Skyshades Holding Pty Ltd v Caterer
[2011] QDC 241
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- Unreported Judgment
- Skyshades Holding Pty Ltd v Caterer[2011] QDC 241
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Skyshades Holding Pty Ltd v Caterer[2011] QDC 241
Skyshades Holding Pty Ltd v Caterer[2011] QDC 241
DISTRICT COURT OF QUEENSLAND
CITATION: | Skyshades Holding Pty Ltd v Caterer [2011] QDC 241 |
PARTIES: | SKYSHADES HOLDING PTY LTD AND CHRISTOPHER GARY CATERER |
FILE NO/S: | Appeal 2587/11 |
DIVISION: |
|
PROCEEDING: | Appeal |
ORIGINATING COURT: | Magistrates Court, Stanthorpe. |
DELIVERED ON: | 5 October 2011 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 5 October 2011 |
JUDGE: | McGill DCJ |
ORDER: | Appeal allowed; order of the magistrate of 27 June 2011 set aside; order in lieu that the default judgment signed on 4 May 2011 by the registrar of the Magistrates Court at Stanthorpe be set aside, proceedings be transferred to the Magistrates Court at Brisbane, the plaintiff provide the particulars of the statement of claim requested on 27 April 2011 within 14 days, extend time for filing and serving the notice of intention to defend and defence until 14 days after receipt of those particulars, and the plaintiff pay the defendant’s costs of the application to be assessed; the respondent pay the appellant’s costs of and incidental to the appeal to be assessed. |
CATCHWORDS: | PRACTICE – Default judgment – whether irregular when action commenced in wrong Magistrates Court – whether defence on merits shown. PRACTICE – Default judgment – signed after unanswered request for particulars and extension of time for filing notice of intention to defend – bad practice – relevant to costs of application to set aside. UCPR r 35, r 290. Collier v Liebrecht [1983] 2 Qd R 726 - applied. Hill v Robertson Suspension Systems Pty Ltd [2009] QDC 165 – cited. Jiona Investments Pty Ltd v Medihelp General Practice Pty Ltd [2010] QCA 99 – applied. National Australia Bank Limited v Singh [1995] 1 Qd R 337 – cited. National Mutual Life Association of Australasia Limited v Oasis Developments Pty Ltd [1983] 2 Qd R 441 – applied. Reid Murray Development Queensland Pty Ltd v Lynwood Holdings Pty Ltd [1964] QWN 1 – cited. Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 Qd R 85 – followed. |
COUNSEL: | S J Given for the appellant. W F Brown for the respondent. |
SOLICITORS: |
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- [1]This is an appeal from the decision of a magistrate in Stanthorpe who on 27 June 2011 dismissed an application to set aside a default judgment which had been signed by the acting Registrar in Stanthorpe on 4 May 2011.
- [2]On 23 March 2011 the plaintiff had filed a claim in the Stanthorpe Magistrates Court claiming a debt of $43,000-odd and interest and costs. The statement of claim, after alleging that the parties are capable of suing and being sued, alleges that between June 2009 and August 2010 the plaintiff, at the request of the defendant, provided design and drafting services to the defendant and the plaintiff had issued invoices for the work done and the defendant owes the plaintiff $43,000 odd for the work he has done for the defendant. The pleading is reminiscent of the old common law declaration in indebitatus. It provided the bare minimum of the claim and significantly did not allege that the work had been done by the plaintiff in the Stanthorpe Magistrates Court district.
- [3]The claim was served at what was in fact the registered office of the company by a licensed commercial sub agent on 28 March 2011. The affidavit of service states that the document was served by leaving a sealed copy with a named person at the registered office of the company at a particular address, but all that the affidavit says about the identification of the place as the registered office of the company is that that person told her that it was the registered office of the company.
- [4]The question of how to prove service on a company and its registered office was discussed in a judgment of mine in Hill v Robertson Suspension Systems Pty Ltd [2009] QDC 165 and I will not repeat what I said there. I note that that decision after it was published was the subject of an article in Proctor so it ought to be reasonably well known within the profession. I do not consider that one proves what is shown in the records of ASIC as to the location of the registered office simply by saying that “a man told me so.”
