Kovacic v A&S Powersellers Pty Ltd & Anor [2022] VSC 77

1 This proceeding concerns the decisions of the Magistrates' Court made on 6 March 2020 and 17 July 2020, each refusing Mr Kovacic's application to set aside a default judgment entered against him on 25 January 2019. The Magistrates' Court proceeding in which the judgment was entered concerned a debt, said to be owed by Mr Kovacic to A&S Powersellers (Powersellers), for the purchase price of a camper trailer.

2 On 25 January 2019, the Registrar at the Magistrates' Court of Victoria entered default judgment against Mr Kovacic after he failed to give notice of defence within 21 days pursuant to r 21.02(b) of the Magistrates' Court General Civil Procedure Rules 2010 (Magistrates' Court Rules).

3 Mr Kovacic applies in this Court for relief in the nature of:

(a) certiorari, quashing the orders of Magistrate Burns and setting aside the judgment;

(b) mandamus, directing the Magistrate to set aside the judgment; and

(c) prohibition, restraining the defendants from enforcing the judgment.[1]

4 The grounds stated in the originating motion include claims of bias, lack of procedural fairness, failure by the Magistrate to consider relevant evidence and a failure by the Magistrate to correctly apply the law.

5 For the reasons that follow, Mr Kovacic's application for judicial review is refused.

6 On 26 October 2018, Mr Kovacic purchased from Powersellers a camper trailer, LED light kit and burner stove along with registration from VicRoads (Goods) for the sum of $15,499 including GST. At the time of the purchase, Mr Kovacic presented a cheque in purported payment for the Goods. The cheque was issued from an account in the name of Z N R Transport Pty Ltd (ZNR). Mr Kovacic was the sole director and shareholder of ZNR at this time. After presenting the cheque, Mr Kovacic took possession of the Goods.

7 Mr Kovacic alleges that the following day, when he was preparing the camper trailer for a family holiday, he discovered water damage. When he raised this with Powersellers, they denied liability and said any damage was caused by Mr Kovacic's own negligence.

8 The cheque presented by Mr Kovacic was dishonoured. Mr Kovacic says he was made aware of this approximately one week later and believes this occurred unexpectedly when a creditor of ZNR did not make a payment, causing the account to have insufficient funds. Mr Kovacic also says that he believed ZNR 'was justified in withholding payment until such a time as [Powersellers] agreed to replace or repair the goods'.

9 On 28 November 2018, Powersellers filed a Complaint in the Magistrates' Court of Victoria (Complaint) against Mr Kovacic to recover the costs of the Goods, plus interest and legal costs.

10 Judgment totalling the sum of $17,362.93 was entered against Mr Kovacic on 25 January 2019 after Mr Kovacic failed to file a defence to the Complaint (Judgment).

11 On 20 August 2019, Powersellers served a bankruptcy notice on Mr Kovacic relying on the unsatisfied Judgment. Following expiry of the bankruptcy notice, Powersellers filed a creditor's petition in the Federal Court of Australia (Federal Court) and it was listed for hearing on 23 January 2020. Around this time, Mr Kovacic made contact with Powersellers' solicitors and on 19 December 2019, offered to make payment in settlement of the bankruptcy proceeding by way of instalments.

12 On 21 January 2020, Mr Kovacic deposited $23,000 into the trust account held by Powersellers' solicitors, by way of cheque. In response, Powersellers agreed to an adjournment of the hearing of the creditors petition (listed two days later) to allow the funds to clear. The adjournment was granted and the following day (24 January 2020), Powersellers was informed that the cheque had been dishonoured.

13 Mr Kovacic says that he was not aware of the Judgment until this was explained to him by a friend on 5 February 2020, although he was aware there was a dispute over the Goods.

14 The hearing of the creditor's petition was adjourned by the Federal Court to 6 February 2020. In the days leading up to this hearing, Mr Kovacic made attempts to adjourn the hearing and settle the bankruptcy proceedings, however Powersellers refused.

15 Mr Kovacic appeared at the hearing of the creditor's petition via audio-link on 6 February 2020 and again sought an adjournment, however it was refused by Judicial Registrar Ryan.[2] The Federal Court made a sequestration order against Mr Kovacic. That sequestration order is the subject of ongoing litigation in the Federal Court.

16 On 11 February 2020, Mr Kovacic filed an application in the Magistrates' Court for re‑hearing pursuant to s 110 of the Magistrates' Court Act 1989 (Magistrates' Court Act). By that application, Mr Kovacic sought an order setting aside the Judgment on the grounds that he had not been served with the Complaint (First Application). The First Application was filed in the form specified in r 46.09(2) of the Magistrates' Court Rules. Mr Kovacic also filed a supplementary affidavit in support of the First Application which exhibited his proposed defence, disputing liability for the debt alleged in the Complaint.

17 Powersellers opposed the First Application on the basis that the Complaint had been served in accordance with the Magistrates' Court Rules. In relation to Mr Kovacic's proposed defence, Powersellers submitted that Mr Kovacic had admitted the underlying debt, evidenced by his conduct in offering to settle the bankruptcy proceedings and depositing the cheque of $23,000.

18 The First Application was heard on 6 March 2020. The details of the hearing are discussed at paragraphs 53-59 below. Magistrate Burns dismissed the First Application and ordered Mr Kovacic to pay Powersellers costs of the First Application in the sum of $1,158.

19 On or about 29 April 2020,[3] Mr Kovacic filed a second application under s 110 of the Magistrates' Court Act seeking an order setting aside the judgment, again disputing service of the Complaint (Second Application). The Second Application was also filed in the form specified in r 46.09(2) of the Magistrates' Court Rules.

20 On 17 July 2020, Magistrate Burns again refused the Second Application and ordered Mr Kovacic to pay Powersellers costs of $3,159. The details of this hearing are discussed at paragraphs 112-116 below.

