New South Wales Supreme Court CITATION : As New Printing Machinery Co Pty Ltd v Hymans Asset Management Pty Ltd [2009] NSWSC 222 HEARING DATE(S) : 26 March 2009 JUDGMENT DATE : 31 March 2009 JURISDICTION : Common Law JUDGMENT OF : RA Hulme J CATCHWORDS : PROCEDURE - miscellaneous procedural matters - power under UCPR to set aside dismissal of proceedings under r 12.9 - MAGISTRATES - appeals and review - jurisdiction and procedure generally - adequacy of reasons in ex tempore judgment Local Courts Act 1982 Uniform Civil Procedure Rules LEGISLATION CITED : Civil Procedure Act 2005 Supreme Court Act 1970 Corporations Act 2001 (Cth) Interpretation Act 1987 CATEGORY : Principal judgment Maviglia v Maviglia [1999] NSWCA 188 CASES CITED : Stoker v Adecco Gemvale Constructions Pty Limited [2004] NSWCA 449 Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133 TEXTS CITED : Ritchie, Uniform Civil Procedure NSW, LexisNexis Butterworths, 2005 PARTIES : As New Printing Machinery Company Pty Limited (Plaintiff) Hymans Asset Management Pty Limited (Defendant) FILE NUMBER(S) : SC 16763/08 COUNSEL : Mr B Ilkovski for the Plaintiff Mr D Anderson (Solicitor) for the Defendant LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 548/07 LOWER COURT JUDICIAL OFFICER : Holdsworth LCM LOWER COURT DATE OF DECISION : 11 December 2008 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION RA Hulme J 31 March 2009 16763/08 As New Printing Machinery Company Pty Limited v Hymans Asset Management Pty Limited JUDGMENT 1 HIS HONOUR: This matter involves a question as to whether there should be the setting aside of an order which set aside an order. 2 Hymans Asset Management Pty Limited ("Hymans") brought an action in the Local Court against As New Printing Machinery Pty Limited ("ANP") in respect of a money claim. To avoid confusion I will refer to the parties by their names. This matter is an application by ANP for leave to appeal from the Local Court brought pursuant to s 74(2) of the Local Courts Act 1982 in respect of an interlocutory judgment of her Honour Magistrate Holdsworth on 11 December 2008. The judgment in question is the dismissal of ANP's application to set aside an order re-instating Hymans' statement of claim that had earlier been dismissed pursuant to r 12.9 Uniform Civil Procedure Rules ("UCPR") because of inactivity in the 9 months since the statement of claim had been filed. 3 In the alternative to the application for leave to appeal under the Local Courts Act, ANP seeks relief pursuant to s 69 of the Supreme Court Act 1970. 4 The matter has a very sorry history and it is necessary to trace some of it to understand the issues now raised for consideration. It is useful to bear in mind when considering this history that the overriding purpose of the Civil Procedure Act 2005 ("CP Act") and the UCPR "is to facilitate the just, quick and cheap resolution of the real issues in the proceedings": s 56(1) CP Act. History of proceedings 5 Hymans instituted proceedings in the Local Court in January 2007 for the recovery of a debt it asserted was owed by ANP. The statement of claim was not served upon ANP until May 2007. In June 2007 ANP wrote to Hymans requesting particulars of the claim. Hymans did not reply. 6 I note at this point that Local Court Practice Note No1 of 2005 states the aim of that Court is to finalise 90% of civil proceedings within 6 months of commencement and 100% within 12 months, so as to give effect to the overriding purpose of the CP Act that I have just mentioned. The Practice Note further states that parties to proceedings must plan to meet those time standards. It appears that Hymans did not so plan. 7 On 24 October 2007 the Local Court, of its own motion as r 12.9 allows, dismissed Hymans' claim because of 9 months of inactivity. ANP's solicitor found out about this the following day and, understandably, he regarded the matter as having concluded. 8 Neither party was notified of the dismissal of the claim. The commentary on r 12.9 in Ritchie, Uniform Civil Procedure NSW, LexisNexis Butterworths, 2005 ("Ritchie"), suggests caution in dismissing a claim without prior notice to the parties. Local Court Practice Note No 1 of 2005, however, serves to alert parties to the prospect of dismissal under r 12.9. It also notes that an order of dismissal made under this rule may be set aside upon application under r 36.16(2)(b), and that a dismissal will not bar the commencement of fresh proceedings. No authority is cited for the latter proposition but s.91 of the CP Act has that effect. 9 On 15 January 2008 Hymans' solicitor, unaware of the dismissal of the claim, replied to the request for particulars made seven months earlier 10 Upon receipt of this letter, ANP's solicitor contacted the court registry and obtained confirmation that the claim stood dismissed. He considered that there was no necessity to file a defence and no further action on ANP's behalf was required. This is understandable. It was suggested in submissions on behalf of Hymans that the problems that later arose could have been avoided if ANP's solicitor had contacted Hymans' solicitor and told him of the dismissal. That might be so but I do not regard ANP's solicitor as having any responsibility or obligation to do so. 11 The next events occurred without the knowledge of ANP. 12 Hymans filed a notice of motion on 4 April 2008 seeking the entry of default judgment. The court registry responded by advising of the dismissal of the claim the previous October. Hymans then filed a notice of motion seeking the re-instatement of the claim. In support of the motion there was an affidavit by Hymans' solicitor (who is not its present solicitor). He asserted that "the proceedings have been progressing" and to support this proposition he said that there had been a request for particulars, a provision of those particulars, a lapse of time after the provision of those particulars sufficient to allow for the filing of a defence, and then the filing of the notice of motion for default judgment. He also asserted that the first three of those four matters were "inter party steps which would not have been known to the court as they did not involve the filing of any new process". I infer that he was seeking to convey that at the time of the unilateral dismissal by the court it would not have been aware of the progress in the matter. Of course, the true position was that at the time of the dismissal, all that had happened was that ANP had sought particulars and Hymans had not responded. 13 Hymans did nothing to alert ANP to the filing of the notice of motion, let alone serve a copy of it, notwithstanding that the motion nominated ANP under the heading "Person Affected By Orders Sought". The notice of motion specifically sought that the application be determined "in Chambers and on an ex parte basis". 14 It should be noted at this point that r 18 UCPR provides as follows: 18.2 Requirement for notice (1) A person may not move the court to make any order unless notice of motion has been filed and served on each person affected by the proposed order. (2) Despite subrule (1), a person may move the court to make an order without notice of motion having been filed or served on a person if: (a) that person consents to the making of the order, or (b) the preparation, filing or service of the notice would cause undue delay or other prejudice to the person by whom the order is sought, or (c) the court dispenses with the requirement for such notice to be filed or served, or (d) under these rules or the practice of the court, the motion may be made without the prior filing or service (as the case may be) of notice of motion. 15 The notice of motion was dealt with ex parte in chambers. On 14 May 2008 the court registry notified Hymans, but not ANP, that the notice of motion had been granted but that this was on the condition that Hymans applied for default judgment within 28 days. I will refer to this as the "reinstatement order". 16 Hymans then filed a notice of motion seeking the entry of default judgment. That was also dealt with in the absence of the parties and default judgment was entered on 21 May 2008. Again, there was no notice given to ANP. Rule 16.3 contemplates applications for default judgment being dealt with in the absence of the parties and without notice to the defendant "unless the court otherwise orders". I note, however, the commentary in Ritchie under r 16.3 suggests that prudence would dictate notifying a defendant of an intention to seek default judgment in order to minimise the prospects of, and costs of, any subsequent application by the defendant to set aside the judgment. 17 The affidavit of Hymans' solicitor that was filed in support of the notice of motion made mention of the service of the statement of claim, the request for particulars, the response thereto, and the fact that no defence had been filed. There was no mention of the dismissal of the claim and reinstatement without notice to ANP. If the affidavit had mentioned the complete history of the matter I cannot conceive of the Court proceeding to deal with the matter in the absence of the parties and with no service upon ANP. If the Court was aware of the complete history it would have realised it was being asked to enter default judgment against a defendant who might not even be aware that the proceedings were on foot. Justice would have dictated the making of an order for ANP to be served with the application before dealing with it. 18 Hymans' solicitors immediately sought a certificate of judgment. 19 In early November 2008 ANP was served with a Creditor's Statutory Demand for Payment of Debt under the Corporations Act 2001 (Cth) threatening winding up action if the judgment debt was not paid within 21 days. This is what alerted ANP to the fact that the proceedings by Hymans had been revived and judgment by default entered. The proceedings before the Magistrate 20 ANP then filed a notice of motion on 26 November 2008 seeking to set aside the reinstatement order and the default judgment. This came on for hearing in the Local Court on 11 December 2008. Hymans consented to the setting aside of the default judgment but opposed the setting aside of the reinstatement order. 21 Counsel for ANP put the application for setting aside the reinstatement as one made pursuant to r 36.15: 36.15 General power to set aside judgment or order (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent. 22 It was contended for ANP that there was no statutory power for the Local Court to have set aside the order of dismissal. