SUDUK v JOHN BURTON & ANOR T/AS BURTONS SADDLERY [1999] NSWSC 1277 | Case summary

1 HIS HONOUR: On 24 February 1998, the defendant obtained a default judgment against the plaintiff in the sum of $1,026.34. On 16 October 1998 the plaintiff applied to set aside the default judgment on the ground that she had a bona fide defence and claiming that she did not become aware of the proceedings until August 1998. It is from the determination of the Magistrate refusing the application to set aside the default judgment that this appeal is made to this Court by way of case stated. 2 Section 101(1) of the Justices Act 1902 (the Act) provides that an application to a justice to state a case must be made within 35 days of the determination or such longer period as may be fixed under s 102A(1) of the Act. This provision permits a justice by order made within 35 days after the determination to fix a period of more than 35 days for the application for a stated case to be made. 3 It is agreed that in this case an application by the plaintiff to extend the period for applying for the stated case was made on 15 January 1999 which was 35 days after the determination (on 11 December 1998). The Magistrate, however, was unavailable on 15 January and ordered an extension of time on 18 January 1999. The application for the stated case was filed in due course and within that extended period. It will be seen that the order made by the justice extending the time was not made within 35 days of 11 December 1998, although the application to do so had been made within the fixed period. 4 Objection is taken by the defendant that accordingly s 102A(1) was not complied with and the appeal is incompetent. Mr Robinson, counsel for the plaintiff, submits however, that s 36(3) of the Interpretation Act 1987 applies to permit the exercise by the justice of the power to extend time although outside the period prescribed by s 102A of the Act. Mr Robinson candidly brought to the attention of the Court the decision in Attorney General of New South Wales and Another v Civic Transport Services Pty Ltd (unreported, NSWCA, 8 December 1998). In that case the Court of Appeal held by majority that s 36(3) of the Interpretation Act 1987 did not permit an extension of the time in which an application might be made to extend time and accordingly, if the application were made out of time, the right to obtain an order for extension is lost and s 36 will not restore it. 5 The situation here, however, is significantly different, since the application was made within time and the order was out of time. Since the Act prescribes a period of time in which a justice may make an order, and confers a power on the justice to extend it, in terms s 36(3) of the Interpretation Act 1987 permits the power to be exercised after the period of time has expired. Of course, s 52 of the Interpretation Act 1987 applies the provisions of that Act "except insofar as the contrary intention appears". Since s 36(3) can only apply where a period of time is prescribed or allowed and permits things to be done after that period has expired, it must in terms be inconsistent with any Act which imposes such time limits. I do not understand the Court of Appeal in Attorney General of New South Wales and Civic Transport Services to be suggesting otherwise. Rather, because the right to apply was lost with the expiration of the relevant period, there was nothing to extend after the relevant period had expired. 6 Accepting that the application must be made within time, I am of the view that s 36(3) of the Interpretation Act 1987 applies to permit the justice to exercise his or her power to extend, although as it happens the order allowing the extension is itself made after the period of time specified by the Act has expired. Accordingly, this appeal is competent. 7 I now move to the substantial point raised by the stated case. The learned Magistrate found that the statement of claim had been served in accordance with the Local Court (Civil Claims) Rules 1998. Although some issue was taken by Mr Robinson about this finding, he conceded in due course, quite properly, that his objections were to the conclusion of fact and did not disclose an error of law. Similarly, the learned Magistrate's finding that the judgment debtor had failed to act reasonably when the matter was brought to her attention was a finding of fact and again disclosed no error of law. 8 The substantial point made on the plaintiff's behalf however, concerned the enunciation by the learned Magistrate of the appropriate test that applies when considering whether a default judgment should be set aside. He held that - "The only question to be considered on an application to set aside default judgment related to a defence known to law and whether the judgement debtor had cause for failing to act reasonably when the matter was brought to her attention". 9 A default judgment entered under the rules may be set aside on terms by orders of the Court on "sufficient cause being shown" (Pt 11 r 1(2)). 10 In dealing with this question the learned Magistrate held that - "Questions of whether or not a judgment debtor had a defence known to law was of equal weight to the question as to whether the judgment debtor's conduct had been reasonable at or about the time of service."

11 I consider that this statement of principle discloses a significant error of law. Firstly, as was made clear (if it were not already so, see Evans and Bartlam 1937 AC 473 and Terms Sales Pty Ltd v Joseph (1950), 67 WN (NSW) 44) in Adams v Kennick Trading (International) Ltd (1986), 4 NSWR 503 at 506 - "The Court has a general discretion not requiring the establishment of each of specified grounds [as stated in the Common Law Procedure Act 1899 s 25(3) - satisfactorily accounting for the non appearance and disclosing a defence upon the merits], the failure to establish one such ground is a matter to be taken into account with all the other circumstances, but the decision has to be reached upon the whole of the relevant material. The existence of a bona fide ground of defence and an adequate explanation for the failure to defend and any delay are the most relevant matters to consider, but there may be other matters. And a refusal of relief to an applicant is not automatically justified because he has failed to establish one relevant matter, such as an adequate explanation for the failure to defend or for delay; such a failure must be considered in the light of all the circumstances. The absence of an adequate explanation, particularly if it is coupled with prejudice, may justify a denial of relief, but only when considered with the other relevant circumstances of the case..." In Evans and Bartlam, Lord Wright said (1937 AC at 489 - "In a case like the present there is a judgment, which, though by default, is a regular judgment, and the defendant must show grounds why the discretion to set it aside should be exercised in his favour, the primary consideration is whether he has merits to which the Court should pay heed. If merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication... The Court might also have regard to the applicant's explanation why he neglected to appear after being served though as a rule his fault, if any, can be sufficiently punished as to terms of costs or otherwise which the Court in its discretion is empowered by the rules to impose". 12 In the absence of significant prejudice, the existence of a substantive bona fide defence will usually result in the judgment debtor being allowed to defend even where his or her only explanation is dilatoriness. 13 It follows that the learned Magistrate erred in supposing that the existence of a bona fide defence was of equal weight to the reasonableness of the judgment debtor's conduct. He also erred in considering that the relevant conduct occurred at or about the time of service. The whole of the conduct of the judgment debtor explaining why no defence was made within due time is material. It may be that wrongful behaviour as at the date of service would not be significant if there was a reasonable explanation for a subsequent failure to defend in time. In this case, there is a possibility of such a situation since it seems uncontroverted that the judgment debtor had very serious surgery after the statement of claim was served. 14 In the circumstances, the facts have not been sufficiently explored to permit me to determine one way or another whether it would have been appropriate for the learned Magistrate to have set aside the default judgment. There was good reason, as it seems to me on the affidavit material before him, for the learned Magistrate to consider that the judgment debtor had not been candid when dealing with the relevant facts. However, findings of this kind ought not in general to be made merely on the basis of affidavit evidence. This is especially so if the affidavits are drafted by persons such as legal representatives acting on behalf of a party. 15 I am of the view, therefore, that the appeal should be allowed and the matter remitted to the Local Court for rehearing by a different Magistrate in accordance with these reasons. 16 The plaintiff must have her costs. ****************

SUDUK v JOHN BURTON & ANOR T/AS BURTONS SADDLERY

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