21 Mr Kovacic applies by way of originating motion filed 15 September 2020 for judicial review of the First Application and Second Application. He relied on the following material in support of his application:

(a) affidavits of Zoran Kovacic filed 15 September 2020 (unsworn), 4 November 2020 (incorporating the content of the unsworn affidavit filed 15 September 2020), dated 3 November 2021 (filed 29 November 2021), 24 November 2021 (filed 25 November 2021) and 28 November 2021 (filed 30 November 2021);

(b) affidavit of Nedeljka Kovacic dated 22 November 2021;

(c) affidavit of George Katsakis dated 22 November 2021; and

(d) outline of submissions dated 4 November 2020, 1 October 2021 and reply submissions dated 25 November 2021.

22 Powersellers relied on the following material to oppose Mr Kovacic's application:

(a) affidavit of Lee Filkin dated 3 November 2021 (exhibiting Ms Allamby's affidavit affirmed 2 July 2020); and

(b) submissions dated 4 October 2021 (filed 4 November 2021).

23 Mr Kovacic appeared by his McKenzie friend, Mr Fitzgerald. Mr Kovacic is a self‑represented litigant and so entitled to the assistance of the Court to ensure a fair hearing.[4]

24 The second defendant, the Magistrates' Court of Victoria, is joined as a necessary party pursuant to r 56.01(3) of the Supreme Court (General Civil Procedure) Rules 2015 (Rules). In accordance with the normal practice, the Magistrates' Court formally entered an appearance and advised that it did not intend to take any active role in the proceedings and would abide by the decision of this Court in accordance with the Hardiman principle.[5]

25 On 20 September 2021, Mr Kovacic filed a summons seeking, amongst other things, summary judgment of the relief sought in the originating motion pursuant to r 45.03(1) of the Rules. The application relied upon Powersellers' failure to file an appearance. Mr Kovacic's summary judgment application was listed for hearing concurrently with the trial in this proceeding.

26 Following my ruling on the question of leave referred to in paragraphs 27 and 31 below, Mr Kovacic confirmed at the hearing on 30 November 2021 that he no longer pressed the application for summary judgment. Accordingly, I dismiss the summons filed 20 September 2021 insofar as it seeks summary judgment.

27 At a directions hearing held on 5 October 2021, orders were made for Mr Kovacic to serve Powersellers with the originating motion and related court documents (Documents) by posting these documents to Powersellers' registered office as listed on a recent ASIC Current and Historical Company Extract. Powersellers filed a notice of appearance on 15 October 2021.

28 On 30 November 2021, on return of the summons and at the trial of the proceeding, Mr Kovacic argued that Powersellers required and should not be granted leave to appear. Mr Kovacic submitted that he had previously served Powersellers by posting sealed copies of the Documents to an address he had found in an online search directory operated by White Pages (white pages address). The white pages address was not the registered address for Powersellers but appeared to be an address located in the same factory complex as Powersellers' registered address. Mr Kovacic deposed to speaking with a person at the white pages address who did not recall this specific piece of mail sent by Mr Kovacic, but stated he often received mail addressed to Powersellers which he would hand deliver to Powersellers at their office. I take this to be a submission that the Court should be satisfied that the Documents ought to have come to Powersellers' attention. Mr Kovacic also submitted that r 8.04 of the Rules requires a defendant served with an originating process in Victoria to file an appearance within 10 days of service.

29 Against this, Powersellers submitted leave is not required. It relied upon r 8.07(1) which permits a defendant to file an appearance at any time before judgment without requiring the leave of the Court.

30 Having heard the parties' submissions on this issue, I determined that leave to file an appearance was not required. I did so because:

(a) on Mr Kovacic's evidence, I could not be satisfied that the Documents sent to the white pages address had come to Powersellers' attention;

(b) section 109X of the Corporations Act 2001 (Cth) sets out, non-exhaustively, how a company may be served including by posting documents to a company's registered office;

(c) section 29(1) of the Acts Interpretation Act 1901 (Cth) provides:

where an Act authorises or requires any document to be served by post.... then service shall be deemed effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

(d) section 160 of the Evidence Act 2008 provides the presumption that if a postal article addressed to a person at a specified address in Australia, it was received at that address on the seventh working day after having been posted;

(e) the originating motion and supporting documents were posted to Powersellers' registered office only after 5 October 2021;

(f) rule 8.04 of the Rules provides that the time for entering an appearance where the originating process is served in Victoria shall be not less than 10 days after service [emphasis added]; and

(g) rule 8.07 of the Rules provides that a defendant may file an appearance at any time, but after judgment an appearance shall not be filed without leave of the Court.

31 Even if I am incorrect and leave was required, in all the circumstances of this case I would have granted Powersellers leave to enter an appearance. The Court had raised issues concerning service of the originating motion with Mr Kovacic as early as 4 November 2020. I also note that Powersellers promptly filed a notice of appearance once it was served at its registered address. Lastly, Mr Kovacic did not point to any prejudice caused by the timing of the notice of appearance filed by Powersellers.

32 Under the Rules, a proceeding seeking judicial review must be commenced within 60 days after the date when grounds of the grant of relief first arose.[6] The Court shall not extend the time for filing a judicial review application except in special circumstances.

33 Mr Kovacic's application for judicial review was filed on 15 September 2020. The Magistrates' Court order dismissing the First Application was made on 6 March 2020. The originating motion was filed more than 130 days after the expiry of the time limit in relation to the First Application.

34 Mr Kovacic submitted that special circumstances exist because the judgment he sought to set aside in the First Application was entered without a hearing on the merits in circumstances where relevant evidence (such as 'the written agreement' or copy of the first dishonoured cheque) was not produced by Powersellers.[7] Mr Kovacic further submitted that during the hearing of the First Application, the solicitor for Powersellers misled the Magistrate about Mr Kovacic's residential address and again disputed that personal service had been effected on him.

35 Mr Kovacic says he filed the First Application as soon as he became aware of it and that consideration must be given to his disability and poor mental health, evidenced by a report from a clinical psychologist. I accept that Mr Kovacic has been diagnosed and is being treated for major depressive disorder, generalised anxiety and post‑traumatic stress disorder.

36 Finally, Mr Kovacic says that he always intended to appeal the decision of the Magistrate but did not realise there was a limitation period of 60 days. He thought it was necessary to file a second application in the Magistrates' Court before he could file an application for judicial review and that any time limit would only commence to run from the time of the refusal of any second application. Mr Kovacic offered no explanation for why he held this belief.

