2 I will deal first with the application for an extension of time to appeal against the summary judgment which was ordered by a judge of the County Court on 5 April 2005. The learned judge ordered summary judgment against the first applicant for approximately $200,000 and the second applicant for approximately $96,000, and ordered the applicants to pay the respondent's costs of the proceeding.
3 Any notice of appeal against that judgment should have been served within 14 days. The current application is made by summons dated 25 July 2005, just over three months after the time for commencing an appeal had expired. The application for an extension of time is opposed by the respondent.
4 In the County Court proceeding, the respondent claimed moneys said to be owing under two agreements, both dated 28 June 2002. The first agreement was between the respondent and first applicant and related to the sale of three laser machines for medical use for a total sum of $286,000. The second agreement was between the respondent and the second applicant and related to the sale of a premises fit-out and a business name, for a total sum of approximately $87,000. In each case the purchase price was payable by monthly instalments.
5 Each applicant delivered a defence on 16 June 2004 which consisted of bare denials or non-admissions. Although described at the time of service as being a "holding defence", no substantive defence was in fact subsequently delivered.
6 The summons seeking final judgment was issued on 11 March 2005 and supported by the affidavit of Dr Richard Bassard, a director of the respondent, which was sworn on 3 March 2005.
7 The applicants relied upon a two-page affidavit of Dr Ian Rafter, the second applicant, sworn on 1 April, but apparently only provided to the respondent's counsel on the day of the application. Dr Rafter deposed in paragraph 4 that both agreements were subject to some sort of oral agreement or condition precedent that the respondent would secure a lease to the relevant premises where the lasers and fit-out were located. He also deposed in paragraph 5 that there was an implied term of both agreements that the applicants would have a right to lawfully occupy the premises.
8 It is common ground that, on the day of the hearing, the judge and the respondent's counsel both raised a number of criticisms of the Rafter affidavit, both as to content and form. Many of those criticisms appear to be entirely justified. However, the defects were all capable of being remedied by the filing of a more detailed affidavit in admissible form, as has now occurred in this Court.
9 According to the applicants' counsel on that day, Shane Lethlean, he requested an adjournment of the summary judgment application so that the defects in the Rafter affidavit could be cured. Mr Lethlean has deposed that "his Honour declined to grant an adjournment and stated that there had been sufficient notice and time to engross the appropriate material in response to the application".
10 Each of the respondent's counsel, solicitor and articled clerk who was present in court on that occasion, has deposed that he does not recall, and, in the case of the solicitor and clerk, has no note of, any adjournment application being made. None of them positively contradicts the Lethlean affidavit. The judge's notes have subsequently been exhibited to an affidavit of one of the respondent's solicitors. His notes make no mention of any adjournment application. However, they are extremely brief and do not appear to be a complete record of what occurred on that occasion. I note that no transcript or recording was made of the summary judgment application.
11 Section 74(2A) of the County Court Act 1958 gives this Court power to extend the time for commencing an appeal, whether before or after the expiry of that time. It is clear on the authorities that the Court's discretion is unfettered and should be exercised flexibly with regard to the facts of the particular case. The courts have warned against approaching such an application in a formulaic manner. Since the discretion to extend time is given for the purpose of enabling the Court to avoid an injustice, the Court must determine whether justice as between the parties is best served by granting or refusing the extension.
12 I turn to consider the question of delay. Dr Rafter has deposed that he was not aware that he had only 14 days within which to appeal the judgment until after that time had expired. It is perfectly true, as the respondent's counsel points out in his submissions, that Dr Rafter has not deposed as to the precise date on which he first learned that there was such a time limit, but in my opinion nothing turns upon that omission in the circumstances of this case.
13 Dr Rafter has deposed in some detail as to the circumstances surrounding the illness of his brother Ken Rafter, who was diagnosed with cancer in the second half of 2004 and died in early May 2005. Suffice to say that from the time of diagnosis, through the various operations and treatments, until his brother's death, Dr Rafter was the family member primarily responsible for the care of his brother. That his mind and time might have been occupied on matters other than the County Court proceeding would hardly be surprising in the circumstances. That said, it is most unfortunate that Dr Rafter's inability to attend properly to the County Court proceeding due to his brother's situation was not communicated to the respondent's lawyers until the application before this Court.