- [5]There is also the consideration that, as I mentioned in that decision, service at a place shown in the records as the registered office will be good service even if the office of the company is not in fact at that location.
- [6]It follows that what matters is proving that it has been served at the address shown in the records of ASIC as the registered office, and that is not what was done here. Accordingly, I do not consider that the plaintiff had properly proved service, and therefore default judgment ought to have been refused. However, it does not appear that this issue was raised before the magistrate on the application and one, in those circumstances, cannot criticise the magistrate for having failed to spot it herself.
- [7]The application did, however, rely on another irregularity, in that there had been a failure on the part of the plaintiff to comply with r 35 in starting the proceeding in the Stanthorpe Magistrates Court. The Magistrates Courts Act 1921 provides that there is a separate Magistrates Court in each district, and s 15 provides that the District and Magistrates Courts respectively in which proceedings may be brought and heard and determined shall be as prescribed by Rules of Court. Now, the relevant Rule of Court is r 35 of the UCPR which applies to Magistrates Court pursuant to r 34. Rule 35 is also expressed as a mandatory provision that uses the word “must.”
- [8]There was nothing in the proceeding, in the pleading or in the material before the registrar, or for that matter before the magistrate apparently, to show that what the plaintiff was suing on in respect of work done was work alleged to have been done in the district. Rule 35(1)(e) refers to, as a place where a proceeding may be commenced, “the district in which all or part of the claim or cause of action arose.” If one is suing for the work done at the request of someone in the particular district then that would indicate that the cause of action for the claim arose in the district and in those circumstances the proceedings were properly commenced under r 35.
- [9]There was, however, nothing in the pleading to indicate that. Rule 22 (2)(c) requires that a plaintiff for a claim filed in the Magistrates Court must show the Court has jurisdiction to decide the claim. That the question of where a proceeding is commenced is a matter which goes to the jurisdiction of the Court in a particular place is shown by the decision of the Full Court in Collier v Liebrecht [1983] 2 Qd R 726, which also showed that the mere fact that the plaintiff lives in a particular district and that there is an old principle that a debtor must seek out and pay his creditor where the creditor is, does not provide a basis for bringing a matter within a rule similar to r 35, simply on the basis that the plaintiff is located in the district in which the proceeding was commenced.
- [10]In the present case, therefore, the plaintiff, in order to show that the proceeding was commenced in the correct district and therefore that the Magistrates Court at Stanthorpe had jurisdiction to decide the claim, ought to have pleaded that the work was done in the Stanthorpe district and that was not done. One might refer to the old forms in Schedule 2 to the Magistrates Court Rules, where similar claims in a short form are set out, where reference was made to the things being done in this district as being part of the pleading where that was relied on.
- [11]Accordingly, either there was a failure to comply with r 35 or there was a failure to comply with r 22 in this case. That point was raised on behalf of the appellant before the Magistrate. The Magistrate rejected that argument, rejected the argument that the judgment was irregular on the basis that the appropriate course for the appellant if the proceeding was commenced in the wrong district was to file a conditional notice of intention to defend; however that was, with respect, not the correct course to follow in relation to a proceeding where a defendant wishes to say that the proceeding has been commenced in the wrong district.
- [12]Rule 144 deals with a conditional notice of intention to defend, but r 39, which deals with Magistrates Court districts, provides that a defendant may object to the starting of the proceeding other than in the correct district under Division 2, which is the division including r 35, for a proceedings started by claim only if the objection is included in the defendant’s notice of intention to defend. The objection is then to be taken on an application under sub-rule (3), and the court may on that application transfer the proceeding to another court.
- [13]The rules therefore indicate that in a situation such as this the appropriate course is to file a notice of intention to defend, that is an ordinary notice of intention to defend, which would include a defence but take the objection in the notice of intention to defend and then apply to the court to have the matter transferred to a court that does have jurisdiction. In the present case, presumably, had that step been taken it would have elicited an application to amend the statement of claim.
