Colevski v Australian Associated Motor Insurers Limited

Principles 3The learned magistrate's decision not to vacate a hearing date and to strike out the defence are discretionary rulings, which, if exercised within jurisdiction, may be interfered with on appeal, only on one of the well-known grounds summarised in: House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505-506. 4The grounds upon which an exercise of discretion of this kind, will be subject to interference on appeal will be where the magistrate has exercised the discretion in a manner which involved: an error of law; an error of fact; a failure to take into account one or more mandatory considerations; or the consideration of a factor that is irrelevant to the decision-making process: House v The King, supra. 5Where it is impossible to identify an error of the kind that would allow interference on appeal, the outcome may be so manifestly unjust or unreasonable, that the exercise of jurisdiction must have involved a misapplication of the relevant principles. In those circumstances, manifest error is disclosed and interference can occur. 6The principles of non-interference by an appellate court in an issue of practice, such as those before the Local Court, below, is particularly important. Such judgments of practice and procedure will be interfered with only when there is an error of the kind to which reference has been made, or an error of jurisdiction or failure to accord procedural fairness. 7The courts could not function, if every application for an adjournment, was the subject of appellate review. In those circumstances, it is and must be extremely rare for vacation of dates, and such other practice aspects, to be the subject of interference: Maxwell v Keun [1928] 1 KB 645 at 650, 657 and 658. The High Court cited Maxwell, supra, with authority and applied it in its judgment in Haset Sali v SPC Ltd [1993] HCA 47; (1993) 67 ALJR 841 and further in Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 at 154. 8Since the judgments of the High Court in J L Holdings, supra, and Sali, supra, the legislature has enacted the Civil Procedure Act 2005, and, in particular, has enacted those provisions that mandate a duty on parties and the Court to facilitate the just, quick and cheap resolution of the real issues between the parties: ss 56, 57 and 58 of the Civil Procedure Act. 9Even before the promulgation of the Civil Procedure Act, the High Court remarked in Sali, supra, that the principle of non-interference with the exercise of a discretion on matters of practice must be extremely rare and will occur only in circumstances where, if refused, the failure to grant the indulgence would result in a serious injustice to the applicant. In circumstances of serious injustice, an adjournment or vacation of dates should be refused only where that is the only way that justice can be done to another party in the action. 10However, justice, in the immediately preceding summary of principle, must be understood in the sense that it is used in the Civil Procedure Act. Justice includes the right of parties to have their rights enforced (or defended) expeditiously and often delay in proceedings will itself involve effecting an injustice on the party who is denied the ability to have its case heard. This aspect is particularly important in proceedings before the Local Court. 11Procedural fairness involves providing a party with a reasonable opportunity to prepare and to present its case. It does not involve the imposition on a court of the impossible task of ensuring that the party, given an opportunity, takes advantage of it: Sullivan v Department of Transport (1978) 20 ALR 323 at 343, per Deane J; Re Association of Architects of Australia; Ex parte Municipal Officers Association of Australia [1989] HCA 13; (1989) 63 ALJR 298 at 305, per Gaudron J; Minister for Immigration & Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 at 611.

Proceedings in the Local Court 12The progress, or otherwise, of the Local Court proceedings was not a matter of controversy. A chronology, which formed part of the defendant's written submissions, is extracted below: 8 December 2009 Proceedings commenced. 15 January 2010 Defence filed. Listed for directions before the Registrar with the following orders made: 1.Amended Statement of Claim with leave. 7 April 2010 2.Defendant to request particulars Amended Statement of Claim by 14 April 2010. 3.Plaintiff to respond to request for particulars by 28 April 2010. 4.Defendant to file and serve any defence to Amended Statement of Claim by 12 May 2010. 5.Matter listed for directions before the magistrate as to expert evidence on 18 May 2010. 12 May 2010 Defendant fails to comply with the direction for any amended defence to be filed by this date. Listed for directions before Magistrate Heilpern. 18 May 2010 No appearance for the defendant 1.Matter stood over to 27 May 2010 for directions as to expert evidence. Proceedings listed before Magistrate Heilpern. No appearance for the defendant. 27 May 2010 1.Defendant's notice of motion to set aside subpoena dismissed. 2.Defence struck out. 3.Judgment may be entered by the plaintiff 14 days after today. 4.Costs of proceedings as agreed or assessed to be paid to the plaintiff within 28 days. 17 June 2010 Proceedings listed for direction before Magistrate Forbes. 1.Defendant to provide text of defence to amended statement of claim by 24 June 2010. 24 June 2010 Defendant fails to comply with direction as to service of defence to Amended Statement of Claim. Proceedings listed for direction before Magistrate Heilpern. 1.Orders of 27 May 2010 stayed in their operation by an order of 17 June 2010 striking out the defendant's defence and granting leave to the plaintiff to enter judgment be set aside. 2.Leave granted to the defendant to file a defence to the Amended Statement of Claim within 7 days. 1 July 2010 3.The matter is to proceed by way of affidavit evidence. 4.Plaintiff is to serve expert and lay evidence by 13 August 2010. 5.Defendant to serve expert and lay evidence in reply by 17 September 2010. 6.Plaintiff to serve evidence and reply by 15 October 2010. 20 July 2010 Proceedings listed for direction before Magistrate Heilpern. Proceedings listed for hearing on 22 and 23 November 2010. 13 August 2010 Plaintiff complies with direction for service of lay and expert evidence. Proceedings listed for directions before Magistrate Heilpern. 9 September 2010 On application of the plaintiff November hearing date vacated. Review date 18 January 2011. Matter listed for hearing 8 and 9 February 2011. Proceedings listed for directions before Magistrate Heilpern. 18 January 2011 Defendant to serve evidence it relies on by 1 February 2011. Adjourn to further review on 1 February 2011. 1 February 2011 Defendant fails to comply with direction in respect to service of evidence. Defendant files application to vacate hearing date. Application refused and hearing of 8 and 9 February 2011 confirmed. Proceedings listed for hearing before Magistrate O'Shane. 8 February 2011 Defendant still not complied with directions for service of evidence. Application to vacate hearing refused and defence struck out. 9 February 2011 Default judgment entered.