14 Dr Rafter says it was not until early June that he started turning his mind to the possibility of setting aside the judgment. Thereafter he came to Melbourne from Sydney, where he currently lives and works, on three separate occasions in order to give more detailed instructions to his solicitors. There is much force in the respondent's argument that such instructions ought to have been sought and given at an earlier stage of the County Court proceeding. But it does not follow that the applicants should be completely shut out from defending a proceeding merely because the case could have been better handled in that regard.
15 In my opinion, the explanation offered for the delay is a reasonable one and the delay of some three months is not inordinate in the circumstances.
16 On an application for an extension of time the Court may have regard to the prospects of the appeal succeeding if an extension is granted. The extent to which the appeal court needs to be satisfied as to such prospects will vary from case to case. For example, if the appeal would be clearly hopeless, then an extension ought not be granted, even if the delay is short and the explanation for the delay satisfactory. Conversely, if the prospects of success are strong, that may outweigh a long delay or a lack of satisfaction with the reasons for the delay.
17 In this case there are two bases for seeking to attack the judgment below. The first relates to the judge's refusal to grant an adjournment, the second to the judge's ordering of summary judgment.
18 I accept that the applicants' counsel did seek an adjournment of the summary judgment application, and that the judge refused to grant one solely on the basis that the applicants had had ample time to put in their affidavit material. I note also that the respondent had not claimed at the hearing of the application that it would suffer any prejudice were an adjournment to be granted.
19 Appellate courts are slow to intervene in the exercise of an interlocutory discretion, particularly one as to practice and procedure. However, having regard to the evidence before this Court, it cannot be said that the applicants have no prospects of succeeding on an appeal against the failure to grant an adjournment.
20 Turning to consider the second attack on the summary judgment, the principles which govern an application for summary judgment are well established. In his submissions, the applicant's counsel referred to the classic statement of the High Court in Fancourt v. Mercantile Credits Ltd[1] that "the power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried".
21 The learned judge allowed the Rafter affidavit into evidence, notwithstanding its late service and irregular form. However, he effectively went on to make credit findings against Dr Rafter, apparently based on the brevity of his affidavit and the judge's value judgment as to the degree of detail he thought a credible witness would have put in. The dangers of making such a value judgment or credit finding on a summary judgment application were noted by this Court in Duncan v. Commonwealth Bank of Australia[2]. In doing so, the learned judge rejected out of hand the applicants' possible defences raised in paragraphs 4 and 5 of the Rafter affidavit, which relate to the alleged oral agreement and the implied term. For the purposes of the extension application, it cannot be said that the applicants have no prospects of succeeding on an appeal against the summary judgment. I will deal further with the grounds of appeal shortly, when I deal with the appeal itself.
22 I turn to consider the question of prejudice. Within a month after the summary judgment was obtained, the respondent prepared a bankruptcy notice dated 2 May 2005 against Dr Rafter and a statutory demand dated 4 May 2005 against the first applicant. This was in the week before Ken Rafter's death. Thereafter the respondent took a number of steps in relation to the bankruptcy notice, including obtaining an order for substituted service and the appointment of an interim trustee in bankruptcy. In doing so, the respondent has incurred legal costs in the vicinity of some $11,000 or $12,000, as well as a liability to pay the trustee's substantial costs and expenses, in the vicinity of some $23,000 or $24,000.
23 The respondent says that if an extension of time were granted and the appeal were successful, it would be prejudiced in a way which is not compensable by an order for costs, because it would be unable to recover the costs it has incurred in relation to the bankruptcy proceeding and the appointment of the interim trustee.
24 The respondent acted swiftly to enforce the judgment. It was entitled to do so once the time for commencing any appeal had expired. In doing so it has incurred considerable expense, which it would not have incurred had the applicants commenced an appeal promptly. This concern led to the Court asking the applicants' counsel whether the applicants would provide an undertaking to indemnify the respondent in respect of such costs. Mr Stirling, after seeking instructions, has indicated that the applicants would be prepared to offer such an undertaking to the Court.
