West Coast Transport Pty Ltd v Adams Group Services Pty Ltd
[2001] TASSC 94
•15 August 2001
[2001] TASSC 94
CITATION:West Coast Transport Pty Ltd & Anor v Adams Group Services Pty Ltd & Anor [2001] TASSC 94
PARTIES: WEST COAST TRANSPORT PTY LTD
DE BRUYN & SON PTY LTD
v
ADAMS GROUP SERVICES PTY LTD
ADAMS, Rawson
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: APPELLATE
FILE NO/S: 63/2000
DELIVERED ON: 15 August 2001
DELIVERED AT: Hobart
HEARING DATE: 14 June 2001
JUDGMENT OF: Cox CJ
CATCHWORDS:
Procedure - Judgments and orders - Amending varying and setting aside - Actions to review or set aside judgment - In general - Judgment in default of defence.
Evans v Bartlam [1937] AC 473; Grimshaw v Dunbar [1953] 1 QB 408, followed.
Aust Dig Procedure [490]
Evidence - Affidavits and statutory declarations - Affidavits - Use of affidavits - Cross-examination of deponent - Application to set aside judgment - Exemption from further cross-examination.
Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503; Sullivan v Henderson [1973] 1 All ER 48, followed.
Aust dig Evidence [252]
REPRESENTATION:
Counsel:
Appellants: S B McElwaine
Respondents: J Lynch
Solicitors:
Appellants: S B McElwaine
Respondents: Shields Heritage
Judgment Number: [2001] TASSC 94
Number of paragraphs: 13
Serial No 94/2001
File No 63/2000
WEST COAST TRANSPORT PTY LTD
and DE BRUYN & SON PTY LTD v
ADAMS GROUP SERVICES PTY LTD and RAWSON ADAMS
REASONS FOR JUDGMENT COX CJ
15 August 2001
This is an appeal from a decision of the Master whereby he granted an application by the respondents to set aside a judgment for damages to be assessed which was entered against them on 8 August 2000 in default of the delivery of a defence. The writ with statement of claim annexed filed on 1 May 2000, was delivered to the respondents in Victoria some time prior to 3 July 2000, on which date a Victorian solicitor purportedly entered an appearance on their behalf. A fortnight later, to cure any irregularity in the entry of that appearance, Tasmanian solicitors filed a fresh appearance on their behalf. On 7 August 2000, the Victorian solicitor notified the appellants' solicitor that instructions had been received for a defence, that he expected to forward a draft defence to the respondents' Tasmanian solicitor on the record on 9 August and expected the defence to be delivered to the appellants' Tasmanian solicitor on Friday, 11 August or Monday, 14 August "at the latest". Presumably by this time the time limited for delivery of defence had expired as the Victorian solicitor asked the respondents' solicitor for his "brief indulgence". At 6pm on 7 August, the appellants' solicitor sent an email advising that the indulgence sought would not be afforded. On 8 August, the Victorian solicitor telephoned the appellants' solicitor and was advised that judgment in default of defence had been entered that day. The Victorian solicitor said in a letter to the appellants' solicitor dated 8 August 2000 that the respondents intended to apply to have the judgment set aside. The application to set aside the judgment was filed on 18 August 2000.
The claims made by the first and second named appellants were as follows. The first named appellant alleged that by an agreement partly written and partly oral entered into about August 1999, the first named appellant agreed at the request of the first respondent to transport a dismantled paper machine from Burnie to Melbourne at an agreed cost per container and per trailer involved in the transportation. It was further alleged that the paper machine was transported at a charge in accordance with the agreement of $58,707.03 of which only $5,895 was paid, leaving a balance owing of $52,812.03. The balance had been due and unpaid since 14 March 2000 and from that date the first named appellant had been left to pay interest on that amount on its bank overdraft account. The second named appellant alleged that by an oral agreement made between the second named appellant and the first named respondent in about December 1996, the second appellant agreed to store the paper machine at Devonport for $800 per month. The discussions which constituted the agreement were between Mr De Bruyn on behalf of the second named appellant and Mr Rawson Adams, the second respondent, who was a director of the first named respondent. The second named appellant alleged that the machine was stored as requested until 31 August 1999, but payments were not made for the storage for the 19 month period between 31 January 1998 and 31 August 1999, the amount unpaid being a little over $15,000. These costs had been due and unpaid since 31 August 1999 and from that date the second named appellant had been left to pay interest on the amount owing on its bank overdraft account. So far as the second named respondent is concerned, the appellants claimed that he was personally liable to compensate them for their losses as a result of the breaches of the first respondent on the bases that the second respondent was at all material times a director of and agent for the first respondent; the transportation agreement and the storage agreement were negotiated by the second respondent on behalf of the first respondent; in the negotiations the second named respondent represented that the transportation and storage costs would be paid by the first respondent; the representations were made in trade or commerce, were misleading or deceptive or likely to mislead or deceive and the appellants entered into the agreements and performed their obligations relying on the representations; and that as a result the appellant suffered loss and damage. They respectively claimed against the first respondent the amount owing for the transportation and the amount owing for the storage charges and also claimed damages being the interest incurred on their overdraft accounts. The appellants claimed against the second named respondent damages pursuant to the Fair Trading Act 1990 for misleading or deceptive conduct.