37 Powersellers concede that it suffers no direct prejudice as a result of Mr Kovacic's delay in filing his application in relation to the First Application. It does, however, point to the litigation in the bankruptcy jurisdiction of the Federal Court which is currently on hold pending the outcome of Mr Kovacic's application for judicial review in this Court.

38 Powersellers submit that the Court should be circumspect in accepting Mr Kovacic's submissions made at the hearing in relation to his ignorance of legal process exacerbated by low literacy levels and poor health. Powersellers point to the fact that these arguments were first put forward by Mr Kovacic in his submissions in reply and appear unsupported by any evidence. Additionally, Powersellers says that Mr Kovacic is 'no stranger to the legal system or legal processes' and point to the extensive affidavits he has filed in this proceeding and the bankruptcy proceeding.

39 Finally, Powersellers submit that Mr Kovacic has not demonstrated an arguable case for judicial review of the Judgment or the Magistrate's order in relation to the two applications.

40 I turn now to the applicable principles for determining whether special circumstances exist.

41 In Garrett v Legal Services Commissioner,[8] Derham AsJ surveyed the authorities on what needs to be shown to establish special circumstances under r 56.02(3) of the Rules. I gratefully adopt his Honour's summary of the applicable principles including:

(a) the phrase 'special circumstances' is deliberately flexible;

(b) to show special circumstances, the plaintiff is required to make out circumstances that are not general in character, exceeding that which is usual or common;

(c) the existence of special circumstances is to be determined by reference to all the circumstances of the case;

(d) the relevant factors include (but are not limited to):

(i) the period of delay;

(ii) the reasons for the delay;

(iii) whether the plaintiff has an arguable case;

(iv) the justice to both parties; and

(v) the public interest in the finality of litigation; and

(e) an arguable case does not automatically result in a finding of special circumstances, but if the plaintiff does not establish an arguable case, there will ordinarily be no point in extending time and therefore no special circumstances exist.

42 In this case, the period of delay is significant, however I accept that Mr Kovacic has provided an explanation for the delay and note that Powersellers concede that no prejudice was occasioned by the delay. I am not persuaded that Mr Kovacic is such an experienced litigant that his explanation for the delay should be rejected.

43 In my view, noting that Mr Kovacic is not legally represented and the lack of prejudice to Powersellers, the justice to both parties lies in extending the time for filing of the originating motion. Accordingly, I extend the time period for filing of the originating motion to 15 September 2020 insofar as it relates to the Magistrates' Court order of 6 March 2020.

Judicial review - applicable statutory provisions and legal principles

44 The following statutory provisions and legal principles apply in respect of Mr Kovacic's application for judicial review of the orders made by the Magistrates' Court on both 6 March 2020 and 17 July 2020.

45 In Craig v State of South Australia,[9] the High Court explained that certiorari is a process by which a superior court supervises the acts of an inferior court. It is not an appellate procedure enabling the supervising court to generally review the order or decision of the inferior court. Nor may the superior court substitute the order or decision that the superior court thinks should have been made. Certiorari enables the quashing of the impugned order or decision on one or more of a number of distinct established grounds including jurisdictional error or failure to observe the requirement of procedural fairness. An inferior court falls into jurisdictional error if it mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist.

46 In Doughty-Cowell v Kyriazis,[10] the Court of Appeal made the following instructive points about the fundamental obligation of every court to ensure a fair hearing, relevant to determining the content of the procedural fairness required in a particular case:

(1) Fairness is not an abstract concept. When one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.

(2) The practical question is whether the party in question was given a reasonable opportunity to present his or her case and advance submissions in support, and to know the case to be advanced by the opposing party and to make submissions in opposition to that case.

(3) What is reasonable for this purpose will necessarily depend upon the circumstances. Matters to be taken into account will include:

• the nature and complexity of the issues in dispute;
• the nature and complexity of the submissions which the party wishes to advance;
• the significance to that party of an adverse decision; and
• the competing demands of the time and resources of the Court.

(4) The question to be asked is whether the party (represented or unrepresented) was given a reasonable opportunity to advance his or her own case and to be informed of and respond to the opposing case.

(5) The key difference with respect to unrepresented litigants is the need for the Court to assess the capacity of an unrepresented person to formulate, and articulate, the case which they wish to present. As we said [in Roberts v Harkness[11]]:

The assessment of capability will typically be based on any written documentation which the litigant has filed and, where there is an oral hearing, on the quality of the litigant's verbal communication with the Court. Very often, the judicial officer will be able to assess relatively quickly whether, and to what extent, the litigant will need assistance, either from the Court or from a third party, in order for the Court to understand the litigant's case.

47 In order to determine the content of fairness in a particular case, it is necessary to consider the statutory framework governing the decision-making process.[12]

48 The main purposes of the Magistrates' Court Act includes:

(a) to establish the Magistrates' Court of Victoria; and

(c) to provide for the fair and efficient operation of the Magistrates' Court; and

(d) to abolish inefficient and unnecessary court process and procedures; and

(e) to allow for the Magistrates' Court to be managed in a way that will ensure-

(i) fairness to all parties to court proceedings; and

(ii) the prompt resolution of court proceedings; and

(iii) that optimum use is made of the Court's resources.

49 Rule 1.06.1 of the Magistrates' Court Rules state that the overriding objective of those rules is to enable the court to deal with a case justly and in accordance with the requirements of the Civil Procedure Act 2010 (Vic) (CPA).

50 Section 7 of the CPA provides that the overarching purpose of the CPA and rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute. Section 8 of the CPA requires the court to give effect to the overarching purpose in the exercise of any of its powers, or, in the interpretation of those powers, whether those powers arise from or are derived from the common law or any procedural rules or practices of the court.

51 Section 110 of the Magistrates' Court Act provides that:

(1) If a final order is made by the Court in a civil proceeding against a person who did not appear in the proceeding, that person may, subject to and in accordance with the Rules, apply to the Court for an order that the order be set aside and that the proceeding be re-heard.

(2) On an application under this section, the Court may set aside the order subject to any terms and conditions that it thinks just and re-hear the proceeding.