25 An issue then arose as to the likely value of such an undertaking. Counsel for the respondent submitted that such an undertaking would be effectively worthless. The applicants' counsel effectively conceded that there must be some doubt as to the value of such an undertaking. I note that there is no evidence before us in relation to the applicants' current financial position, but I am prepared to proceed on the basis of the concession by Mr Stirling, namely, that there would be some doubt as to the value of the undertaking. If it be the case that the applicants would be unable to pay costs and expenses in the vicinity of some $30,000 to $35,000, then there must be an even greater risk that they will be unable to satisfy the judgment entered against them. The point is something of a two-edged sword as far as the respondent is concerned. It chose to adopt particularly aggressive and expensive means of enforcing its judgment, apparently with full knowledge of the applicants' financial position. In doing so, it must be taken to have accepted some risk that it may not recover its costs of the enforcement proceedings. I am not satisfied that it is necessary for the applicants to persuade the Court that the undertaking would be of substantial value before the Court should grant an extension of time in this particular case.
26 For these reasons, I would be minded to grant an extension of time, upon the giving of undertakings in relation to both the trustee's costs and the legal costs.
27 I turn then to consider the appeal itself. I will explain in a little more detail my conclusions in relation to the adjournment application and the ordering of summary judgment. I have already mentioned the evidence in relation to the adjournment, and I accept that the applicants' counsel did seek an adjournment of the summary judgment application and that the judge refused to grant it, solely on the basis that the applicants had had ample time to prepare affidavit material.
28 The judge's decision to refuse an adjournment was both interlocutory and discretionary. I note that leave to appeal such a decision will only be granted in cases where the decision is wrong or attended with sufficient doubt to justify the grant of leave and substantial injustice would be done if the decision were to stand. As this Court noted in Smith v. Gannawarra Shire Council[3], a judge's decision on an application for an adjournment involves an exercise of discretion in a manner of practice and procedure, "and the restraint which an appellate court will exercise before reviewing a discretionary decision of any kind is even greater in such a case. Still more is this so when the Court of Appeal is asked to interfere with the decision of a judge as to the conduct of business in his or her own court."
29 However, this Court and the High Court have also made it clear that courts must be astute to ensure that expediency is not permitted to usurp justice by refusing to grant an adjournment at the instance of a party, in circumstances which will significantly interfere with the ability of that party to present his or her case effectively.
30 It is not uncommon for summary judgment applications to be adjourned, either before the hearing commences or when they are part heard, to enable further affidavit material to be prepared. The party seeking the adjournment may be deprived of the opportunity to effectively present his or her case if an adjournment is not granted. The party whose conduct has necessitated the adjournment will usually be ordered to pay the costs of that adjournment. In the present case, the respondent had not claimed that it would suffer any prejudice at all if the adjournment was granted, and presumably an appropriate costs order could have been made had the judge ordered an adjournment.
31 In my opinion there was sufficient material in paragraphs 4 and 5 of the Rafter affidavit to have required the judge to allow an adjournment to put the evidence in proper form and to provide the sort of particularisation that could have been provided, and has now been provided. In my opinion the learned judge was too concerned with procedure and the failure to allow an adjournment constituted a denial of natural justice.
32 The alternative ground of appeal is that the judge should not have ordered summary judgment on the material before him. As I have already indicated, the judge could have refused to admit into evidence some or all of the Rafter affidavit. He did not do so. He allowed the evidence in. Once paragraphs 4 and 5 were admitted, even in their brief, unparticularised form, they did raise a serious question to be tried and should have been sufficient for the judge to give leave to defend.
33 In addition, a number of grounds have now been raised in the submissions filed on behalf of the applicants before this Court. In my opinion the argument in relation to the condition precedent under the laser agreement is particularly strong. The fact that the respondent pleaded and led evidence in relation to the term in Clause 2.1(a) but did not do so in relation to Clause 2.1(b) is rather curious, and clearly indicated that the respondent's solicitors were aware of the existence of at least one of the conditions precedent and the need to establish that it had been satisfied. Even though the matter was not raised before the learned trial judge, in my opinion there was and is a serious question to be tried in relation to that matter. Once the issue was raised in submissions before this Court, affidavits was produced by both sides which make it clear that there is a factual dispute that ought to be tried in relation to that issue.
34 It has often been said that the nature of the summary judgment procedure makes it undesirable, if a court is going to give leave to defend, that it give detailed reasons for doing so. Accordingly, I propose to say no more than that the submissions filed on behalf of the applicants in relation to the appeal do raise a number of serious questions which should be tried.
35 For these reasons, I would grant leave to appeal in relation to the judgment in so far as it is interlocutory. I would allow the appeal and I would give the applicants leave to defend the County Court proceeding.