Satchi & Satchi v Sharma

Local Courts Act 1982 LEGISLATION CITED : Supreme Court Act 1970 Uniform Civil Procedure Rules 2005

CASES CITED : Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR(NSW) 239

Satchi & Satchi Australia Pty Ltd (1st Plaintiff) PARTIES : Thambiappah Satchithanantham (2nd Plaintiff) Hemalathasothy Ranjani Satchithanantham (3rd Plaintiff) Sanjay Sharma t/a Adidev Enterprises (Defendant)

COUNSEL : J M Patel (Plaintiffs) S Stojanovic (Sol) (Defendant)

SOLICITORS : In person (2nd Plaintiff) Stojanovic Solicitors (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11443/06 Satchi & Satchi Australia Pty Limited v Sanjay Sharma T/as Adidev Enterprises

JUDGMENT 1 BELL J: This is an appeal from the judgment of Malpass AsJ delivered on 27 June 2007: Satchi & Satchi Australia Pty Limited v Sanjay Sharma trading as Adidev Enterprises [2007] NSWSC 642. The judgment was a review of the determination of Assistant Registrar Howe made on 1 November 2006 dismissing a notice of motion filed by the plaintiffs. The motion claimed an order setting aside the Assistant Registrar's earlier order striking out the summons.

2 Before turning to the grounds of appeal I will refer to the history of the proceedings.

3 The plaintiffs, Satchi & Satchi Australia Pty Limited (Satchi & Satchi) (the first plaintiff), Thambiappah Satchithanantham (Mr Satchithanantham) (the second plaintiff) and Hemalathasothy Ranjani Satchithanantham (Mrs Satchithanantham) (the third plaintiff) by summons filed on 29 March 2006 appealed against the decision of Magistrate Brown sitting in the Local Court at Parramatta, General Division, giving judgment to the first defendant, Sanjay Sharma trading as Adidev Enterprises (Adidev) (the plaintiff in the Local Court) in the sum of $20,200.00. 4 The plaintiffs' appeal against the Magistrate's judgment was brought pursuant to s 73 of the Local Courts Act 1982 and is confined to error of law. 5 In the Local Court proceedings Mr Sharma's liquidated claim was pleaded on a cause of action as follows: For the purchase of goods by the defendants from the plaintiff and paying for the same with cheques on an account in the name of the defendants 2 and 3 after which defendant 2 (Mr Satchithanantham) admitted that no funds were available to pay the cheques. 6 The proceedings came before Magistrate Brown on 25 November 2005. Mr Satchithanantham appeared in person. Two sets of proceedings involving the same parties were before the Court. Mr Sharma had earlier commenced proceedings (3788 of 2004), which were struck out for want of prosecution. A defence and cross-claim in those proceedings had been filed. The cross-claim remained live after the original claim was struck out. The proceedings which give rise to the present appeal (1160 of 2005) were commenced in relation to the same subject matter. It appears that both proceedings involved a re-hearing following an arbitration (Mr Satchithanantham's affidavit para 8, 6 June 2007). On 25 November the Magistrate listed the cross-claim filed in the earlier proceedings for hearing on 8 December 2005, together with the hearing of Mr Sharma's statement of liquidated claim in proceedings 1160 of 2005. 7 At the hearing on 8 December each of the parties was represented by a solicitor. Mr Sharma was represented by Mr Niven and the three plaintiffs were represented by Mr Krishnar. 8 Mr Sharma gave evidence confirming the accuracy of his affidavit, which had been filed in the proceedings. In summary Mr Sharma's evidence was that he was in the business of selling women's clothing. He had sold stock to Mr Satchithanantham from time to time. In November 2004 Mr Satchithanantham owed Mr Sharma $3,500.00 and he wanted to purchase a substantial quantity of further goods from him. Mr Sharma was unwilling to sell further goods to Mr Satchithanantham until he was paid the balance that he was owed. Mr Satchithanantham offered to hand over his BMW motor vehicle to Mr Sharma as a guarantee of payment. Mr Sharma said that he was not interested in the car and that he wanted money. Mr Satchithanantham demonstrated his capacity to pay by showing Mr Sharma a cheque that had been drawn in his favour