52 Rule 46.10 of the Magistrates' Court Rules states that:

The Court may set aside or vary an order which affects a person where the application for the order -

(a) was made on notice to that person, but the person did not attend the hearing of the application; or

53 Mr Kovacic relied upon affidavits affirmed 11 February 2020 and 4 March 2020, the latter of which exhibited documents evidencing his residential address (such as his Victorian Heavy Vehicle Driver's Licence and utility statements), a letter from his psychologist and his proposed defence.

(a) denied entering into an agreement to purchase the Goods and said that the Goods were purchased by him as a representative of ZNR and that he took possession of the Goods in that same capacity;

(b) in the alternative, Mr Kovacic stated that if he did enter into an agreement with Powersellers, he did so either:

(i) 'under a total mistake as to its nature and contents and subject matter'; or

(ii) under a special disability. The special disability is particularised and includes, non-exhaustively, his background growing up in conditions of war in Serbia, his limited 'functional' English, his lack of familiarity with commercial transactions, not being informed to seek legal advice before signing any agreement to purchase the Goods, his permanent disability and psychological difficulties he has suffered since a car accident in January 2018 (including confusion, stress and trouble interpreting legal documentation such as contracts); and

(c) referred to his discovery of water damage and his belief that the Goods were defective, Powersellers' refusal to repair or replace them and his explanation as to how the cheque he had presented to Powersellers had been inadvertently dishonoured.

55 Powersellers opposed the First Application, relying on the affidavit of Jennifer Allamby sworn 4 March 2020 and the affidavit of Sherril Scott, a process server, sworn 19 December 2018. I interpolate briefly to note that Ms Allamby's affidavit affirmed on 4 March 2020 was not before this Court, however a solicitor for Powersellers, Mr Lee Filkin, deposes in his affidavit filed in this Court on 3 November 2021 that much of Ms Allamby's missing affidavit was repeated in Ms Allamby's affidavit affirmed 2 July 2020 (at paragraphs one to 30) filed in support of the Second Application; a copy of which he exhibited.

56 Powersellers said that the Complaint was served in accordance with the Magistrates' Court Rules. Powersellers relied upon the affidavit of a licensed process server who deposed to service on Mr Kovacic's mother, Nedeljka Kovacic (Mrs Kovacic) at an address in Braybrook, Victoria on 17 December 2018. At the time of service, Mrs Kovacic confirmed to the process server that Mr Kovacic resided at the Braybrook address.

57 Mr Kovacic did not dispute the truth of this evidence. His affidavit evidence filed in the First Application was that 'my parents are getting older and there [sic] command and understanding of English is fair' and that he never received the correspondence. Mr Kovacic further said that he had moved out of the Braybrook address at the time of service and relied on documents he had exhibited supporting his address change, including a copy of his driver's licence which (on the back) listed an address in Werribee, Victoria.

58 Powersellers further opposed the First Application on the basis that the debt had been admitted by Mr Kovacic by his conduct in offering to settle the bankruptcy proceedings and depositing the cheque of $23,000. This does not appear to be directly addressed by Mr Kovacic in his affidavit material filed in the Magistrates' Court in support of the First Application.

59 It is also relevant to note that the affidavit material filed by Mr Kovacic in the First Application also refers to matters occurring in the bankruptcy proceedings in the Federal Court, including Mr Kovacic's attempts to adjourn the hearing of the creditor's petition on 6 February 2020, his attempts to settle the dispute with Powersellers in the days prior, and the difficulties he experienced during the hearing on 6 February 2020.

60 The First Application was heard by Magistrate Burns on 6 March 2020.

61 At the hearing, Ms Allamby, appeared as solicitor for Powersellers. Mr Kovacic did not hear the application being called and so arrived after the hearing had commenced. He appeared as a self-represented litigant, supported by his friend, Mr George Katsakis.

62 The transcript of the hearing shows that the Magistrate began the hearing, in Mr Kovacic's absence, by reading the affidavit of Ms Allamby sworn 4 March 2020 and asking how Powersellers had determined that the Braybrook address was Mr Kovacic's address for service, given that Mr Kovacic's driver's licence had listed an address in Werribee, Victoria. Ms Allamby advised the Magistrate that this was detailed in her affidavit sworn 4 March 2020 which deposed that the Braybrook address was listed as Mr Kovacic's address in his capacity as sole director of ZNR in an ASIC company search.

63 The Magistrate went on to question Ms Allamby about whether service was attempted at the Werribee address or the Derrimut address (listed on the front of Mr Kovacic's driver's licence). Ms Allamby told the Magistrate she had evidence that service was attempted at the Derrimut address but conceded she had no evidence of any attempt to serve Mr Kovacic at the Werribee address. At this point, Mr Kovacic arrived at the hearing.

64 Upon his arrival the following exchange occurred between the Magistrate and Mr Kovacic:

HIS HONOUR: We've been calling you Mr Kovacic, where have you been?

MR KOVACIC: I was just outside here. I didn't hear anybody call me up.

65 The Magistrate then proceeded to ask Mr Kovacic why the matter should be reheard. Mr Kovacic explained that he had not been served with the Complaint by Powersellers. The Magistrate asked Mr Kovacic questions about when he moved to the Werribee address and whether he had an affidavit from his mother disavowing her statement to the process server that Mr Kovacic lived at the Braybrook address. Mr Kovacic explained that he has only recently received Ms Allamby's affidavit of 4 March 2020 and had not had time to consider it in detail. He then told the Magistrate that his mother probably did tell the process server he lived at the Braybrook address, however she is elderly, does not speak English and has 'a high sugar level'. Mr Kovacic told the Magistrate that his mother did not know the process server and so 'she withheld the information [about Mr Kovacic's Werribee address] and hasn't provided that to whoever came to serve the paperwork.'

66 The Magistrate then asked Mr Kovacic whether by presenting the cheque in purported payment of the Goods, he acknowledged the debt. Mr Kovacic explains that at the time of the purchase, he was acting as a representative of ZNR and not in his personal capacity. The Magistrate continued, saying that Mr Kovacic had then presented a second cheque (in the sum of $23,000) which had also been dishonoured. Mr Kovacic responded, saying he was unaware there were insufficient funds in the account, which must have occurred due to a late supplier payment. Mr Kovacic reiterated that it is a company account and that he was not aware of the balance of funds available in the account and no longer controlled the company.