- [14]In any event the magistrate’s proposition that what the defendant should have done was file a conditional notice of intention to defend was, I think, not correct, but in any event it was not really an answer to the point that a default judgment is a process where the rules must be strictly complied with. A deficiency in the defendant’s compliance with the rules in relation to how one took the point does not overcome a deficiency in relation to the plaintiff’s compliance with the rules.
- [15]The issue that ought to have been of concern to the magistrate was whether the plaintiff had strictly complied with the rules. There is plenty of authority, for example, Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 Qd R 85 at 91, and there are plenty of other cases, that the entry of a judgment on default will only be undertaken regularly if the rules have been strictly complied with. So, the question for the magistrate was not whether the defendant had complied with the rules, but whether the plaintiff had complied with the rules and as I have indicated in this case, in my view, the plaintiff had not done so.
- [16]I do not consider that the effect of r 39 is that it is not open to a defendant on an application to set aside a default judgment to argue that there has been a failure to comply with r 35 on the part of the plaintiff. As I say, the issue is what the plaintiff should do. That is a mandatory rule and in my view it was not complied with here.
- [17]I note that in the former District Court Rules there was a provision that if an entry of appearance in defence were not filed a proceeding was deemed to have been commenced in the correct district. That would have the effect of overcoming the difficulty that arises in the case of a plaintiff who in fact commences in the wrong district and then wants to sign default judgment. However, the UCPR contains no equivalent provision, at least as far as I can find.
- [18]It follows therefore that the magistrate’s approach to the question of what the defendant ought to have done was not appropriate. The magistrate, I think, failed to address properly the question of whether the judgment was irregular. If a judgment is entered irregularly, of course, it should be set aside ex debito justitiae, as we say, and indeed with costs. The magistrate also, however, dealt with the question of whether there was a good ground of defence shown. Reference had been made in written submissions, which were before the magistrate, to a number of decisions in relation to the application of r 290 and most of the decisions dealt with earlier but equivalent rules. One of them relied on was Reid Murray Development Queensland Pty Ltd v Lynwood Holdings Pty Ltd [1964] QWN 1. The magistrate rejected that on the basis that that was a 1964 case and that there is a much stronger test provided in the UCPR regime.
- [19]With respect, the provisions of r 290 do not seem to me to be materially different from the provisions of the rules of the Supreme Court dealing with setting aside judgments signed in default of entry of appearance in 1964. In so far as there has been a difference in the approaches of the courts towards setting aside default judgment since that time, the difference seems to me to be one rather of an increased leniency in what needs to be shown by a defendant in terms of a defence on the merits. The decision which is most relied on on this point, in relation to the exercise of the discretion to set aside a default judgment is the decision of Justice McPherson as he then was in National Mutual Life Association of Australasia Limited v Oasis Developments Pty Ltd [1983] 2 Qd R 441 at 449. His Honour there referred to the three issues which had been identified in an earlier decision of Justice Kelly as being, whether the defendant had given a satisfactory explanation for its failure to appear, any delay in making the application, and whether the applicant defendant had a prima facie defence on the merits.
- [20]His Honour added:
“Speaking generally it may be said that it is the last of these considerations that is the most cogent. It is not often that a defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy interval of time had elapsed, provided that no irreparable prejudice is thereby done to the plaintiff.”
- [21]That approach by his Honour was endorsed by the Court of Appeal in National Australia Bank Limited v Singh [1995] 1 Qd R 337 at 380. It was also endorsed, I think most recently, in the Court of Appeal in Jiona Investments Pty Ltd v Medihelp General Practice Pty Ltd [2010] QCA 99 at [35]. In that case Justice Muir, with whom the other members of the Court agreed, had cited a passage in Agar v Hyde (2000) 201 CLR 552 at 575-6 where four members of the High Court made some general remarks about the approach which was appropriate in relation to an application for summary judgment and his Honour then added:
“A broadly similar approach has been traditionally taken in relation to applications to set aside regularly obtained judgments.”