for $395,000.00 (Brunei dollars). They agreed that Mr Sharma would sell a shipment of goods worth $16,500.00 to Mr Satchithanantham, which with the outstanding balance would mean that Mr Satchithanantham owed Mr Sharma the sum of $20,000.00. Mr Sharma agreed to keep Mr Satchithanantham's BMW motor vehicle as security for the payment and Mr Satchithanantham gave Mr Sharma two personal cheques; the first for $3,500.00 and the second for $16,500.00. The cheques were post-dated. Mr Sharma said (at [20]): I agreed that I would not deposit the cheques until the dates that were written on the cheques. We agreed that when he got back from Brunei I could then bank the cheques and when they were presented I could return the car to him. 9 The shipment was delivered to Mr Satchithanantham. Annexed to Mr Sharma's affidavit is a handwritten document, which was prepared by Mr Satchithanantham and which reads as follows: 8/11/04 Re purchase of goods I T Satchi of 76 Houison Street Westmead received goods worth A$20,000.00. In return I give my car BMW 750 TL for the same value to Adidev Enterprise. In view of temporary arrangement, I give two cheques amounting to $3500 (dated 30/11/04) and $16,500 (dated 15/11/04) as holding payment until I return from Brunei. Settlement of the car will be done upon return from overseas. By 19/11/04. 10 Mr Sharma was unhappy with the terms of the agreement recorded by Mr Satchithanantham. The following day he had a telephone discussion with Mr Satchithanantham to the following effect (at [24]): I said: "I am not happy with the proposed agreement. It is confusing where it mentions the car. I want you to make it clearer". He said: "I will write a new agreement. You can sell the car and we will take that into account on the settlement. If you sell the car for more than $20,000.00 I will pay you from the sale of the car. If it is less I will make up the balance so you are paid $20,000.00. 11 Mr Sharma attended the Roads and Traffic Authority, with Mr Satchithanantham, when the registration of the BMW motor vehicle was transferred from the company name into Mr Satchithanantham's name. On the same date Mr Satchithanantham executed a further document (annexure D to Mr Sharma's affidavit). This reads as follows: 16/11/04 Re ZHL 701 I, T Satchi hereby confirm that the market value of the car will be taken into the settlement of goods. 12 Following this Mr Satchithanantham gave Mr Sharma the BMW vehicle and the registration papers. 13 Mr Satchithanantham returned from Brunei around 23 November 2004. Shortly after this Mr Sharma requested payment and Mr Satchithanantham said, "I don't have the money, I can't pay you. I have stopped the cheques. The cheques will bounce if you bank them. You can keep the car instead". Mr Sharma protested that he did not want the car, and that their agreement had been that he would get the money. Mr Sharma transferred the registration of the BMW into his name. He had intended selling it to mitigate his losses, but he had been advised not to do so until the court proceedings were concluded. Mr Sharma was in India between December 2004 and April 2005. On his return to Australia he banked the two cheques, but they had been dishonoured on presentation. 14 An agreed statement of facts and issues was before the Magistrate on 8 December. After the morning adjournment the Magistrate raised a matter with the parties, which was not addressed by the agreed statement (08/12/05 T 11.8-24): Gentlemen I've read these two and it seems to me that there is an issue that's not addressed here and which is quite fundamental to the present proceedings. Prima facie it would appear that the plaintiff has an absolutely unanswerable case because the two cheques were dishonoured on presentation. It may be that there's a cross-claim to run as to why there might be some damages awarded against the plaintiff but frankly I can't see how given that the two cheques were tendered in payment and dishonoured, the plaintiff simply cannot succeed by sitting on the cheques and nothing else. He doesn't need to prove anything else. It's not in the statement of facts and issues so obviously I'm obliged to raise it but it seems to me the plaintiff's case if brought from that basis is unanswerable and under Part 36 of the Rules I'd have to deal with an issue that arises whether its pleaded or not. 15 Mr Krishnar complained that he had not come prepared to meet a case based on the cheques being dishonoured on presentation. The Magistrate stood the proceedings over and invited the parties to prepare written submissions on the issue that he had raised. 