13As is clear from the foregoing, and upon which the defendant relied, the plaintiff before this Court had, in the Local Court, repeatedly failed to comply with directions of the Local Court in respect of the filing of a defence and the filing and serving of evidence in support of the defence. On a number of occasions, the defendant failed to appear before the Local Court. 14Leaving aside the initial commencement of the proceedings in the Local Court and a defence filed approximately one month thereafter, an amended statement of claim was filed, with leave of the Local Court, on 7 April 2010, and despite various directions, no defence was filed to the amended statement of claim prior to 24 June 2010. 15Further the plaintiff, in accordance with the directions of the Local Court, filed and served its lay and expert evidence by 13 August 2010 and, despite a number of directions, the defendant failed to serve any evidence. 16It is necessary to point out that the statement of claim issued in the Local Court (and the amended statement of claim) alleged fraud by the defendant, in his capacity as a director of a corporation that issued quotes to AAMI (the defendant in these proceedings) for costs of repairs to motor vehicles. According to the statement of claim, and amended statement of claim, that work or those repairs were never performed. 17Mr Colevski, a director of the corporation, did not admit to an allegation that the said corporation undertook repair and replacement of parts to motor vehicles insured with AAMI. He also did not admit (and did not deny) that in his capacity as a director of the corporation he was responsible for issuing quotes on behalf of the corporation. He objected to being named as a defendant on the basis that he was the lawful servant and/or agent of the corporation. 18The defendant also did not admit (but did not deny) preparing the invoices to AAMI, addressing the invoices to AAMI and seeking payment from AAMI in the knowledge and understanding that they were fraudulent, although he denied that the invoices were wholly or partly false and deceitful. 19The particular invoices to which reference is made in the amended statement of claim (also referred to in the statement of claim) were the subject of a pleading by Mr Colevski to the effect that he did not admit compiling the invoice. The amended statement of claim (apart from the naming of another corporation of which Mr Colevski was a director) did not substantially amend the statement of claim and the defence remained substantially to the effect outlined, albeit pleaded extremely late. 20As is clear from the foregoing chronology, on 17 June 2010, his Honour Magistrate Forbes, granted an indulgence to Mr Colevski, notwithstanding earlier non-compliance with directions of the Local Court, by allowing the filing of a defence to the amended statement of claim by 24 June 2010. Mr Colevski failed to comply with that direction. 21On 1 July 2010, his Honour Magistrate Heilpern granted leave for Mr Colevski to file a defence in the Local Court within seven days (a further indulgence) and ordered that the matter proceed by way of affidavit evidence. The learned magistrate also gave directions as to the filing of that evidence. 22On 20 July 2010, the matter was fixed for hearing in November. On 9 September 2010, the hearing dates originally set were vacated on the application of AAMI as a result of the failure of Mr Colevski to provide certain documents in a timely fashion. 23The matter came before his Honour Magistrate Heilpern on 18 January 2011 at which further directions were issued for Mr Colevski to serve evidence by 1 February 2011. Subpoenas that were issued on an earlier occasion were the subject of hearing on 30 September 2010. 24It is appropriate to mention the proceedings on 30 September 2010. Mr Colevski was then cross-examined as to the production of documents on subpoena. The evidence of Mr Colevski discloses an inconsistency between an allegation that there had been a fire, which destroyed much of the records of the company, on the one hand, and, on the other hand, a conversation between Mr Colevski and representatives of AAMI in which (after the date of the alleged fire) Mr Colevski said that he was "having some difficulty in locating business records relating to the acquisition of parts. We are in the process of relocating our business premises. The paperwork is in boxes and it is hard to locate individual items." 25On 1 February 2011, Mr Colevski applied in the Local Court for the vacation of the hearing dates set for 8 February 2011. He did so by motion on notice and his application was refused. In those proceedings, heard by his Honour Magistrate Heilpern, Mr Colevski relied upon an alleged illness, change in solicitors and other matters. These matters had been relied on earlier in the process by which the matter had come before the Local Court. 26On 30 September 2010, Magistrate Heilpern had ordered the provision of medical evidence. No relevant medical evidence was ever provided. Solicitors had ceased to act and/or been changed on one or more occasions. 27His Honour Magistrate Heilpern refused the motion heard on 1 February 2011. The application for vacation of the dates was re-agitated before her Honour Magistrate O'Shane on 8 February 2011. Her Honour refused the application. Mr Colevski did not seek to rely upon the affidavit which supported the notice of motion and on which he relied before Magistrate Heilpern. 