67 The Magistrate then asked if Mr Kovacic had proof of when he moved to the Werribee address, which Mr Kovacic responds by saying no, only the accounts and bills he had exhibited in his filed affidavit.

68 The Magistrate then asked Ms Allamby for a copy of the written sales agreement and was directed to the invoice issued for the Goods exhibited to Ms Allamby's affidavit as evidence of the agreement. The Magistrate then asked Mr Kovacic about the invoice which was addressed to him personally. Mr Kovacic responded that at the time of the purchase he had asked for the invoice to be addressed to ZNR and had not noticed the invoice was addressed to him personally. Mr Kovacic said this was a mistake and reiterated that he paid using a 'company cheque'.

69 I interpolate here to note that at the time of the hearing of the First Application, a copy of the first cheque evidencing ZNR as the account drawer does not appear to have been before the Magistrate.[13]

70 The Magistrate asked Mr Kovacic why he gave Powersellers an address in Derrimut (as listed in the invoice). Mr Kovacic responded by saying he did not give any address, he just handed over his driver's licence.

71 Around this time, the following exchange takes place between the Magistrate and Mr Kovacic:

MR KOVACIC: - - - (indistinct) have it under the company name. I was told that's not an issue.

HIS HONOUR: Mr Kovacic, when I talk you stop, do you understand?

72 Mr Kovacic explained that he did not provide the Derrimut address to Powersellers but was asked for a photocopy of his driver's licence at the time of purchase. Mr Kovacic then told the Magistrate that he asked for the invoice to be made out to ZNR.

73 At this point, Ms Allamby made submissions to the effect that Ms Kovacic's affidavits had failed to adequately address the actual debt, regardless of whether it was ZNR or Mr Kovacic personally who had agreed to purchase the Goods.

74 Mr Kovacic responded by saying that the debt was disputed and that he wanted the court to hear all of the evidence from witnesses explaining the situation, concluding by saying 'I have pretty much cleared everything in my affidavit'.

75 The Magistrate then told Mr Kovacic that he did not accept what Mr Kovacic had said or his affidavit material. The Magistrate stated:

I think that you have been particularly sharp in your dealings with the company and your application to set aside and rehear is refused.

76 Mr Kovacic requested reasons for the Magistrate's conclusion. The Magistrate responded:

I don't accept the truthfulness of your affidavit and I accept - the respondent to your application, I accept their affidavit as the truth of the situation.

77 After the Magistrate dealt with the question of costs, Mr Kovacic asked to bring the letter from his clinical psychologist, exhibited to his affidavit, to the Magistrate's attention. The Magistrate replied, 'I've had a look at that. I've made by ruling. Thank, Mr Kovacic.' The hearing then ended.

78 Mr Kovacic seeks judicial review of the dismissal of his First Application on the following grounds:

(a) Ground 1: the Magistrate did not correctly apply s 110 of the Magistrates' Court Act and r 46.10 of the Magistrates' Court Rules because the Magistrate misapplied his discretion by failing to set aside the Judgment in circumstances where it was obtained ex parte and without the benefit of the evidence to be given by the parties;

(b) Ground 2: Mr Kovacic was denied procedural fairness and natural justice;

(c) Ground 3: the Magistrate demonstrated bias towards him;

(d) Ground 4: the Magistrate failed to take into account Mr Kovacic's medical condition as evidenced by the report of his clinical psychologist.

79 Powersellers opposes Mr Kovacic's application for judicial review in this Court. It says the evidence demonstrates Mr Kovacic did receive a fair hearing because Mr Kovacic was given an opportunity to make submissions, he filed evidence which was considered by the Magistrate and, having considered that evidence, the Magistrate made adverse findings of fact against Mr Kovacic. Further, Powersellers say there is no evidence to suggest the Magistrate was biased or that the Magistrate disregarded Mr Kovacic's affidavit evidence without considering it.

80 The Judgment obtained by Powersellers against Mr Kovacic was made pursuant to r 21.04 of the Magistrates' Court Rules. That rule requires the Registrar to be satisfied that the order should be made. The application for such an order must include an affidavit of service of the Complaint. In the case of a claim for a debt or liquidated demand, an affidavit verifying the Complaint is not required.[14]

81 Mr Kovacic's written submissions acknowledge the unconditional nature of the discretion of the judge to set aside a default judgment.[15] Mr Kovacic has not identified in his written or oral submissions how he contends that the Magistrate incorrectly applied s 110 of the Magistrates' Court Act or r 46.10 of the Magistrates' Court Rules, other than to repeat his submissions concerning service of the Complaint and the Magistrate's alleged failure to consider the material filed by Mr Kovacic.

82 Section 110 and r 46.10 provide power to the Magistrates' Court to make the orders sought by Mr Kovacic but do not in themselves specify any criteria or elements the Court must consider beyond that the person seeking that the order be set aside and the matter reheard must not have been present at the original hearing.

83 The Magistrate clearly understood that Mr Kovacic was not present at the original hearing. Section 110(2) and r 46.10 state that the court may set aside the order obtained at a hearing where the applicant was not present. There is no statutory requirement for the court to set aside the order. If there was such a requirement one would expect the language of the statute to be couched in terms of 'must' not 'may'.

84 In circumstances where a judgment was obtained regularly, ordinarily, in considering an application to set aside that judgment, the court will require the applicant to produce to the court evidence that he has a prima facie defence.[16]

85 In making inquiries of Mr Kovacic about why he had twice paid the debt by cheques that were later dishonoured the Magistrate was, in my view, assessing whether Mr Kovacic had a prima facie defence, including whether he had previously acknowledged the debt. These were enquires the Magistrate was entitled to make in weighing the evidence before him and deciding whether to exercise his discretion to set aside the default judgment order.

Grounds 2 and 3: Denial of natural justice and bias

87 Mr Kovacic's second ground is that he was denied natural justice and a fair hearing. It is convenient to address this ground together with Mr Kovacic's third ground; that the Magistrate was biased.