To an affidavit sworn on 16 October 2000, the second named respondent annexed a proposed defence and counterclaim and swore that its contents were true. In the draft defence, all the allegations against him personally were denied and the first named respondent's liability to either appellant was also denied, although agreement with the first named appellant in respect of the transportation of the machinery to Melbourne and its storage in the meantime were not disputed. By way of set-off and counterclaim, the respondents alleged that irreparable damage had been caused to the machinery while in the possession of the appellants and damages of over $400,000 were sought to be set-off against any amount owing to the appellants while the balance was sought by way of counterclaim. The appellants gave notice requiring the deponent to appear for cross-examination on his affidavit pursuant to the Supreme Court Rules 2000, r463(1) and on 19 October 2000 the second named respondent submitted to cross-examination. At the end of that day, the matter was adjourned and the hearing was resumed on 29 November 2000, but cross-examination was still not completed on that occasion and the hearing was yet again adjourned. On the occasion of each adjournment, the second named respondent undertook to return for further cross-examination. Although court time was available in the meantime, the hearing did not resume until 4 May 2001. On that date the respondents had retained new counsel who advised the Master that the deponent "would not submit to further cross-examination". The Master then purported to exempt the second named respondent "from submitting to further cross-examination" pursuant to r463, which relevantly provides:
"463 (1) A party seeking to cross-examine a deponent on an affidavit filed on behalf of an opposite party may serve on that opposite party a notice requiring the production of the deponent for cross-examination at the hearing of the proceeding.
(2) The affidavit is not to be used as evidence unless –
(a)the deponent is produced according to the notice; or
(b)the Court or a judge makes an order under subrule (4) exempting the deponent from attending for cross-examination; or
(c)the Court or a judge grants special leave for its use.
(3) A party served with a notice under subrule (1) may apply to the Court or a judge for an order exempting the deponent named in the notice from attending for cross-examination."
When this appeal came on for hearing, there was some debate as to how the matter should proceed, for the notice of appeal claims specific error of law on the part of the Master in excusing the second named respondent from further cross-examination and in not permitting counsel for the appellants to resume it. Among other complaints it was alleged that this course had involved a denial of procedural fairness. An appeal from the Master is not an appeal in the strict sense, nor is it an appeal by way of complete rehearing in the same sense as an appeal under the Justices Act 1959, s113. The appeal is by way of rehearing with the judge exercising his own discretion and is decided by the judge upon the materials before the Master, together with any further evidence he may see fit to receive. The judge has full power to receive further evidence and in deciding whether or not to do so will be guided by what he considers to be the interests of justice in the particular circumstances (Butler v Electrolytic Zinc Company of Australasia Ltd [1975] Tas SR 9; Electrolytic Zinc Company of Australasia Ltd v Emmerton [1971] Tas SR (NC)). Accordingly, I ruled that although I would hear the appeal on the materials properly before the Master, I would entertain an application by the appellants to require the second named respondent to submit to further cross-examination before me. However, as the merits of the application before the Master were traversed by both sides in the process, I feel at liberty to deal with the issues on this appeal without confining myself to the last-mentioned application.
On the admissions made so far in cross-examination, it is clear that the first named respondent has no defence to the appellants' claims other than set-off. The two items claimed were the transportation costs and the storage costs, with consequential damages for the loss of use of the money. The second named respondent unequivocally acknowledged in cross-examination the following:
As to storage
"… one of the things I asked you to produce at the hearing today, I'll just remind you, was bank statements and cheque butts for payments of either of the defendants to either of the plaintiffs for storage and/or shipping costs claimed in the action. You just didn't bother to get those documents, did you? … Because we're not disputing storage costs.