- [22]Leaving aside the issue of whether the judgment here was obtained irregularly and on the assumption that the magistrate was considering, that is that it was a regular judgment, then that was the approach that was appropriate on the authorities as they stand under the UCPR. Part of the passage cited from Agar v Hyde, which was, of course, expressed in the context of a summary judgment application, said:
“All of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.”
- [23]In other words summary judgment should not be granted if a high degree of certainty about the outcome, if the proceeding were allowed to go to trial in the ordinary way, were not possible.
- [24]If one adopts a broadly similar approach to an application to set aside regularly obtained judgments, the result should be that the judgment should be set aside unless a high degree of certainty exists that if the matter were to go to trial in the ordinary way the ultimate outcome of the proceeding would be a judgment in favour of the plaintiff the same as the default judgment that has already been granted. That might be said to be a much stronger test but it is not a much stronger test against setting aside regularly entered default judgments. Rather it is a much stronger test which has to be satisfied in order to avoid having a regularly obtained default judgment set aside. The magistrate appears not to have been aware of that.
- [25]The magistrate approached the matter, it seems to me, principally on the basis that the defendant and the defendant’s solicitors knew about the proceedings but had not done anything until after the default judgment had been signed. She said:
“By December of 2010, as I understand it, there had already been communication about the dispute and the applicant filed a statement of claim and claim against the defendant on 23rd of March, but of also considerable significance in my view is the fact that nothing was done until after the judgment was entered. Now, I do not know, and it’s not necessary for me to know, whether or not that is entirely the fault of the solicitor or a combination of the solicitor and the defendant or purely the defendant, but the fact is nothing was done. There is no evidence before me that there was any further communication between the parties on this apparent negotiation pathway and that’s been claimed at least until after the default judgment was entered and advised.”
- [26]If the magistrate was proceeding on the basis that there was no relevant communication after December 2010, that does not appear to be consistent with the state of the affidavit material before her Honour. That affidavit includes as an exhibit a letter dated 27 April, 2011 which was sent by facsimile by the solicitor for the defendant to the solicitor for the plaintiff setting out a request for particulars of paragraphs 3, 4, and 5 of the statement of claim. Such a request is understandable; the statement of claim needed to be further particularised before a proper defence could be framed.
- [27]At the end of that letter there was the paragraph:
“Finally, can you please confirm that your client will allow our client 14 days from the date the requested particulars are provided to file its defence.”
- [28]The solicitor for the plaintiff did not respond to that request until after the default judgment had been signed, about a week later. What that means is that the solicitor for the plaintiff signed the default judgment knowing that the defendant had solicitors acting, knowing that the defendant’s solicitor had taken a step in relation to the proceeding in the form of requesting particulars and had requested an extension of time to file the defence until after the particulars had been provided, which in the circumstances was, in my view, an eminently reasonable request to have made, and instead of responding to that, had signed default judgment without any prior warning to the defendant’s solicitor.
- [29]I regard that as singularly bad practice for a solicitor. It has been described by the epithet of “snatching a judgment”. It is in my view to be deprecated. Apart from anything else, it seems to me to be contrary to the overriding purpose set out in r 5 of the Uniform Civil Procedure Rules. The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. That has certainly not been achieved in this matter. There was undoubtedly a real dispute between the parties, as exposed in correspondence prior to the time when these proceedings were commenced. There is no reason to doubt that, if the plaintiff’s solicitor had responded to the request to which I have just referred with an advice that his instructions were not to delay signing judgment, a notice of intention to defend and defence would have been promptly filed.
- [30]If that had happened the matter would have proceeded to trial in the usual way and could well by now have been tried. Instead of that a default judgment was signed, and an application to set it aside was resisted. Due to the various errors of the magistrate that application was unsuccessful, but inevitably an appeal against that decision has succeeded.
- [31]A great deal of time and expense has been unnecessarily incurred by the failure to follow what I regard as proper practice and to give warning in those circumstances before signing a default judgment. Admittedly the solicitor for the defendant is not without fault. The solicitor for the defendant should have ensured the notice of intention to defend was filed in the absence of an acknowledgement that that extension would be given, and that was not done.