88 In summary, Mr Kovacic submits that the Magistrate did not provide him with a fair hearing and demonstrated bias as follows:

(a) Mr Kovacic entered the hearing approximately 11 minutes after it had commenced, during which time Powersellers, with the benefit of an experienced lawyer, presented Powersellers' case in his absence;

(b) the Magistrate, given that Mr Kovacic had made his presence known to the Registry, should have stood the matter down to see if Mr Kovacic could be located;

(c) by the time Mr Kovacic appeared, the Magistrate was 'angry, annoyed and unhappy and...Mr Kovacic bore the brunt of it';

(d) Mr Kovacic incorrectly stated he moved to his Werribee address in 2017 (instead of 2016) 'due to nerves';

(e) when Mr Kovacic told the Magistrate he had not had an opportunity to read Ms Allamby's affidavit which was served on him the previous day, the Magistrate unfairly and unreasonably responded by saying, 'why haven't you read it, I just did in three minutes';

(f) the Magistrate aggressively and forcefully tried to refute or rebut Mr Kovacic's honest answers without indicating that he had read Mr Kovacic's affidavit;

(g) the Magistrate continued to 'interrogate and intimidate' Mr Kovacic about his address, and 'other questions all related to the evidence Ms Allamby had given in [Mr Kovacic's] absence';

(h) when he responded to Mr Kovacic's request for his reasons for refusing his application, the Magistrate stated he did not accept the truthfulness of Mr Kovacic's affidavit and he accepted Ms Allamby's affidavit as truthful. Mr Kovacic says that in making this statement, the Magistrate refused the First Application without conducting a hearing, or giving Mr Kovacic the opportunity of being heard or giving sworn evidence, or calling witnesses and cross‑examining his opponent's evidence; and

(i) it was also 'very clear' that [the Magistrate] did not take note of Mr Kovacic's substantial disability.

89 Mr Kovacic relies on his own evidence of what occurred at the hearing and the affidavit of George Katsakis affirmed 24 November 2021 in which Mr Katsakis deposes to his impressions of what occurred during the hearing. Mr Katsakis says the Magistrate was immediately antagonistic and aggressive towards Mr Kovacic and appeared biased against Mr Kovacic, 'he spoke to him disrespectfully, told him not to talk when it was Zoran's turn to talk....the way he was treated was anything but what I would expect as a fair hearing.'

90 Mr Kovacic has not specified whether his third ground alleging bias is based in actual or apprehended bias. The test for actual bias is that a judge must not sit on a case where he is biased against one of the parties: Minister for Immigration and Multicultural Affairs v Jia Legeng.[17] The test for apprehended bias is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide: Ebner v Official Trustee in Bankruptcy.[18]

91 Mr Kovacic suggests that the Court ought to rely on Mr Katsakis' observations of his attendance at the Magistrates' Court on 6 March 2020 as evidence of what transpired.

92 Mr Katsakis attended court on 6 March 2020 to support his friend, Mr Kovacic. I note that in the settlement correspondence between the parties, Mr Katsakis is said to be Mr Kovacic's mentor. I accept his observations of the proceeding as genuine. I am not, however, prepared to accept his observations as those of the 'fair-minded lay observer' given his presence at the proceeding was to support Mr Kovacic. In my view, the better course is for me to rely on the transcript of the proceeding, being an accurate record of the hearing.

93 At this point, it is worth noting that the First Application, being a re-hearing application, is a common interlocutory application made by parties involving well‑settled law. The Magistrates' Court of Victoria is an extremely busy court, with a great many competing demands on its resources. I consider the grounds and issues raised by Mr Kovacic in his First Application to be straightforward in nature and narrow in compass.

94 Much of the affidavits relied upon by Mr Kovacic in the First Application address his submissions disputing service of the Complaint, the proceedings in the Federal Court and settlement attempts. Further, the outcome of the First Application had the capacity to affect the bankruptcy proceeding in the Federal Court, a matter addressed at length in Mr Kovacic's material. An adverse decision for Mr Kovacic would mean that the Judgment (upon which the bankruptcy notice and creditor's petition is based) would remain.

95 I take into account all of these matters in assessing the content of the requirement for fairness in the hearing of Mr Kovacic's re-hearing applications.

96 It must be borne in mind that the purpose of the hearing of Mr Kovacic's First Application was not to hear and determine the existence of the underlying debt alleged by Powersellers (or, indeed, to hear Mr Kovacic's defence to the claim). The Magistrate was only concerned with testing the issues of service and whether there was an arguable defence. Matters such as Mr Kovacic's acknowledgement of the debt rightly fall within this enquiry.

97 In my view, the transcript shows that the Magistrate commenced the hearing by thinking, quite reasonably, that Mr Kovacic would not be attending to make oral submissions. Notwithstanding Mr Kovacic's absence, the Magistrate, aware that Powersellers had opposed the application on the basis that service was duly effected and that Mr Kovacic had admitted the debt, began to test Powersellers' evidence regarding those matters.

98 It is clear from the transcript that the Magistrate, quite rightly, put Mr Kovacic's submissions regarding service to Ms Allamby, directing her to Mr Kovacic's evidence of his driver's licence and requesting evidence of service at the Werribee address. In response, Ms Allamby conceded that Powersellers had no evidence of any attempt to serve Mr Kovacic at the Werribee address.

99 On the transcript the Magistrate's initial interaction with Mr Kovacic on his late arrival seems abrupt, however, after a very brief exchange about the reason for Mr Kovacic's late arrival, the hearing proceeded. Mr Kovacic, like anyone coming in to a hearing after its commencement, was no doubt unsettled but was quickly able to explain to the Magistrate the basis of his application. In my view, the exchange on Mr Kovacic's arrival may demonstrate the Magistrate's frustration with Mr Kovacic being late but falls well short of a demonstration of bias by the Magistrate.

100 Similarly, the exchange between the Magistrate and Mr Kovacic in which the Magistrate says, 'Mr Kovacic, when I talk you stop, do you understand' was perhaps curt, but, as the transcript demonstrates, when more than one person is talking, the transcript records 'indistinct'. In my view, this exchange also falls far short of demonstrating any bias or unfairness on the Magistrate's part.