Oh well wait a minute. De Bruyn & Sons claims about fifteen thousand six hundred dollars in storage costs in this action, do you dispute that claim? … No.
So why haven't you paid it? … Because we have an offset against damaged materials.
Oh I see. So the storage costs were part of the deal? You want to think about this answer very carefully, yes. The storage costs were part of the deal, were they? … Yes.
They were. So contrary to your defence, your draft defence, the storage costs were part of the deal? … Yes.
And contrary to the evidence you gave earlier that Mr De Bruyn had to pick up the storage costs from someone else, they were part of the deal, weren't they? … Yes."
As to transport
"Do you dispute that the total charge for that was fifty two thousand eight hundred and twelve dollars and three cents? I understand you say you're not liable for it for other reasons, but you don't dispute that that's the proper charge for transporting the machine to Melbourne, do you? … No, the money's been added up correctly.
Yep. But your dispute is 'they damaged parts and I have a set-off'? … Yes.
…
And you've got no dispute as to the amount of fifty two thousand eight hundred and twelve dollars and three cents, but subject to your set-off and counter claim? That's correct? … Yes, correct.
Now - and you haven't paid either of those amounts; that is, the amount claimed for storage, which is fifteen thousand five hundred and eighty seven dollars fifteen; or the transport cost, because of this set-off that you say you have? That's correct? … Yes."
In these circumstances, I can see no utility in setting aside the judgment regularly entered against the first named respondent. If it has a valid counterclaim in respect of damage to the goods while in the possession of the appellants, the appropriate course is to grant it a stay of proceedings on the judgment conditioned upon its prosecuting that counterclaim with due diligence, and the amount found due thereon can be set off against the appellants' judgment debts.
With respect to the appellants' claim against the second named respondent for damages under the Fair Trading Act 1990 for misleading and deceptive conduct, the only conduct alleged is the making by him of representations that the first named respondent would accept and pay the transportation and storage charges. The statement of claim asserts that by reason of the fact that the appellants have not been paid, these representations were false. That fact, however, does not establish that they were false at the time they were made. If the goods were damaged as alleged and the first named respondent suffered damage in excess of the charges, its right to a set-off would be justification for the non-payment. Even if the second named respondent as a director of the first named respondent subsequently invented some spurious excuse for the company not paying its just debts, it does not follow that his conduct at the time the contracts were entered into was misleading and deceptive. In my view, a claim of this nature must be based on conduct which was misleading and deceptive at the time that it occurred and at which reliance was placed upon it.
The considerations applicable to misleading and deceptive conduct under the Trade Practices Act (C'wealth) are similar to those under the Fair Trading Act. In James & Ors v Australia and New Zealand Banking Group Ltd & Ors (1986) 64 ALR 347 at 372, Toohey J said, in a series of propositions, that:
"(2) The mere fact that representations as to future conduct or events do not come to pass does not make them misleading or deceptive: Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242.
(3) Nevertheless, a statement relating to the future may contain an implied statement as to present or past fact. It may represent impliedly that the promisor has a present intention to make good the promise and it may represent impliedly that he has the means to do so: Thompson v Mastertouch TV Services Pty Ltd (1977) 15 ALR 487.
(4) A statement involving the state of mind of the maker of the statement, eg promises, predictions and opinions, ordinarily conveys the meaning that the maker of the statement had a particular state of mind when the statement was made and that there was basis for that state of mind. If the meaning contained in or conveyed by the statement is false in that or in any other respect, there will have been a contravention of s 52: Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 55 ALR 25; Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1984) 58 ALR 549."
In Cohen v Centrepoint Freeholds Pty Ltd (1982) 66 FLR 57, the court found against a defendant making a promise of future conduct on the basis that he had no intention at the time he made it of keeping the promise. The Fair Trading Act does not confine misleading or deceptive conduct in respect of predictions or promises of future conduct to situations where there is an absence of an intention to ensure that the promise was kept. Section 11 relevantly provides:
"11 (1) For the purposes of this Act, where a person makes an inaccurate representation with respect to any future matter (including the doing of, or the refusing to do, any act) the representation shall be taken to be misleading unless the person has reasonable grounds for making the representation.
(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a person with respect to any future matter, the person shall, unless the person adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation."