- [32]However, I consider it is the behaviour of the solicitor for the plaintiff that is particularly deserving of censure in a matter of this nature. I do not consider that the matter referred to by the magistrate, which was inaccurate as an analysis of the relevant chronology, provides any justification for refusing to set aside the default judgment. On the contrary, this is a case where there is no reason to doubt that a notice of intention to defend and defence would have been promptly filed if the defendant’s solicitors realised that the reasonable request for particulars was going to be ignored.
- [33]The real issue in relation to the default judgment, if it were a regularly entered default judgment, was whether a defence had been shown. The magistrate went on to deal with paragraph 13, the last paragraph of the written submissions as if that was the only thing which was said about the existence of a defence on the merits and dismissed that on the basis that it was simply a matter of assertion.
- [34]It is correct that paragraph 13 says that the defendant submits that the draft defence of the defendant does show a prima facie defence on a question that ought to be tried, that is, the defendant denies that the plaintiff has performed drafting services for the defendant at their request, nor that there was any agreement in place between the defendant and the plaintiff for the plaintiff to undertake such drafting services.
- [35]The magistrate’s point may well have been that there ought to have been affidavit evidence from an officer of the defendant company to verify that that was the position and, strictly speaking, it was, at that stage, a matter of assertion; however, if that was the difficulty the matter should have been raised during submissions so as to give the defendant the opportunity, belatedly, of putting affidavit evidence before the court in order to verify that proposition. It would hardly have been surprising if that affidavit had been forthcoming.
- [36]What was put before the court was a draft defence which responded in an appropriate way to the statement of claim and which, on its face, pleaded a good defence. Further, there had been put before the court correspondence showing that the issues had been ventilated in correspondence prior to the proceedings, and that the defendant denied that there was any liability to make this payment because there was no current agreement and there had been no current agreement since the defendant had moved to Stanthorpe two years ago. I might add that, in relation to the appeal, an affidavit by an officer of the company was filed but the significance of that, really, is not so much to provide fresh evidence on the appeal but to demonstrate that an affidavit could and would have been provided if the solicitor for the defendant had had proper notice of the point instead of the magistrate deciding the matter without giving the defendant the opportunity to respond to that point. That, I think, was a further error on the part of the magistrate.
- [37]In the circumstances, however, for the reasons that I have given, in my view, the default judgment was irregularly entered and it therefore ought to have been set aside. Even if it had been regularly entered, in my view, the material that was before the magistrate ought to have been such as to prevent that degree of confidence from arising which would have justified depriving the defendant of the opportunity of allowing the dispute to go to trial in the ordinary way and, therefore, the test adopted by the Court of Appeal in Jiona Investments was not applied. It was also an error.
- [38]If the magistrate’s point was that there was no affidavit by the defendant’s solicitor, which is a good point as far it goes, that is a point which should have been raised in the course of the hearing to give the defendant the opportunity to respond to it.
- [39]The appeal is, therefore, allowed. The order of the magistrate of 27 June 2011 is set aside and in lieu thereof it is ordered that the default judgment signed on 4 May 2011 by the registrar of the Magistrates Court at Stanthorpe is set aside. The judgment was irregular so it should be set aside with costs but also, I think, in the circumstances where it was signed as I have outlined, an order for costs against the plaintiff for that application should be made anyway. So I would substitute an order that the plaintiff pay the defendant’s costs of the application in the Magistrates Court to be assessed, and I will order the respondent to pay the appellant’s costs of and incidental to the appeal to be assessed.
- [40]I order that the proceedings be transferred to the Magistrates Court at Brisbane, and the plaintiff provide the particulars of the statement of claim requested on 27 April 2011 within 14 days, and I will extend time for filing and serving the notice of intention to defend and defence until 14 days after receipt of those particulars.
- [41]I reserve leave to the appellant to apply for an order for costs against the respondent’s solicitor.