Whitworth v Christian Brothers College Adelaide - [2019] SASC 154

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
WHITWORTH v CHRISTIAN BROTHERS COLLEGE ADELAIDE
[2019] SASC 154
Judgment of The Honourable Justice Doyle
29 August 2019
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE JUDGMENTS AND ORDERS - GENERAL PRINCIPLES
The defendant appeals from a decision of a Magistrate dismissing her applications to set aside a default judgment entered in favour of the plaintiff.
The plaintiff school sued the defendant for the school fees it claimed were owing in respect of her son’s tuition from late 2016 through to 2018. No defence was filed within the prescribed time, and the plaintiff obtained default judgment in the amount of $14,836.63 in its favour. The defendant brought two applications to set aside the default judgment, both of which were dismissed by the Magistrate on the ground that the material relied upon by the defendant did not disclose an arguable defence.
Held (per Doyle J):
1.       The Magistrate erred in declining to set aside the default judgment obtained by the plaintiff. The material relied upon by the defendant disclosed an arguable defence to the effect that the relationship between the parties was governed by annual contracts and that, in the relatively unique circumstances where the defendant had no control over whether her son attended the plaintiff school, an agreement between the parties cannot be inferred in respect of the 2017 and/or 2018 school years.
2.       Appeal allowed.
3.       The default judgment in favour of the plaintiff is set aside.
Magistrates Court (Civil) Rules 2013 (SA) r 87, referred to.
Sandery v Kowalski [2016] SASC 175; Cubelic v T & D Lock Pty Ltd [2009] SASC 397; Watson v Anderson (1976) 13 SASR 329; C E Heath Underwriting & Insurance (Australia) Pty Ltd v Edwards Dunlop & Co Ltd (1993) 176 CLR 535, considered.

WHITWORTH v CHRISTIAN BROTHERS COLLEGE ADELAIDE
[2019] SASC 154
Magistrates Appeal: Civil

DOYLE J: The plaintiff school (the School) sued the defendant (Ms Whitworth) for the school fees it claimed were owing in respect of her son’s tuition at the School from late 2016 through to 2018. No defence was filed within the prescribed time, and the School obtained default judgment in the amount of $14,836.63 in its favour.
Ms Whitworth subsequently brought two applications to set aside the default judgment, both of which were dismissed by the Magistrate on the ground that the material relied upon by Ms Whitworth did not disclose an arguable defence.
Ms Whitworth now appeals from the orders of the Magistrate dismissing her applications to set aside the default judgment. She contends that the Magistrate erred in concluding that her affidavits did not disclose an arguable defence. In particular, she contends that those affidavits disclosed an arguable case that she did not owe the school fees claimed on the basis either that she terminated her contract with the School in late 2016, or alternatively that she did not renew that contract in 2017 or 2018.
Overview of the proceedings
The School’s pleaded claim, filed 14 June 2018, was based upon a contract for the provision of educational services arising out of an application for the enrolment of Ms Whitworth’s son at the School.
The enrolment form was dated 21 January 2009, this being at the commencement of the son’s first year at the School. The application for enrolment included acknowledgments that Ms Whitworth, as the signing parent, agreed to pay the fees “in accordance with the College Board policy” as well as any debt recovery costs.
The School claimed a sum of $15,452.50 for unpaid tuition and related fees for the period from November 2016 to February 2018, plus $4,196.63 in debt recovery costs, giving a total of $19,649.13.
The School’s claim was served upon Ms Whitworth on 25 June 2018. No defence was filed, and on 21 January 2019 the School sought default judgment in the amount of $14,686.63 plus costs of $150, giving a total of $14,836.63. Default judgment was entered in this amount.
It is not entirely clear how the amount of $14,686.63 was arrived at, although it appears to have been comprised of a small amount for unpaid fees from 2016, the entirety of the tuition and related fees for 2017 and 2018, plus the debt recovery fees mentioned in the claim, but less two amounts referable to payments towards the son’s fees referred to as “school card” payments. One of these school card payments ($4,581.50) was made in 2017 and had already been reflected in the figure for tuition and related fees in the statement of claim. The other school card payment was for $5,901.25 made in 2018. This second school card payment had not been reflected in the figure in the School’s claim, but was ultimately reflected as a credit in reduction of the amount sought and awarded by way of default judgment.