16 The proceedings were next before the Court on 2 March 2006. On that occasion there was no appearance on behalf of the plaintiffs. Mr Niven informed the Court that he had spoken by telephone with Mr Krishnar who had told him that he thought the matter had been listed for the following day. Mr Niven said that he had suggested to Mr Krishnar that he should make endeavours to attend the court promptly. The Magistrate stood the matter down until 10.30AM. After a short adjournment Mr Niven informed the Court that he had not been able to make further telephone contact with Mr Krishnar. Mr Niven applied to have the defences struck out. The Magistrate so ordered. His Honour referred to Mr Sharma's affidavit and concluded that the material did not sustain the cause of action pleaded against Mrs Satchithanantham. He dismissed the proceedings against her. (It is not clear why the proceedings in this Court were commenced by Mrs Satchithanantham as third plaintiff.) His Honour gave judgment for Mr Sharma in the sum pleaded in the statement of liquidated claim against Satchi & Satchi and Mr Satchithanantham. 17 Mr Krishnar and Mr Satchithanantham attended the Court at around 11.00AM on 2 March. Later that day a notice of motion claiming orders setting aside the judgment and reinstating the defences was filed on behalf of the three plaintiffs. Mr Satchithanantham swore an affidavit in support of the motion. He said that his failure to attend court was the result of a misunderstanding and that ([15]): We believe we have very good prospects of success in this matter, seek the Court's indulgence and orders sought. 18 The notice of motion was dealt with in chambers and refused. 19 The grounds of appeal set out in the plaintiffs' summons are: (a) His Honour the Magistrate R. Brown (M) erred in not hearing the application of "Notice of Motion" filed by the defendants on 3/3/2006 and refused to entertains the said application and failed to hear the main hearing and made orders on 2/3/2006 without hearing the matter and application. (b) His Honour R. Brown (M) erred in " not hearing the matter on 2/3/2006 and made orders against the defendants ," for the matter which was partly heard on 8/12/2005. The defendants were in the court at 11.00 am on 2/3/2005 for hearing, as notified to the plaintiff's solicitor by the defendant's counsel to stand the matter for the remaining part of the hearing. On 8/12/2005 and 23/12/2006, the current plaintiffs were wrongly understood that the hearing date was adjourned to 3/3/2006 instead of 2/3/2006. The court did not notify the adjournment date to the parties in writing and the plaintiff's solicitor then was notified the confusion when he called the current plaintiff's counsel at his residence at 10.00 am on 2/3/2006 prior to the orders made on 2/3/2006. (c) His Honour R. Brown (M) erred in not hear the matters in 3 occasions on 23/12/2005, 2/3/2006 and on 3/3/2006 for the Notice of motion filed, not even heard "ex-party" and acted in favour of the current defendant in the court below. (d) His Honour R. Brown (M) erred in " not hearing the matter fully " when all the parties were attended the hearing on 8/12/2005 after partly heard and by adjourning and by giving " concession to the plaintiff " for an issue, which the plaintiff was not pleaded in his statement of claim. The defendants were disadvantaged as to the concession and adjournment given to the plaintiff and the defendants were suffered injustice . (e) His Honour R. Brown (M) erred in not giving weight to the defendant's defences, which were not heard in the court on 2/3/2006 for the plaintiff's statement of claim that the plaintiff altered the original claim amount from $24,000 to 20,000 and initiated a new proceeding in the same