Grosche v Ducie; Badran v Saman

Local Court of NSW|2019-03-08|Before: Martin P

Judgment

Mr Grosche is the applicant on the notice of motion (NOM) and the defendant in the default judgment. The NOM prayed, via a number of grounds, for the Court to set aside the default judgment which was entered on 22 November 2018 in the amount of $2,639.12.
As has been submitted, particularly by the respondent, these are matters that ultimately revolve around default judgments entered in the Small Claims Division, for (in the whole scheme of things) fairly minor amounts of money. It is in my view however an issue that has been worthy of consideration by this Court - given the amount of resources that are expended across all jurisdictions in relation to motor vehicle accident claims and particularly replacement/car hire vehicle issues.
The Court has looked closely at the way the pleadings have been prepared in these matters, and has had cause to focus on the conduct of the parties involved, particularly in relation to their filing of claims and motions on-line, and how it is that these default judgments are obtained so expeditiously.

Ground One

Is the claim to be set aside for an irregularity on the basis that it incorrectly claims an amount for unliquidated damages in a pleading?
The applicants correctly submit that the plaintiff's statement of claim is for unliquidated general damages. That is clear from any reading of what has been filed with the Court and the covering notations.
Pursuant to UCPR 14.13(1) the general rule is that a plaintiff in a pleading cannot claim an amount for unliquidated damages. Pausing there - this would ordinarily mean that the plaintiff would only be entitled to seek default judgment pursuant to UCPR 16.7 and that damages would have to be assessed.
There are exceptions however. Via UCPR 14.13(2)(a), a plaintiff can claim an amount for an unliquidated claim in a pleading in the Local Court where the claim is for the recovery of the cost of repair to a motor vehicle; or the value less any salvage value of a motor vehicle; or the towing of a motor vehicle; or the cost of hiring a replacement car whether repair, loss, towing or cost of hiring is a consequence of damage alleged to have been sustained as a result of the negligence of the defendant or the defendant's servant or agent.
The UCPR's dictionary defines a pleading as including a statement of claim.
An effect, as has occurred here, of allowing a plaintiff to claim an amount for unliquidated damages in those exceptional circumstances, as listed, is that it allows a plaintiff to seek default judgment for an unliquidated amount pursuant to UCPR 16.6, thereby avoiding the need for a plaintiff to have their damages assessed at a hearing.
It is crystal clear that this claim, on the face of it, pleads unliquidated general damages in an amount, that being $1,846.19. True it is that the term "loss of use" is found within those pleadings. The applicant's contention is that pleading "loss of use" per se, without anything further, does not get the plaintiff across the line, as it were, so as to fall within the exceptions as listed to the general prohibition under UCPR 14.13.
Mr Richey of Counsel for the respondent on the NOM argues that the rules "do not say" the statement of claim cannot be pleaded in the way that it has been here and that the exception is properly made out. He submits that in any event, the Court's focus should really be on substance over form, particularly given that now at least we are aware that liability in relation to the accident per se is not in dispute and the amount claimed is fairly insignificant in the scheme of such matters."
He suggests that: "Practically speaking, the Rule's creation of the exceptions under 14.13(2) are administrative in nature - directing the registry, online or otherwise, as to where to allocate the claim be it to small claims or the general division or indeed into some" - I think they're called buckets -on the online registry in relation to where things are placed for further adjudication".
Now, that may be so in relation to allocating matters to the appropriate jurisdiction. However, that does not alleviate the need for strict clarity in pleadings. The existence of a multitude of "crash and bash" cases (as Mr Richey so fondly describes them) in the Local Court does not mean that the defendant should somehow know or understand or interpret that the claim is for, in fact, the recovery of hire car charges that were occasioned by the other party to the accident. Not once in this particular statement of claim does the word "hire", "replacement", "hire car" or "vehicle" ever appear.
It is a salient point, in my view, that in relation to these right‑to‑drive‑type matters involving the hire car issue, it is an individual who ultimately is the subject of the default judgment. Those individuals seemingly ignored these demands for payments or notices in relation to default judgements, believing that the paperwork sent to them really is not their issue because "they are insured" and their insurer is "taking care of it" for them. Then they are perplexed and distressed to be the unknowing subject of a default judgment and they find a writ is served for the levy of their property. And thus the familiar cycle of the setting aside of the judgments begins.
So it is those practical considerations, in my view, that point to a real necessity to make sure that a defendant does not need to guess or speculate in relation to the contents of a statement of claim and it is not appropriate, in my view, to move on assumptions that "most motor vehicle accidents" involve invoices and hire car costs and repairs and so on. All of those things are true but, the consequences for the lay person in particular in relation to these default judgments can of course be far reaching.
As Mr Jaramillo for the applicant submits, a claim for loss of use could be a myriad of things. It could be a claim for a market rate for a comparable vehicle in circumstances where the plaintiff demonstrates a need for a replacement vehicle. It could be interest on the capital value of the plaintiff's vehicle plus standing costs thrown away if the plaintiff does not demonstrate a need for a replacement vehicle. It could be loss of profits if the plaintiff's vehicle is an income-producing chattel. It could be for depreciation of an idle vehicle that the plaintiff had available and ought to have used during the alleged loss of use period.
In answer to that, Mr Richey says that the applicant has somehow confused the nature of a loss of use claim and he says that the loss suffered was not the cost of hiring a replacement vehicle but the inability to use the vehicle whilst undergoing repair. Again, these "loss of use" arguments within the Local Court are common, and his analysis in relation to what loss of use actually means is probably correct, but in my view that is not the point so far as the pleadings are concerned. It is inescapable that that in order to claim the amount for loss of use one needs to fit within, as it were, the exceptions that are enunciated in UCPR 14.13(2).
Whatever the legal basis for loss of use might be, the practical issue is attaching the amount to the exceptions in the pleadings and that, of course, is why pleading the amount for $1,800 without enunciating the exception falls short in the view of the Court, in this statement of claim, to fulfilling appropriate procedures and the need for regularity to ground the entry of the default judgment. It is not for the defendant, as I have said, to determine in this situation that the words "loss of use" meant the hire car costs, in the absence of proper pleadings. A defendant is entitled to have the material facts pleaded properly so as to allow him to know the case alleged against him: Fenanto v Chief Commissioner of State Revenue (2010) 78 NSWLR 20 per Gzell J.
Neither is it for the Court to determine after the fact, and after the default judgment is entered that this is really what the matter is all about.
I am satisfied on the balance that the applicant has shown that there is a failure to properly fulfil the requirements under UCPR 14.3(2) and thus the provisions of UCPR 16.6(1). It is my view that the statement of claim could not, in the way that it was framed, have supported a default judgment: Arnold v Forsyth [2012] NSWCA 18.
I find the judgment was entered irregularly and I set it aside pursuant to UCPR 36.15(1).
Had it been necessary, I would also have found section 63(3)(a) of the Civil Procedure Act 2005 (NSW) applied to the pleadings: their irregular nature would have resulted in the Court setting aside the default judgment obtained.