On 13 February 2019, Ms Whitworth filed an application to set aside the default judgment that the School had obtained in its favour. The application was supported by an affidavit of Ms Whitworth, sworn 13 February 2019. Ms Whitworth subsequently filed a second affidavit, sworn 15 February 2019.
The application to set aside the default judgment was heard and determined by the Magistrate on 25 March 2019. His Honour delivered some short ex tempore reasons for dismissing the application. His Honour concluded that the affidavit evidence relied upon by Ms Whitworth did not provide any basis for her contention that she had terminated her contract with the School, or had otherwise withdrawn him from the School.
On 2 April 2019, Ms Whitworth then filed a second application to set aside the default judgment. It was supported by a third affidavit of Ms Whitworth, sworn 2 April 2019. The School filed an affidavit from its solicitor, Mr Stewart-Rattray, sworn 11 April 2019, in opposition to that application.
The second application to set aside the default judgment was heard and determined by the Magistrate on 15 April 2019. Again, his Honour delivered some short ex tempore reasons for dismissing the application. His Honour reasoned that the further evidence filed by Ms Whitworth did not alter the position, and hence did not establish any arguable defence to the School’s claim for school fees.
The appeal
The present appeal is from both decisions of the Magistrate. No point was taken as to the appropriateness of the Magistrate entertaining two applications to set aside the default judgment. Both parties approached the appeal on the basis that it turned upon whether the totality of the evidence relied upon by Ms Whitworth disclosed an arguable defence to the School’s claim for tuition and related fees.
Under r 87(1) of the Magistrates Court (Civil) Rules 2013 (SA), the Magistrate had power to set aside a judgment in default. However, under r 87(2) a judgment must not be set aside unless the party seeking to have it set aside establishes both (a) that he or she has an arguable defence, and (b) that he or she has a reasonable excuse for not having complied with the Rules.
The Magistrate’s reasons do not address the issue of whether Ms Whitworth had a reasonable excuse for her non-compliance with the rule setting out the time for the filing of a defence. However, as the School has not filed any notice of contention, and does not otherwise seek to uphold the decision below on this basis, it is not necessary for me to consider that issue.
The issue of whether the affidavit material relied upon by Ms Whitworth established an arguable defence must be considered in light of the authorities on this topic. Those authorities make it plain that it is not sufficient for the defendant to articulate, let alone baldly assert, the existence of a defence. Rather, the defendant must put before the Court sufficient evidence to enable the Court to be satisfied that the defence is one that the defendant genuinely intends to pursue and has an arguable basis for pursing.[1]
[1] Sandery v Kowalski [2016] SASC 175 at [25]-[26], [39]; Cubelic v T & D Lock Pty Ltd [2009] SASC 397 at [18]; Watson v Anderson (1976) 13 SASR 329 at 341.
It is appropriate to commence my consideration of whether Ms Whitworth established an arguable defence by summarising the effect of her evidence.
Ms Whitworth’s evidence
As mentioned, Ms Whitworth filed three affidavits. In addition to providing a summary of her relevant communications with the School, her affidavits annexed a number of documents both in relation to those communications and in relation to the fees charged by the School.
By way of summary, in her first affidavit, Ms Whitworth said that her son attended the School for his secondary school education.[2] Through to his completion of year 9, at the end of 2015, the son was a successful student, and she and her husband (the son’s step-father) had a good relationship with him.
[2] It is apparent from other evidence that he had been enrolled at the School from 2009.
However, Ms Whitworth said that there was a dramatic change during 2016, while her son was in year 10. She and her husband lost contact with their son, and attributed this to what she described as “interference” on the part of the School, and in particular a counsellor employed by the School. They initially did not know where their son was living, and indeed were not given the information about him and his whereabouts that they were seeking. They subsequently learned that he was staying at a facility run by the Baptist Church, but they still had no ability to contact him. According to Ms Whitworth, the School in effect precluded them from having any contact with their son. They were aware that he was continuing to attend the School, but believed that his academic performance was declining.
Ms Whitworth said that they contacted the School by various methods, including by email and telephone, and through meeting with staff at the School, but were not successful in having contact with their son. She said (at [10]-[11]):
We made it very clear to the officers of the plaintiff that we did not want [our son] staying at the school. … Our repeated requests for his schooling at the plaintiff’s school to be terminated and for him to go to another school were ignored.