28Her Honour Magistrate O'Shane, at p 3 of the Transcript of 8 February, enquired whether there was an affidavit to support the notice of motion that had been dealt with by Magistrate Heilpern. It is not suggested by those representing Mr Colevski that any such affidavit was relied upon in those proceedings, or should be read or referred to by her Honour in the proceedings then before her on 8 February. 29Her Honour heard the parties on the further application to vacate the hearing dates. Before her Honour, counsel representing Mr Colevski also relied upon the proposition that his client was frustrated by solicitors who allegedly continued to refuse to prepare and to file evidentiary material. Counsel, presumably on instructions, submitted that Mr Colevski's solicitors had informed him that it would be silly to prepare evidence, because the matter will settle. 30Exhibit 4 in these proceedings is correspondence from Elmassian Lawyers to Mr Colevski. They were then (on 30 September 2010) representing Mr Colevski. The correspondence makes clear, after stating what the probable legal costs would be, that it was urgent for Mr Colevski to prepare evidence and to file it, bearing in mind that there was a pre-trial review on 18 January 2011. The letter is dated 30 September 2010. Other than the allegation from the bar table and evidence by affidavit of Mr Colevski, unsupported by medical evidence, the learned magistrate had no material before her from which she could have determined that Mr Colevski had been misled or negligently advised by solicitors. Nor that he was ill in the manner or to the degree alleged. 31Her Honour also gave Mr Colevski notice that he was in jeopardy of having his pleadings struck out (Exhibit 1, p 65, line 1).

Consideration 32As earlier stated, it is rare for an appellate court to interfere in orders made by a court or tribunal relating to practice and procedure. The Standard Directions issued in the Local Court make clear (Clause 6 thereof) that failure to comply with the Local Court's directions may result in pleadings being dismissed. Clause 1 of the Standard Directions makes clear that all evidence should be filed at least 14 days prior to the Review date and at least 32 days prior to the day fixed for hearing. 33The learned Magistrate, on 8 February 2011, was faced with an application to vacate the hearing dates, which was the re-agitation of a motion argued and dismissed one week prior thereto. Further, the basis of the vacation of the hearing dates (and the submission made in response to her Honour's warning as to the striking out of pleadings) were based upon material that had been considered. 34In relation to the allegedly wrong advice from solicitors, the material before this Court (Exhibit 4), being the letter of 30 September 2010, to which reference has been made, makes clear that the previous solicitors gave the appropriate advice and put Mr Colevski on notice that he was required, well prior to 18 January 2011, to file statements of the evidence upon which he sought to rely. 35The other complication facing the Local Court was that there was a significant issue associated with the failure of Mr Colevski to produce documents relating to the allegations against him. Mr Colevski suggested that this was as a result of a fire in April 2009. I have dealt with the inconsistency between that statement and other communications to which Mr Colevski agreed. 36Moreover, the pleadings themselves disclose a degree of obfuscation on the part of Mr Colevski. As already stated, procedural fairness (or natural justice) requires that a party be given a reasonable opportunity to prepare and to present a case. Mr Colevski was given more than a reasonable opportunity. He failed to comply with a number of directions. The Local Court, below, provided an indulgence on a number of occasions to allow Mr Colevski to prepare and to present his case. On each occasion, Mr Colevski did not take adequate advantage of that opportunity. 37The matter in the Local Court was the subject of a hearing fixed for November 2010. That hearing was vacated on the application of AAMI, because documents were not available from Mr Colevski, when they should have been. The matter was fixed for 8 and 9 February 2011 and Mr Colevski, knowing of those dates, again did not take the steps necessary to prepare adequately or at all for the hearing. 38Her Honour Magistrate O'Shane and his Honour Magistrate Heilpern were both within their rights in not vacating the hearing that had been fixed. There was no denial of procedural fairness, or natural justice, occasioned thereby. 39Further, her Honour Magistrate O'Shane, given the history of this matter, was exercising a discretion that was available to her, albeit to be exercised as a last resort, of striking out the defence on the basis that there had been such contumelious disregard of, and non-compliance with, the directions of the Local Court that injustice would be perpetrated, if Mr Colevski was permitted to pursue a defence: s 61(3) of the Civil Procedure Act and Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [36], [38], [42]-[47], per Allsop P and [52]-[53], per Young JA. 40As a consequence of the foregoing, the Court does not consider that there has been a denial of procedural fairness or breach of the rules of natural justice. No other ground or basis of appeal has been pursued: see Hans Pet, supra, at [53], [54], per Young JA. 41The Court makes the following orders: (i) Proceedings dismissed; (ii) The plaintiff pay the defendant's costs of and incidental to the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 October 2011