Ground 2: Service of Originating Process/ Timely Filing of Defence

The applicant on the NOM submits that should they fail to convince the Court of irregularities in the pleadings, an alternative irregularity can be found on the basis that the plaintiff obtained default judgment against the defendant too early. A close examination of the rules as to service and calculations that attach to that is therefore timely under a consideration of this alternative ground.
As the applicant submits, the proposition that a plaintiff is not entitled to obtain default judgment earlier than 28 days from the date on which the originating proceeding was served is not controversial: Johnsen v Duks (1962) 80 WN NSW 272 at 5. Service of originating process has taken place, via the court registry, as permitted under UCPR 10.1: 10.1 Service of filed documents (cf SCR Part 15, rule 28) (1) Unless the court orders otherwise, a party that files a document must as soon as practicable serve copies of the document on each other active party. (2) In the case of proceedings in the Local Court, an originating process may, and a defence must, be served on the other parties, on behalf of the party by whom it was filed, by an officer of the Local Court. Note: See rules 10.7 and 10.8 as to how service is to be effected by a court. (3) Despite subrule (2), a defence that is filed in proceedings in the Local Court by means of Online Registry (within the meaning of Part 3) must be served on the other parties by the party that filed the defence rather than by an officer of the Local Court.
It is not disputed that the statement of claim was filed with the Court on 17 October 2018 and that the plaintiff paid the fee for the Court to serve it via post on the defendant. This method of service is reflected in UCPR 10.20(2)(b)(iii) hereunder: 10.20 Personal service required only in certain circumstances (cf SCR Part 9, rules 1 and 2; DCR Part 8, rule 3; LCR Part 7, rules 3 and 20) (1) Any document required or permitted to be served on a person in any proceedings may be personally served, but need not be personally served unless these rules so require or the court so orders. (2) Except as otherwise provided by these rules: (a) any originating process, and any order for examination or garnishee order, in proceedings in the Supreme Court, the Industrial Relations Commission (including the Commission when constituted as the Industrial Court), the Land and Environment Court, the District Court or the Dust Diseases Tribunal must be personally served, and (b) any originating process in the Local Court must be served in one of the following ways: (i) it may be personally served on the defendant, ii) it may be left, addressed to the defendant, at the defendant's business or residential address, with a person who is apparently of or above the age of 16 years and apparently employed or residing at that address, (iii) if served by the Local Court, it may be sent by post, addressed to the defendant, to the defendant's business or residential address in an envelope marked with a return address (being the address of the Local Court but not so identified), ….
Issues arose here on the basis that there seemed to be a conflict between the dates of service, and thus how long it actually was that the defendant had to file a defence.
The Service and Execution of Process Act 1992 (Cth) allows for service of documents by post, and section 76 of the Interpretation Act 1987 (NSW) sets out the framework for New South Wales, such that - 76 Service by post (1) If an Act or instrument authorises or requires any document to be served by post (whether the word "serve", "give" or "send" or any other word is used), service of the document: (a) may be effected by properly addressing, prepaying and posting a letter containing the document, and (b) in Australia or in an external Territory - is, unless evidence sufficient to raise doubt is adduced to the contrary, taken to have been effected on the seventh working day after the letter was posted, and (c) in another place - is, unless evidence sufficient to raise doubt is adduced to the contrary, taken to have been effected at the time when the letter would have been delivered in the ordinary course of post. (2) In this section: working day means a day that is not: (a) a Saturday or Sunday, or (b) a public holiday or a bank holiday in the place to which the letter was addressed.
It is of note that section 76 of the Act was amended on 28 November 2018 such that the deeming date of service under section 76(1)(b) was changed from the fourth working day to the seventh working day. In any event Mr Germain for the applicant on the NOM deposes that his enquiries with the registry revealed that the deemed date of service by post, , was the 26 October (assuming process posted out on date it was filed - being 17 October 2018 ) - that being 7 working days after posting from the Court. That meant that the defendant/applicant on the motion actually had until the 23 November 2018 to file his defence.
Mr Germain also deposed that his client actually received originating process in the post on the 25 October 2018, which gave him at the very least until close of business on the 22 November 2018 to file his defence. It is clear therefore that the default judgment was entered early and before the time allowed for the filing of the defence. This is also to be classified as an irregularity that would justify the setting aside of the default judgment (had that been necessary, given my finding in part one above).
It is somewhat alarming, on any interpretation of the date or deemed date of service, that the plaintiff's representatives have rushed the application for default judgment through. Had they just waited for 24 hours, all of these subsequent and costly proceedings could have been avoided. Email exchanges that were tendered on this motion show the defendants had certainly requested the plaintiff to hold off but that request was basically ignored. This is not a fine display of courtesy and respect for one's fellow practitioners on any view. It is not in line with Justice Kunc's "nine commandments" as to how practitioners should deal with each other and with the court: Ken Tugrul v Tarrants Finance Consultants Limited (No 5) [2014] NSWSC 437.

Ground Three - Non-compliance with affidavit requirements as to service of originating process in application for default judgment

The applicant submits that the respondent on the NOM failed to comply with UCPR 16.6 which requires the affidavit in support of a NOM for default judgment to state when and how the originating process was served on the defendant.
The plaintiff's solicitor deposed in the application for default judgment that the statement of claim "was issued on the 17th Ocotober 2018". It does not address a date or a deeming date upon which the defendant is said to be been served. I am not of the view that the applicant succeeds on this ground, given that the court serves the originating process at the (paid for) request of the plaintiff, and that it can only be supposed that the date of filing of process on-line is the same date that the statement of claim and the paperwork is printed out and put in an envelope and posted out by the registry staff. I was unable to gain any further insight as to how exact dates are arrived at, and how the dates of the computer - generated material 'fits' with the posting out by humans within the registry. I am of the view that in this circumstance, the plaintiff solicitor had deposed to all the possible information available to him at the time as to the service process and the dates involved.

In the matter of Sarman v Badram

This is a NOM to set aside the default judgment which was entered on 17 September 2018 in the sum of $6,581.44.
These proceedings involve a motor vehicle collision on 22 September 2016 between the plaintiff and the defendants' vehicles. The plaintiff issued a statement of claim on 9 August 2018 for the amount of $5,475.64 together with interests and costs. The default judgment was entered on 17 September 2018. The writ for the levy of property was issued on 16 October 2018. The NOM to set aside was filed on 5 December 2018. Again there is a stay of enforcement action in relation to these matters pending the outcome of the NOM and again costs are sought by the applicant on the NOM if successful.
Irregularity of pleadings also grounds this matter, as it did in Grosche v Ducie. The pleadings are silent as to invoking the exceptions enunciated in UCPR 14.32. I am of the view, as per the previous decision, that "loss of use" as pleaded here simply does not allow the defendant to understand the material facts that are relied upon to make out the claim. A significant failure in the pleadings forces, in my view, the defendant to speculate or guess as to what the loss of use is based upon and the monetary figure claimed had to be pleaded in terms of the exceptions in UCPR 14.3(2) so as to make any sense at all.
I have addressed already the issues surrounding the affidavit of service, argued in Grosche v Ducie on exactly the same grounds. I find that really nothing more could have been deposed in the solicitor's affidavit of service as to dates of service by the court office.
This is also a matter where civil communications between the parties may well have avoided the cycle of default judgment being set aside: Ken Tugrul v Tarrants Finance Consultants Limited (No 5) [2014] NSWSC 437.
Finally, it is trite to observe that a cause of action that is not clearly pleaded may be treated as failing to be pleaded: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206. I certainly accept that a defendant may be prejudiced by such failure and I am quite convinced that the pleadings in both of these proceedings fell well short of being in an appropriate form. They reflect therefore that the default judgments were given irregularly and that that judgments should be set aside under UCPR36.15. Magistrate S McIntyre Downing Centre Local Court 8 March 2019

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: 09 March 2020

Uniform Civil Procedure Rules 2005(NSW)rr 10.1, 10.20, 14.13, 16.6, 36.15

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (7 paragraphs)

Legislation Cited (4)

Cases Cited (4)