in matters 167/2007 and 266/2007, seeking to set aside the judgments entered therein on 30 August 2007;

(iv) The defendant shall pay the plaintiffs’ costs of and incidental to these proceedings, as agreed or assessed;

(v) The defendant shall, to the extent otherwise eligible, be granted an indemnity certificate pursuant to the Suitors’ Fund Act 1951.

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