101 It is important to remember that Mr Kovacic bore the onus of convincing the court on the balance of probabilities that service had been defective and therefore the judgment should be set aside. Despite his initial absence, the Magistrate sought to test Powersellers' evidence of service.

102 Upon Mr Kovacic's arrival, the Magistrate proceeded to run the hearing in the conventional way, by effectively asking Mr Kovacic to make his case. The Magistrate asked Mr Kovacic about the evidence concerning service on his mother at his mother's address, the timing of Mr Kovacic's move to the Werribee address and his two prior dishonoured payments for the Goods. All of these matters were either clearly known to Mr Kovacic or within the material that Powersellers had served on Mr Kovacic in advance of the hearing.

103 Mr Kovacic confirmed to the Magistrate that he had been served with Powersellers' affidavit material (including Ms Allamby's affidavit of 4 March 2020) in advance of the hearing. The Magistrate was entitled to expect that Mr Kovacic had prepared for the hearing, including by reading the opposing party's material. The Magistrate was not obliged to adjourn the hearing because Mr Kovacic had not read documents served on him in advance of the hearing. Nor did Mr Kovacic request an adjournment.

104 At the end of his questions for Mr Kovacic the Magistrate asked Mr Kovacic whether he wished to say anything else. Mr Kovacic took up this offer explaining that he wanted the opportunity to dispute the debt in court with witnesses and that he otherwise relied upon his affidavit. At no time did Mr Kovacic request to cross‑examine Ms Allamby on her affidavit. This is not surprising given Mr Kovacic's statement that he had not considered Ms Allamby's affidavit in detail.

105 The transcript of the hearing, even allowing for tone which can be difficult to discern from transcript, does not support Mr Kovacic's assertion that the Magistrate was angry, annoyed, unhappy, aggressive or intimidating. The transcript demonstrates that the Magistrate asked questions of both Ms Allamby and Mr Kovacic that were clearly intended to test and explore their affidavit evidence. An assessment of competing and inconsistent evidence is a normal incident of a magistrate's role in deciding an application. In my view, the Magistrate gave Mr Kovacic a reasonable opportunity to advance his case and to be informed of and respond to Powersellers' case.

106 I am not satisfied that Mr Kovacic has demonstrated that he was denied natural justice at the hearing on 6 March 2020, nor that the Magistrate conducting the hearing was biased.

107 Accordingly, Mr Kovacic's second and third grounds must fail.

Ground 4: Failure to consider evidence and matters

108 Mr Kovacic contends the Magistrate failed to consider his affidavits and submissions, including the letter from his clinical psychologist.

109 The transcript shows that when Mr Kovacic raised this matter, the Magistrate informed Mr Kovacic that he had read the letter from Mr Kovacic's clinical psychologist.

110 The Magistrate, in asking about Mr Kovacic's previous payments for the Goods, demonstrated he had clearly read Mr Kovacic's affidavit material detailing the parties' settlement negotiations conducted in the background to the bankruptcy proceedings. This same affidavit exhibited the letter from Mr Kovacic's treating psychologist.

111 In my view there is no basis in this ground and it must fail.

112 On 29 April 2020, Mr Kovacic filed a second application for re-hearing pursuant to s 110 of the Magistrates' Court Act (Second Application). It is immediately apparent on the face of Mr Kovacic's Second Application that he made the Second Application on substantively the same reasons as the First Application, namely that he disputed service of the Complaint.

113 Mr Kovacic's affidavit sworn 29 April 2020 repeats much of the contents of affidavits he had filed in support of the First Application, save that he exhibited additional documents and expanded on submissions previously made.

114 Importantly, the additional information includes evidence that was not before the Magistrate at the First Application including:

(a) evidence of Mr Kovacic's residential address at the time the Complaint was served at the Braybrook address;

(b) a statutory declaration from Mr Kovacic's mother detailing her reasons for telling the process server that Mr Kovacic lived at the Braybrook address at the time of service and what she did with the documents;

(c) a statutory declaration from Mr Katsakis detailing his observations of the hearing of the First Application; and

(d) a copy of the cheque Mr Kovacic used to pay for the Goods.

115 I note that all of this additional evidence, with the exception of Mr Katsakis' statutory declaration, was available to be assembled by Mr Kovacic and presented as part of his First Application. None of this additional evidence arose from anything that had occurred since the hearing on 6 March 2020.

116 On 17 July 2020, the Second Application came before the same Magistrate who had heard his First Application. The following exchange occurred:

HIS HONOUR: Mr Kovacic, you wish to renew your application?

HIS HONOUR: Why do you want to do that? I made final orders last time?

MR KOVACIC: Due to the default judgment and order was placed against me in my absence.

HIS HONOUR: Just let me speak. It's my turn. I made a final ruling that your application to re-hear was not granted. So, if you wanted to take that elsewhere you could have appealed that. All you are really doing now is asking me to reconsider the final order I've already made. Why are you doing that?

MR KOVACIC: Well, according to the court system it's only an interlocutory order. It wasn't a final order.

HIS HONOUR: It's not a - if the court system says that, then it's incorrect. It was a final order refusing your application. There was final order previously made by the court making a default judgment. Then you made application to re-hear it and I refused that application. Not interlocutory, I finally determined the rights between the parties to refuse your application.

MR KOVACIC: Well, I've only gone by what it says on the court system. It said interlocutory - interlocutory order, wasn't a final order. That's why I'm back in front of you here today, Your Honour.

HIS HONOUR: All right. Well, your application is again refused. Now, tell me why I shouldn't impose costs against you.

HIS HONOUR: Your application is again refused. Your second application to re-hear is refused in the same way it was on 7 February.

HIS HONOUR: Tell me why I shouldn't impose costs against you.

MR KOVACIC: As you wish, Your Honour, obviously ---

HIS HONOUR: The starting point is about five applications not two. So, I'm not going to make orders in relation to preventing Mr Kovacic from lodging at this stage. I'm not going to make any orders that prohibit his rights in that regard. But again, this was a frivolous application and I refuse it and I'll order costs.

117 In relation to the Second Application, Mr Kovacic seeks judicial review on the following grounds:

(a) Ground 5: the Magistrate erred in law in stating that his order of 6 March 2020 (dismissing the First Application) was a final order;

(b) Ground 6: denial of natural justice and a fair hearing; and

(c) Ground 7: bias.

118 In relation to the fifth ground, Mr Kovacic submits that the Magistrate fell into error in stating that his order in relation to the First Application was final and not interlocutory and that this error led the Magistrate to conduct the hearing of the Second Application unfairly, by:

... shutting Mr Kovacic down from discussing the issue further and presenting his arguments' [sic] and effectively dismissing his application without considering its merits.

119 Powersellers concedes that the Magistrate was incorrect to characterise his order of 6 March 2020 dismissing the First Application as final and does not dispute that Mr Kovacic was entitled to bring a second application to set aside the default judgment. Powersellers, however, submits that the Second Application was brought on the same grounds as the First Application; that at the hearing of the First Application the Magistrate, after considering and testing the evidence, found that Mr Kovacic had been validly served; and there were no new or different circumstances arising between the First Application and Second Application relevant to the exercise of the Court's discretion. Accordingly, Powersellers submits that Mr Kovacic was afforded procedural fairness in respect of the Second Application.

120 Powersellers say its position is supported by the statement of Gibbs CJ in Carr v Finance Corporation of Australia Ltd (No. 1):[19]

... An order refusing to set aside a default judgment does not as a matter of law finally dispose of the rights of the parties, for it is open to the disappointed defendant to apply again to have the judgment set aside... In practice, in some cases a second application of that kind might be successful, for example, when the first application had been dismissed on a technicality. In other cases, however, the second application would be doomed to failure because the issues of substance which it raised would have been decided adversely to the defendant in the first application.

121 The way in which the Magistrate dealt with Mr Kovacic's Second Application evolved in the course of his interactions with Mr Kovacic. Having confirmed that Mr Kovacic wished to renew his application, the Magistrate appeared to dismiss the Second Application on the basis that his earlier order in relation to Mr Kovacic' First Application was a final order and that if Mr Kovacic wished to revisit the issue, he should have lodged an appeal. On being corrected by Mr Kovacic about the interlocutory nature of his previous order, the Magistrate proceeded to refuse Mr Kovacic's Second Application, 'in the same way it was on 7 February (sic)'. Importantly, the Magistrate also stated 'this was a frivolous application and I refuse it and I'll order costs'.

122 The Magistrate was correct in calling Mr Kovacic's Second Application frivolous, in that it was bound to fail. This is because Mr Kovacic's Second Application was made on grounds identical to Mr Kovacic's First Application, albeit with additional supporting evidence. That evidence, however, to the extent that it was relevant was all available to be gathered and presented by Mr Kovacic at the hearing of the First Application.

123 This is not a case in which Mr Kovacic's First Application was dismissed on a technicality. Mr Kovacic's First Application was dismissed after a hearing on its merits. Mr Kovacic was entitled to bring a second application to set aside the judgment but an application brought on grounds that had earlier been adjudicated on their merits was bound to fail. The right to bring a second application is not a right to gather better evidence that was available at the time of the first application to re‑litigate grounds that had been determined on the merits. Such a course would be contrary to the objects of finality in litigation.[20]

124 That the Magistrate determined Mr Kovacic's Second Application without hearing submissions was appropriate in circumstances where the Magistrate had discerned that Mr Kovacic's Second Application was a renewal of his First Application on identical grounds. In my view, in doing so, the Magistrate did not deny Mr Kovacic a fair hearing or demonstrate bias.

125 If I am incorrect and the Magistrate did deny Mr Kovacic procedural fairness or demonstrate bias, I would exercise my discretion to withhold the remedy Mr Kovacic seeks and not quash the Magistrate's order of 17 July 2020. I would do so because, for the reasons expressed above, Mr Kovacic's Second Application was bound to fail. In addition, noting that this litigation concerns a transaction between the parties that occurred in October 2018 involving a sum of less than $20,000, I am not satisfied that a grant of certiorari in relation to the Second Application would serve the overarching purpose of facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute.[21]

126 I dismiss Mr Kovacic's originating motion dated 15 September 2020 and his summons dated 20 September 2020.

127 I will hear from the parties on the question of costs.

[1] On 11 November 2020, this Court stayed the order made by the Registrar in the Magistrates' Court on 25 January 2019 until the determination of this proceeding, or until further order.

[2] Mr Kovacic says he informed the Federal Court that he disputed service of the Complaint and had, until recently, been unaware of the judgment entered against him and intended to set it aside.

[3] The Application for Re-Hearing Form 46B is dated 28 April 2020.

[4] See generally Roberts v Harkness [2018] VSCA 215 and Doughty-Cowell v Kyriazis [2018] VSCA 216.

[5] R v Australian Broadcasting Tribunal, Ex parte Hardiman & Ors [1980] HCA 13; (1980) 144 CLR 13, [35]-[36].

[7] Such as evidence of a written contract or a copy of the cheque presented as payment for the Goods.

[8] [2015] VSC 465, [20]-[24].

[9] [1995] HCA 58; (1995) 184 CLR 163, [8]-[12]

[10] [2018] VSCA 216, [63].

[11] [2018] VSCA 215 (citation omitted).

[13] Noting that the parties did not provide this Court with a complete copy of the documents relied upon at the First Hearing - given at least Ms Allamby's original affidavit affirmed on 4 March 2020 was not provided. See paragraph 55 above and the affidavit of Lee Filkin dated 3 November 2021 generally.

[14] Rule 21.02 Magistrates' Court Rules.

[15] Kostokanellis v Allen [1974] VicRp 71; [1974] VR 596.

[17] (2001) 205 CLR 507; [2001] HCA 17.

[18] (2000) 205 CLR 337; [2000] HCA 63.

[19] [1981] HCA 20; (1981) 147 CLR 246 at 248.

[20] Carr v Finance Corporation of Australia Ltd (No. 1) [1981] HCA 20; (1981) 147 CLR 246, [248].