Ms Whitworth said that at the end of “the two years saga”, when their son was 18 and living in rental accommodation in Marion, they managed to resume visiting him regularly, and to begin to restore their relationship with him. She concluded her first affidavit by stating that she was not prepared to pay the fees charged by the School “on account of the fact that we requested that his schooling with the plaintiff stop and also due to the poor performance.”
In her second affidavit, Ms Whitworth said that the relationship she and her husband had with their son began to deteriorate from May 2016, ultimately resulting in him leaving home on 29 September 2016. He had just turned 16 years of age.
Ms Whitworth outlined some of her communications with the School. In particular, she said (at [5]-[6]):
On 29 August 2016 we went to the school, to a parenting interview. It became apparent that [our son] had missed a lot of classes. Up until then his attendance had been good. We spoke to the Deputy Principal and the Director … (separately) and advised them that we did not want [our son] to remain at the school and that we wanted to send him to Adelaide High School. [The Deputy Principal] did not respond to that statement. [The Director] gave the same response.
There was another earlier meeting in August 2016 with [the Deputy Principal] where I told them the same thing. [The Deputy Principal] did not directly respond to that request, but said that we should not worry about finances for [our son], because now that he turns 16 he qualified for Centrelink benefits just like an university student.
Ms Whitworth later referred to an undated meeting with the Principal of the School. She described the meeting as being to facilitate her son’s return without detailing anything said at that meeting.
Ms Whitworth explained that she had had only minimal contact with her son since he left home. He did join her and her husband on a cruise over the 2016 Christmas period, but did not return to their home. She also referred in very general terms to several discussions she had with her son in which he suggested that he was receiving Centrelink benefits (in the form of a youth allowance) and that the School would pay, or arrange for the payment of, his school fees.
Ms Whitworth concluded her second affidavit by stating (at [12]):
The effect of my discussions with staff at the school and their correspondence dated 9 May 2017 and 8 July 2018 and the role of the school’s staff in the breakdown of our relationship with [our son] and our request to have him removed to another school, is the basis for our refusal to pay the school fees for the last two years he attended there. We have experienced a great deal of suffering because of what has occurred and [our son’s] academic performance has declined and he cannot work physically due to the injuries he sustained while away from us.
Ms Whitworth swore her third affidavit after the dismissal of her first application to set aside the default judgment. She said she did so in order to rely upon a number of documents that she by then understood were relevant to the existence of her defence. She said that since her son’s enrolment in 2009 they had, at the beginning of each year, received documents requesting the payment of school fees. She attached, as examples, the documents received from the School in 2017 and 2018 (see below). She said (at [6]):
We informed the school that we would not be paying any accounts it sent to us unless [our son] was returned to our custody. That never happened. That is why I did not sign the School Fee Agreements for 2017 and 2018.
She also referred to the payment of $4,581.50 credited on the invoice for her son’s 2017 fees. She said she did not pay this amount. (It would appear this was a payment or subsidy from the government, referred to on the invoice as a “school card” payment.)
In terms of the documentation annexed to Ms Whitworth’s second and third affidavits, it included the enrolment application form signed by Ms Whitworth in January 2009. That document included acknowledgements that in addition to various conditions stipulated, the signing parent(s) agreed to pay “the fees in accordance with the College Board policy”; that payment of accounts was their responsibility; and that they agreed to pay any debt recovery costs.
Ms Whitworth’s affidavits also attached documents relating to the fee arrangements for 2017 and 2018. The documentation for 2017 included:
·    A pro forma letter dated 23 January 2017 from the school’s ‘Business & Finance Manager’ headed ‘For your urgent attention – 2017 financial information.’ The letter provided information “to assist the College in ensuring you formalise a payment arrangement for 2017 school fees”. It referred to an attached invoice for the fees for the 2017 school year. It explained the process for applying for a scholarship, school card or sibling discount, and the payment options that were available. It noted that “all families must complete the School Fee Agreement form and commence a regular payment plan in February 2017 with a view to having the account settled in full (with regular and ongoing payments) by no later than 20 October 2017”. The letter concluded by noting that the ‘School Fee Agreement’ and ‘School Card Application’ forms needed to be completed, signed and returned to the School by 10 February 2017.
·    Blank ‘School Fee Agreement’ and ‘School Card Application’ forms.
·    A document entitled ‘CBC Financial Information for 2017’ signed by the Principal and Chairman of the College Board. The document set out the matters that the College Board had considered in setting fees for 2017. It referred to the expectation that all parents “honour their financial commitments made at enrolment in payment of all fees and levies” by taking the steps then set out. These included taking steps to ensure payments were made, or advising the Principal of any inability to do so. The document went on to identify the annual fees payable for each year level at the School, and the payment options available. Under the heading ‘Payment of Fees’ the document stated:
In-line with the terms of the enrolment contract signed by parent(s)/caregiver(s) it is the responsibility of the enrolling parent(s)/caregiver(s) to ensure that their fees are paid in a timely manner and in accordance with an approved payment arrangement.
The College reserves its right to re-enrol (sic) students should unpaid fees continue to accumulate and place families in further financial risk.
·    An undated pro forma letter entitled ‘Tuition Fees – 2017’, which referred to an attached tax invoice for the 2017 school fees. It included a note reminding the parent(s) of their responsibility to pay their child’s school fee account for 2017.
·    An invoice for their son’s 2017 fees dated 27 February 2017 (seeking $10,710 in respect of fees and related charges, including an outstanding balance of $97 from 2016).
·    Further invoices for those fees (but with a credit of $4,581.50 for a “school card” received in March 2017) dated 10 April 2017, 16 May 2017, 25 September 2017 and 2 November 2017. The accounts each had a sticker on them variously stating that the invoices were overdue, required urgent action or were by way of final notice.
·    A letter dated 4 December 2017 advising Ms Whitworth of the appointment by the School of a debt recovery agent.
Ms Whitworth also attached equivalent documentation from the School in respect of the 2018 fees.
Turning to the documentation relied upon by Ms Whitworth in relation to her difficulties with the School and her son, it included the following:
·    A letter dated 17 October 2016 from the school counsellor in support of the son’s application for a youth allowance from Centrelink. The letter included an explanation of why the counsellor considered it unsafe for the son to live in the family home.
·    An email dated 1 November 2016 from Ms Whitworth and her husband to the Principal referring to their attempts to get an explanation for their son being sent to a shelter and applying for Centrelink payments without their permission or consent. They asked where their son was staying.
·    A responding email dated 2 November 2016 from the Principal giving some explanation for the son leaving home, and referring to a more detailed letter that would follow. The Principal said that he was working to try and ensure the son returned home.
·    An email dated 8 November 2016 from the counsellor setting out her notes of a meeting that had occurred that day. Those present at the meeting included the Principal, the counsellor, the son, Ms Whitworth and her husband. The meeting focussed upon the relationship between the son and his parents, and the son’s living arrangements. Ms Whitworth made it plain that she wanted her son to return home, whereas the son made it plain he did not want to do so and, indeed, wanted his parents to stop trying to locate and contact him. While the parents continued to attribute blame to the School for their son’s situation, there was no reference in the notes to anything about the arrangements for their son’s schooling.
·    An email dated 9 November 2016 from the son’s godmother to numerous members of the School staff seeking their assistance in encouraging the son to return home.
·    A letter dated 11 November 2016 from the Principal to the parents in relation to their unacceptable behaviour towards the School. The letter suggested a way forward in terms of their communications with the School, and sought assistance in addressing their family difficulties.
·    An email dated 6 May 2017 from the step-father to the Principal seeking a report on how their son had come to be taken away. The Principal responded by email dated 9 May 2017 referring to an earlier (November 2016) communication declining to provide a report and mentioning the involvement of external agencies in determining the son’s living arrangements, but also indicting that the School “is providing every support to [the son] to ensure his academic wellbeing is not compromised.”
·    An email dated 5 July 2017 from the acting CEO of Baptist Care to Ms Whitworth and her husband. The email said that the son was happy, fit, healthy and had a good school attendance; that he was well supported by both the School and Baptist Care; and that Centrelink had deemed him to be an independent adult and that he was therefore able to make decisions for himself.
·    An email exchange between Ms Whitworth and the Principal on 27-28 August 2017 in relation to the former’s continued difficulty in contacting her son.
·    An email dated 26 October 2017 from the Principal to Ms Whitworth and her husband and a large number of other recipients (including a number of politicians and the Archbishop), apparently in response to an email that the husband had sent those recipients a couple of days earlier. The email contained assurances that the son was safe, well and attending school. The email requested that the parents desist from disparaging the School, and assured them of the School’s “continued commitment to the education of your child and working in partnership with you in this challenging time.”