Thus the appellants have an evidentiary advantage in respect of proving their contention by relying on the fact that the first named respondent did not pay the charges. The second named respondent, to succeed in his application to set aside judgment, for practical purposes, needs to demonstrate the bona fides of his defence by showing the existence of evidence of reasonable grounds for making the alleged representations. It is clear from the second named respondent's affidavit that he was, at all material times in his discussions with the appellants, acting on behalf of the first named respondent. His admissions already referred to in respect of the charges lead to the conclusion that he made representations to the appellants that the first named respondent would pay the charges. However, his evidence in respect of the alleged entitlement to a set-off, if ultimately believed, would constitute a valid reason for the first named respondent not to pay the charges. It would be reasonable grounds for representing that the first named respondent would pay the charges, that the second named respondent at that time intended this to happen and had an expectation that the appellants would not damage the goods thereby giving rise to a sufficient set-off to warrant the non-payment of the charges. Hence there is material in the affidavit which, on its face, constitutes a bona fide defence to this claim.
There is a difficulty, however, in respect of this material. The difficulty is that if the Master erred in exempting the second named respondent from cross-examination on his affidavit pursuant to r463(2), the affidavit should not have been used as evidence and should not be regarded as part of the material before me. It is necessary, therefore, to consider whether or not the Master was in error in granting the exemption. This, in turn, requires a consideration of the proper method of determining an application to set aside a judgment in default of appearance or pleading and the extent to which cross-examination on affidavits filed in such proceedings may be allowed to go.
The discretion to set aside a judgment obtained by default is not fettered, although, as Lord Russell of Killowen said in Evans v Bartlam [1937] AC 473 at 482 in respect of the contention that before the court could exercise the power, the applicant was bound to prove that he had some serious defence to the action and give a satisfactory explanation for his default:
"The contention no doubt contains this element of truth, that from the nature of the case no judge could, in exercising the discretion conferred on him by the rule, fail to consider both (a) whether any useful purpose could be served by setting aside the judgment, and obviously no useful purpose would be served if there were no possible defence to the action, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained, to which he could have set up some serious defence. But to say that these two matters must necessarily enter into the judge's consideration is quite a different thing from asserting that their proof is a condition precedent to the existence or exercise of the discretionary power to set aside a judgment signed in default of appearance."
At 480, Lord Atkins said:
"The principle obviously is that unless and until the Court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure."
In Grimshaw v Dunbar [1953] 1 QB 408, Jenkins LJ said at 416:
"Then there is a more debatable point, as I regard it, as to how far the judge should consider the prospects of success of the party applying for a new trial. No doubt 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. For example, I apprehend that if an admitted and self-confessed trespasser allowed judgment for possession to go in default in his absence, the judge would be entitled, on an application for a new trial, to refuse on the ground that he was palpably a trespasser and could not, whatever evidence he gave, possibly justify his presence in the house. But, short of cases of that kind, I think that a new trial should seldom, if ever, be refused merely on the ground that the applicant's case appears to be a weak one, and it is, moreover, difficult to see how the tenant's case here could on the face of it be classed as obviously weak in view of the payment into court. Be that as it may, a party to an action is prima facie entitled to have it heard in his presence; he is entitled to dispute his opponent's case and cross-examine his opponent's witnesses, and he is entitled to call his own witnesses and give his own evidence before the court. Prima facie that is his right, and if by some mischance or accident a party is shut out from that right and an order is made in his absence, then common justice demands, so far as it can be given effect to without injustice to other parties, that that litigant who is accidentally absent should be allowed to come to the court and present his case ¾ no doubt on suitable terms as to costs ...".
The second named respondent has pledged his oath to a claim that the machinery stored and transported by the appellants was so injured while in the possession of the appellants that the proper measure of damage far exceeds the amount of their claims. Prima facie, therefore, the Court has material to demonstrate a possible defence for the second named respondent and a useful purpose to be served by setting aside the judgment against him. That material is likewise available in considering the justice of staying the judgment in respect of the first named respondent which does not have a defence save in respect of set-off. Counsel for the appellants argued that the second named respondent was obviously lying under cross-examination, refused or failed to produce various documents which were highly relevant to the truth of his claims and when reluctant to submit on a third occasion to further cross-examination, simply refused to enter the witness box. If a court found that a deponent was lying and could not be believed, then clearly it would disregard the evidence given by the deponent. Authority for this proposition is the case of Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 where Hope JA said, at 507:
"If the judge hearing the application concludes that the applicant has deliberately lied about the alleged defence and is thus dishonest in raising it, the applicant would fail to establish that he had a bona fide defence on the merits. But if in such a case the judge merely concluded that he preferred the evidence of the respondent to that of the applicant, or anything as to credit short of a disbelief by the applicant in the facts he relied on to found the defence, he would not on that account alone be entitled to find that the applicant had failed to establish that he had shown a bona fide defence on the merits. If he did so, he would be trying the issue to be determined at the trial, and this would be an error of law."