grounds after his original claim was stuck (sic) out by the court on 4/3/2005, which was not set aside in the court. (f) Plaintiffs suffered Natural Justice, as they were not given opportunity to provide their evidence in the court in support of their defences and cross claim filed in the court on 4/3/2005, which was not set aside in the court. (g) On 25/11/2005, His Honour R. Brown (M) erred in fixing hearing date without giving consideration for the reasons voiced out by the current plaintiff as to the previous plaintiff's defaults in the court below then and " the previous plaintiffs counsel misled the court and convinced the magistrate in his favour ". (h) Defendant's previous counsel used his influence and acted and convinced to the court to hear the matter, when defendant was in defaults in for the orders made by the court. (i) His Honour R. Brown (M) erred in " not hearing notice of motion listed on 23/12/2005 for hearing ". The orders sought in that Notice of motion were crucial and the Magistrate erred in his decision, when the respondent was absent on the hearing date of 23/12/2005, in which his decision was different from what the orders made by him on 2/3/2006. 20 On 18 May 2006 the summons came before Assistant Registrar Howe. Mr Satchithanantham appeared. The summons was stood over to 15 June 2006 with directions, which included that there was to be an appearance on behalf of each of the plaintiffs on the next occasion. 21 On 16 June 2006 there was no appearance on behalf of any of the plaintiffs and the summons was struck out. 22 On 4 July 2006 the plaintiffs filed a notice of motion seeking to have the order striking out the summons set aside and the proceedings "reinstated for hearing". Mr Satchithanantham swore an affidavit in support of the motion. 23 The plaintiffs' motion was referred to Assistant Registrar Howe for hearing. On 1 November 2006 he dismissed the motion. He concluded that the appeal had little, if any, prospects of success. He noted that the only evidence adduced by the plaintiffs in support of the motion was that which related to the explanation for Mr Satchithanantham's failure to attend court. The Registrar considered the fact that this was the second time the plaintiffs had failed to attend court in connection with the proceedings was a factor that was against extending letting them back in to prosecute what appeared to be a hopeless appeal. 24 By notice of motion filed on 27 November 2006 the plaintiffs moved to have the order made by Assistant Registrar on 1 November 2006 set aside and to have their summons reinstated and set down for hearing. 25 The motion came on for hearing before Malpass AsJ and is the subject of the appeal. 26 The evidence before Malpass AsJ comprised two affidavits sworn by Mr Satchithanantham. The first (sworn on 6 June 2006) annexed the transcript of the proceedings before the Magistrate on 25/11/05; 8/12/05 and 2/3/06, together with various notices by the Registrar of the Local Court, a letter by Mr Satchithanantham to the Registrar dated 24/3/06; and two tax invoices issued by the Local Court for the payment of Court fees. The second affidavit (sworn on 3 July 2006) set out the history of the proceedings including that Mr Satchithanantham had been mistaken concerning the date on which the plaintiffs' summons was next listed for call-over. He annexed a copy of an advice prepared by Mr Patel, barrister, dated 17 June 2006 with respect to the prospects of the appeal. The plaintiffs also relied on an affidavit sworn by Sivananthan Krishnar. Mr Krishnar said that Mr Satchithanantham had been in conference with him on 2 March when he received the telephone call from Mr Niven. He said that he and his clients had attended the court arriving at 11.00 am. 27 His Honour considered that the proceedings were misconceived, since the grounds of appeal (set out at [19] above) related to the dismissal of the notice of motion in the Local Court, but no relief arising out of that determination was claimed. Generally his Honour was critical of the pleading of the grounds of appeal in that they did not identify the error or errors of law that were relied upon with any specificity.