·    An email dated 10 December 2017 from Ms Whitworth’s husband to numerous recipients, again including not only the Principal but also a number of politicians and the Archbishop. The email made various allegations about the School including in relation to the son being “forcibly taken away” from Ms Whitworth. It included reference to a letter from the School’s debt collectors seeking payment of school fees. The email also included:
We never signed the 2017 School Fee Agreement Form.
Are we supposed to pay the Christian Brothers College for them to steal our only child from us???
As we said in the previous email why is the school still harassing us.
Since [our son] is living completely independently the school promised to pay all his school fees. We have been completely cut off from any access to [his] school progress and results.
·    An email dated 5 February 2018 from Ms Whitworth’s husband to over 100 recipients, including a large number of politicians. The email complains that their son has been ‘stolen’ from them by the School and placed in Baptist Care.
·    An email from the Principal to the parents dated 5 February 2018 in which he referred to the assistance provided by the School. It included:
I remain committed to ensuring [your son] returns home. I will keep on asking him to do so. I am also open to any advice you can give me to assist you in bringing your child home. Whilst he remains at CBC we have been assisting him with food, clothing, school uniform and fees.
After expressing concern about emails sent by the parents to a wide distribution list (which included politicians and the Archbishop), the email concluded:
I remain as always committed to supporting [your son’s] education and want you to be assured whilst under a CBC education we will provide every resource to enable him to complete his SACE.
·    An email dated 13 May 2018 from the parents to a large number of recipients (including the Principal, the acting CEO of Baptist Care as well as the Archbishop and a number of politicians). The email complained about the parents’ continuing difficulties in obtaining access to their son.
·    An email dated 8 July 2018 (and hence after the issuing these proceedings) from Ms Whitworth to the Principal referring back to his reference to the School being willing to assist her son with his fees in his email of 5 February 2018.
·    An email dated 9 July 2018 from the Principal to Ms Whitworth referring to the 8 July email above and stating that:
It has always been a clear expectation that you are responsible for the payment of school fees for your son as you are contractually obligated in your enrolment contract which you signed. I have reminded you of this obligation at numerous meetings throughout 2017/18. As you recall I provided a copy of this signed contract at our meeting of June 29 as evidence against your claim you hand not signed a CBC contract.
My email dated February 5 was to advise you that [your son] had resonated your request that he remain at school. CBC advanced money to cover his food and clothing as he said you had not provided this and certainly had CBC not underwritten his school fees he would not have a place at CBC.
It remains our clear expectation that you pay all outstanding school fees and MCM charges Frank please add full amount including MCM here (and a commitment to pay proposed fees in terms of ongoing additional VET/TAFE courses [your son] chooses to enhance his ability to undertake future study beyond CBC) in full by Monday August 6 both to avoid further legal fees and also to ensure [your son’s] continuing enrolment.
I trust this clarifies the Colleges’ position in terms of your son’s school fees.
·    An email dated 25 July 2018 from the Principal to Ms Whitworth again reiterating the School’s expectation that Ms Whitworth was liable for the fees.
·    An email dated 25 July 2018 from the parents to the Principal which included the following in relation to fees:
When [our son] was forced to leave our family home by the Christian Brothers College without our permission and consent in October 2016 your school promised [our son] to pay all his school fees.
We have continually said throughout the last 1.5 years in discussion with [the Principal] we will pay the school fees once [our son] is returned to our family.
·    An email dated 1 August 2018 from the Director of Catholic Education SA to the parents suggesting that the son had not been attending school that term, but setting out steps that were being taken to try and ensure his return to school.

While the evidence is not entirely clear, it seems that the son ceased attending the School in the middle of 2018 and has not subsequently returned to the School.
The Magistrate’s reasons
In his reasons dated 25 March 2019, the Magistrate focussed upon whether Ms Whitworth’s first two affidavits identified an arguable defence. In this respect, his Honour proceeded on the basis that the issue was whether the affidavits disclosed a basis for the contention that Ms Whitworth had terminated her contract with the School. His Honour referred to paragraph [5] of Ms Whitworth’s second affidavit (set out above) in which she referred to the 29 August 2016 meeting that she and her husband had with the Deputy Principal and Director; and said that they “advised them that we did not want [our son] to remain at the School and that we wanted to send him to Adelaide High School.”
The Magistrate rejected the contention that this raised an arguable defence that the contract had been terminated. His Honour explained:
Nowhere in any of the affidavit material does the defendant indicate that she formally terminated her contract with the plaintiff College. In fact, the affidavit of 15 February 2019 exhibits extensive correspondence with the school, all of which is inconsistent with the suggestion that the defendant has withdrawn her son.
From the end of 2016 through to early 2018, there were a number of communications from the defendant and her partner to the plaintiff school concerning access to their son. Nowhere does the correspondence suggest that the defendant wished to withdraw her son or that she wished to terminate her contract with the College.
In arguendo Mr Scragg suggested to me that because the school was instrumental in preventing the defendant from seeing her son, she were unable to withdraw him from the College. I reject this submission. All that would have been necessary to terminate the contract with the school was a simple written communication.
The main complaint of the defendant seems to be that the school was uncooperative and even hostile towards her in her endeavours to contact her son. That is not a matter that is easily confirmed by analysis of the correspondence. However, such analysis is not necessary. As I have said, the correspondence makes it clear that the defendants had an ongoing contractual relationship with the school.
The application to set aside the judgment is dismissed.
In his reasons dated 15 April 2019 the Magistrate reached the same conclusion. His Honour did not accept that Ms Whitworth’s third affidavit advanced her contention that she had terminated the contract. The Magistrate reiterated that while the evidence revealed complaints to, and about, the School about her son, the evidence did not support any termination of the contract. His Honour said:
As already noted, the defendant was at liberty at any time to cancel the contract between the school and herself by withdrawing her child. She did not do that. What is clear from the correspondence is she was using the threat of non-payment of fees as a lever to get the school to become pro-active in returning the child home.
The defendant has failed to satisfy the test that she must establish an arguable defence before judgment can be set aside. There is no arguable defence against the claim for school fees.
Consideration
On appeal, counsel for Ms Whitworth contended that the Magistrate erred in confining his consideration to whether or not it was arguable that she had terminated her contract with the School. He contended that the Magistrate’s analysis assumed there was a single contract between the School and Ms Whitworth in relation to her son’s tuition at the School; that is, a contract that commenced upon the son’s enrolment in 2009 and continued from year to year until terminated. He contended that this overlooked Ms Whitworth’s (primary) case that in fact there was a series of annual contracts; and that, if the relationship between the parties was governed by annual contracts, then it would be sufficient to establish that it was arguable that Ms Whitworth did not enter into any contract for the 2017 or 2018 school years.
Accordingly, as developed in argument before me, Ms Whitworth contended that she should succeed on appeal on the basis that it is arguable either:
· that her relationship with the School was one of annual contracts or renewals, and that she did not agree any contract or renewal in 2017 or 2018; or
· that even if there was only one contract she nevertheless terminated that contract in late 2016 (or at some point thereafter).
Taking these in reverse order, I share the Magistrate’s difficulty in identifying any reasonable basis for a defence founded upon a late 2016 termination of a single contract between the parties. I do not think that Ms Whitworth has pointed to any communication which was arguably a termination of any such contract. Termination of a contract requires some unequivocal communication or conduct indicating that the contract is at an end. While the evidence does reveal a number of complaints by Ms Whitworth about the School’s handling of the situation with her son, and expressions of a desire that he go to a different school, I do not think these provide an arguable basis for Ms Whitworth’s contention that there was a late 2016 termination of the contract between Ms Whitworth and the School. It may be that there was some communication sufficient to constitute a termination. However, the problem for the defendant is that it has not been sufficiently identified in the affidavit material that has been filed.
Turning to the first limb of Ms Whitworth’s defence, the issue of whether the parties’ relationship was governed by a single contract or a series of annual contracts is not straightforward. In the analogous context of characterising the annual renewal of a contract of insurance, the High Court in C E Heath Underwriting& Insurance (Australia) Pty Ltd v Edwards Dunlop & Co Ltd[3] described the issue of construction that arises in the following terms:[4]
Whether there is a renewal or an extension of an insurance policy is a question of construction, the term “renewal” often being used to refer to both “renewal” and “extension” in the sense that those words are used above. It is, however, well established that, where a policy is renewable only by mutual consent (i.e. not as of right), the renewal results in a fresh contract rather than the extension of an existing contract. Of course, a policy may expressly stipulate that it is not to continue in force beyond the period of insurance, unless renewed by mutual consent. And where a policy, such as the ordinary form of life policy, expressly provides for continuation beyond the specified period of insurance unless a particular event, such as the non-payment of the premium, takes place, the renewal is an extension of the original contract. But where a policy is silent on the question of renewal, renewal of it will generally constitute a new contract.
[3] C E Heath Underwriting & Insurance (Australia) Pty Ltd v Edwards Dunlop & Co Ltd (1993) 176 CLR 535.
[4] C E Heath Underwriting & Insurance (Australia) Pty Ltd v Edwards Dunlop & Co Ltd (1993) 176 CLR 535 at 545-546 (citations omitted).
Here, the evidence presently before the Court does not reveal a clear answer to the question of construction. While aspects of the 2009 enrolment application form signed by Ms Whitworth seem to assume an ongoing relationship, there is no express stipulation that the contract will continue in force beyond the end of each school year unless some step is taken or not taken. On the other hand, the form also assumes that there will be the potential for school fees to be reviewed each year, which is suggestive of a new contract each year. The fact and form of the paperwork provided by the School at the start of each school year is also suggestive of annual contracts.
It is sufficient for present purposes for me to conclude, as I do, that it is at least arguable that the proper construction of the relationship between the parties was that of a series of separate annual contracts for each school year.
On this analysis, given that virtually the entirety of the fees claimed by the School related to the 2017 and 2018 school years, the issue becomes whether there is an arguable basis for contending that no contract was agreed or entered into in respect of the 2017 or 2018 school years.
In this respect, Ms Whitworth relies upon the fact that she did not complete or sign any of the documentation (summarised earlier) sent to her at the start of each of those years in relation to fees for the year. Ms Whitworth’s counsel accepted that entry into a contract might be inferred even in the absence of the documentation being completed and signed. He accepted, for example, that a parent’s acceptance of the terms offered by the School, and hence objective intention to enter into a binding agreement, might ordinarily be inferred from the parent’s conduct in sending their child to school each day.
However, he contended that there was no basis for any such inference in this case because of the unusual circumstances surrounding the continuing attendance of Ms Whitworth’s son at the School. It is apparent that the parents had no control over his attendance at the School; that his attendance was being facilitated by Baptist Care and the School; and that his parents had not only lost control of their son and his schooling, but had also repeatedly expressed their dissatisfaction with the School and a desire that their son go to another school.
In contesting the suggestion of any inferred or tacit agreement, Ms Whitworth also relies upon what she contends were statements (or at the very least intimations or indications) from the School that it was in some way taking on responsibility for the son’s school fees. She relies, for example, upon the 5 February 2018 email from the Principal (extracted above) in which he made reference to the School “assisting him with food, clothing, school uniforms and fees” as well as other assertions in correspondence that the School had made other statements to similar effect. She further relies upon the fact that the School (or someone else on its behalf) did arrange for some of the son’s fees to be met through the “school card” payments referred to earlier.
It is true that the precise timing and content of the communications relied upon in this respect have not been identified by Ms Whitworth. It is also true that the School denies that it ever accepted responsibility for the son’s fees. However, the issue for present purposes is not whether the affidavit material before me establishes a defence to the School’s claim; it is whether it establishes an arguable defence.
The affidavit material before me is not entirely satisfactory. It is in many respects vague as to the timing and content of the critical communications between the parties. However, in the ultimate analysis I am satisfied that it goes beyond mere assertion that there was no agreement reached in respect of the 2017 or 2018 school years. I am satisfied that the material establishes an arguable ‘defence’ to the effect that the relationship between the parties was governed by annual contracts and that, in the relatively unique circumstances that I have described, an agreement between the parties cannot be inferred in respect of the 2017 and/or 2018 school years.
Conclusion
For the reasons set out above, and without of course expressing any view as to the prospects of Ms Whitworth ultimately being successful in her defence of the claim, I am satisfied that there is an arguable defence case in the sense required by r 87(2)(a). As no point has been taken in relation to r 87(2)(b), the appeal must be allowed and the default judgment in favour of the School set aside.
I will make the following orders:
1. Appeal allowed.
2. The default judgment in favour of the plaintiff is set aside.