However, in this case the Master who saw and heard the witness, made no finding that the second respondent's evidence could not be accepted. True he described the evidence the second named respondent gave as "generally confusing and, in a number of respects inconsistent with the contents of his affidavit". A perusal of the transcript confirms this, but does not enable me to make a positive finding that the witness was lying. The burden of the cross-examination was to suggest that, far from being hampered in the sale of machinery to overseas buyers by the damage which was allegedly done to parts of it, there had been no such sale and the parts had been sold for scrap, as all along intended, the damage being accordingly immaterial. There was no admission to this effect, no finding by the Master and no basis upon which I could find it.
I agree with the Master's observation in the reasons for judgment he gave ([2001] TASSC 57 at par18) when he cited remarks made by Megarry J in Sullivan v Henderson [1973] 1 All ER 48 and said of them that they had direct relevance to a preliminary enquiry as to the merits on an application to set aside judgment. The citation was from 50 - 51 where his Lordship said:
"On 22 March 1972 the Master made an order giving the plaintiff unrestricted liberty to cross-examine the defendant on his affidavit; and I was told that a previous order of the Master, made on 15th December 1971, gave the plaintiff leave to adduce oral evidence in reply on giving written notice, which notice was duly given. The result of these orders, coupled with the fact that the defendant appeared in person, has led to the adduction of full and detailed oral evidence about all aspects of the disputed transaction, and much else besides. What in theory was to be a hearing to decide whether in effect leave to defend should be given, or whether summary judgment should be entered for the plaintiff for specific performance, became in fact a virtual trial of the action. This is not what RSC Ord 86, as I understand it, is intended for; nor is the case in a very satisfactory state, because, having been brought under the summons, there has been no discovery of documents, and no pleadings, apart from the short statement of claim endorsed on the writ.
…The summary process under RSC Ord 86 is one thing, and the trial of an action is another: a hearing under RSC Ord 86 with oral evidence is liable to become neither one nor the other, and to share the disadvantages of each. The hearing ceases to be summary, and the absence of pleadings and discovery, for example, prevents the hearing from achieving the exhaustiveness of a trial. The court may be put in the position, at the end of a two day hearing, of saying that there ought to be a trial of the action, in which case there will then be the repetition of much that has occupied the court and the parties during the hearing under RSC Ord 86."
The Rule is one of general application. Different considerations may apply in respect of affidavits on the trial of a proceeding such as one under the Testator's Family Maintenance Act 1910 from those applicable to an application such as the present. The Master had every reason to apprehend that the cross-examination would continue in the same vein as it had followed on the two preceding occasions, ie in the same way he would have expected the deponent to be examined at trial. After two hearings, no definitive break-through had been made in respect of the deponent's claim or his credit. It was well within the Master's discretion to determine that no further cross-examination should be permitted having regard to the subject matter of the proceeding and the circumstances of the case. Perhaps he overstated the case by suggesting that a proposed defence can only be rejected if the facts supporting it can be conclusively disproved, but I agree that in the circumstances of this case, further cross-examination on the merits would involve the unnecessary use of court time and increase the cost of litigation to no end other than to provide the appellants with a forum for further preliminary skirmishing. That being my view of the appropriateness of further cross-examination on merits, I would not, in the exercise of my own discretion on this rehearing of the application, grant leave for further cross-examination.
The Master took the view that cross-examination as to the issue of explanation for delay stood on a different footing, but concluded that, as counsel for the appellants in responding to the exemption application did not suggest that cross-examination was intended or ought to be permitted on the issue of explanation, the further cross-examination was intended to be confined to the issue of merits. There is no transcript of that part of the hearing and no evidence before me that he was in factual error. There is no evidence of when the writ was served, but on any view the delay was very short between the entry of either appearance and the filing of the default judgment and no suggestion of any prejudice to the appellants between that date and the filing of the application to set aside the judgment ten days later. I am not persuaded that the Master erred in making an order which had the effect of not permitting cross-examination on the issue of explanation, nor am I persuaded that justice requires that I afford the appellants that opportunity on this rehearing.
In my view, the appeal should be allowed in respect of the order setting aside default judgment against the first named respondent. That judgment should stand; but I will order a stay of proceedings conditioned upon the diligent prosecution of its counterclaim and will hear the parties further on that matter. The appeal against the setting aside of the judgment against the second named respondent is, however, dismissed.
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