28 His Honour was also critical of the grounds of appeal set out in the notice of motion filed on 27 November 2006, which he described as bordering "on the meaningless" (J [15]). 29 His Honour observed (at [17]): I have earlier mentioned the deficiencies in the summons. During the course of the hearing, Mr Patel sought leave to amend it. The proposed amendments both to relief sought and grounds of appeal. For a variety of reasons, this application was rejected. There was an express abandonment of all grounds of appeal and an attempt to rely on what may be found elsewhere in the bulk of documentation. Apart from general reference to denial of natural justice, there was a lack of specificity in what was proposed as grounds of appeal. 30 Despite these deficiencies, his Honour gave consideration to the merits of the plaintiffs' appeal, noting that the parties were agreed that the crucial issue on the hearing of the motion was the utility of the proceedings. His Honour noted that the claim in the Local Court was brought on two cheques which were dishonoured on presentation. The defences were not in evidence on the motion. His Honour observed that the Magistrate considered that they contained much material that was either irrelevant or prejudicial and it appeared that they had been struck out not only because of the non-appearance of the plaintiffs but also because of their deficiencies. His Honour considered in any event that the decision to strike out the defences had been immaterial to the result reached by the Magistrate. At the time the defences were struck out the proceedings were part heard and the only evidence was that given by Mr Sharma: the only issue before the Local court was the claim based on the dishonoured cheques, and this was addressed in the judgment. 31 The proceedings before me are an appeal from the decision of Malpass AsJ instituted by filing a notice of motion in the proceedings in accordance with Div 3 of Part 49 of the Uniform Civil Procedure Rules 2005 (the UCPR). It is an appeal to which s 75A of the Supreme Court Act 1970 applies. It is an appeal by way of re-hearing. The Court may receive further evidence. On the hearing of the appeal, without objection, Mr Patel read paragraphs one - six of a further affidavit of Mr Satchithanantham, which was sworn on 7 October 2007. 32 The material before Malpass AsJ did not disclose that there had been any evidence in support of the notice of motion filed on the plaintiffs' behalf in the Local Court. Annexed to the affidavit of 7 October is a copy of an affidavit sworn by Mr Satchithanantham in the Local Court proceedings in support of the relief claimed in the motion. I have referred to the assertions made in the affidavit at paragraph [17] above. 33 The further evidence led on the hearing of the appeal includes the defence filed on behalf of the three plaintiffs in the Local Court proceedings 1160/05. This raised a defence of "issue estoppel" based on the dismissal of the earlier proceedings (3788/04). In the alternative the plaintiffs relied on the defences filed in the earlier proceedings. The earlier defence is confined to the case brought against Mr Satchithanantham. I will not detail the assertions contained in it. It is sufficient to observe that the Magistrate's criticisms of it have substance. 34 Four grounds of appeal are set out in the motion: 1. The Associate Justice Malpass erred in law and failed to hear and determine the plaintiffs' application in that he failed to read and consider the written and oral submissions and the material that was put before the Assistant Registrar and he also failed to hear and consider the submissions and the arguments that were advanced to him at the hearing. 2. His Honour erred in law in concluding that - "no grounds of appeal have been made out and I see no error in which was done by the Registrar. Even if a different view were taken on this matter, I consider that the notice of motion should be dismissed in any event because the proceedings have no utility". His Honour erred in law in failing to state in what respect and why and how he came to the view the proceedings have no utility. 3. His Honour constructively failed to exercise his jurisdiction and deal with and determine the plaintiffs' application in accordance with law and on its real merits. 4. The plaintiff has been denied justice and there has occurred a grave miscarriage of justice. 35 Ground one is particularised in subparagraphs (a) - (l). These contain generalised assertions that do not assist in understanding the respects in which his Honour is said to have erred. 36 His Honour referred in terms to the material that was before the Registrar. There is no basis for concluding that his Honour's discretion miscarried by reason of a failure to have regard to either the material that was before him or to the submissions made on the plaintiffs' behalf. 37 His Honour considered that the proceedings lacked utility because the summons claimed orders, which appeared to be unrelated to the grounds of the appeal. His Honour went on as I have noted to consider the substance of the plaintiffs' case. Ground two has not been established. 38 Ground three, which charges that Malpass AsJ constructively failed to exercise jurisdiction, was not further developed in the course of the hearing.

39 It appears that the asserted denial of natural justice was the principal basis upon which the plaintiffs' case was advanced before Malpass AsJ. His Honour said this: [20] The concept of denial of natural justice is a flexible one. What will constitute such a denial will vary from case to case. The onus rests with the party that propounds that there has been a denial. [21] Usually, the question to be considered is whether or not that party has been given a reasonable opportunity to present his or her case (that seems to be the position in these proceedings). In the circumstances of this case, assuming that it was open to the plaintiffs to put such a case, I am not satisfied that the relevant onus has been discharged. [22] As already mentioned, the summons does not seek an order setting aside what was done on 3 March 2006. Putting that problem aside, there is a lack of evidence before the Court to discharge the onus that there was a denial of natural justice in relation to it. [23] I have come to the view that the case for the plaintiffs (be it that thrown up by their process or what appears elsewhere in their material) is devoid of merit and that the appeal cannot proceed. Accordingly, I consider that the summons should be dismissed. 40 On the hearing of the appeal Mr Patel did not address the grounds pleaded in the motion. He did not address his written submissions, dated 17 September 2007, which had been filed. He handed up a two page document which identified the main arguments on which the plaintiffs rely and he focussed his oral submissions on the issues raised in this document. The complaint advanced by Mr Patel was directed to the Magistrate's failure to provide reasons for judgment. Mr Patel contended that it was incumbent on the Magistrate to give reasons addressing the matters that were raised on the plaintiffs' behalf in the written submissions that had been filed following the adjournment of the hearing on 8 December. Mr Patel submitted that the Magistrate should have given consideration to the assertion that the two cheques were delivered in escrow. Mr Sharma brought a liquidated claim for the amount of the two cheques which were dishonoured on presentation. His was the only evidence before the Court. The Magistrate was not required to give reasons addressed to submissions which were not pressed on the plaintiffs behalf (since they did not appear on the resumed hearing) and which were not supported by evidence. 41 Mr Patel also placed reliance on matters contained in the submissions that are annexed to Mr Satchithanantham's affidavit of 3 July 2007. These complain of the striking out of the defences and of the determination of the claim without affording the plaintiffs an opportunity to be heard. 42 In Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR(NSW) 239 Jordan CJ said at 243: … [T]he action coming on for trial in its ordinary place in a list, no one was present in Court to conduct it for the defendant, and it therefore proceeded in his absence. In such a case, when the plaintiff is in no respect in default, a new trial will not be granted save in very special circumstances: Chitty's Archbold, 10th ed, 1457; 12th ed, 1526. In every such case the Court has an inherent and unfettered, though judicial, discretion, in the exercise of which it will, however, necessarily consider (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained: Evans v Bartlam [1937] AC 473 at 482. As a general rule (although not necessarily in every case, if some reason exists for departing from it: Collins' Book Depot Pty Ltd v Bretherton [1938] VLR 40, the Court requires an affidavit showing prima facie that the defendant has a good defence on the merits: Evans v Bartlam (at 480, 488-9), and also an explanation of his absence which shows that justice requires that in the circumstances it should be excused. 43 The evidence before the Local Court in support of the motion to set aside the judgment did not include evidence to show prima facie that the plaintiffs had a good defence on the merits. No such evidence was before Assistant Registrar Howe, Malpass AsJ or on the hearing of the present appeal. The assertions made in the written submissions annexed to Mr Satchithanantham's affidavit, including that the cheques were delivered to Mr Sharma to be kept in safe custody by him "until the settlement of the other deal relating to the transfer of the BMW motor vehicle was completed" are without evidentiary support.

44 This is an appeal from the decision of an Associate Justice having the effect of dismissing the plaintiffs' summons. The onus is upon the plaintiffs to establish that his Honour's discretion miscarried. Nothing put in support of any of the grounds of appeal or in the way the matter was developed on the hearing of the appeal established that his Honour acted on any incorrect principle of law or that he failed to take into account some relevant consideration. The further evidence on the appeal showed that, contrary to his Honour's understanding, evidence had been filed in support of the motion to set aside judgment in the Local Court. This was material that only went to the explanation for the failure to appear (which was consistent with the account that had been relayed to the Magistrate in court on the morning of 2 March) but it did not, as I have noted, include evidence of a prima facie defence. 45 Malpass AsJ made clear that he did not determine the motion on the ground that the relief claimed in the summons was not apt. His Honour considered the real complaint, which was the Magistrate's refusal to set aside the judgment and allow the plaintiffs' back into defend the claim. His Honour pointed to the absence of evidence in support of the motion in concluding that the plaintiffs' motion should be dismissed. No error has been established in the approach that his Honour took to the determination of the motion and it was open to him to come to this conclusion that he did.

ORDERS 1. Dismiss the notice of motion filed on 20 July 2007; 2. The plaintiffs are to pay the defendant's costs of the motion. **********

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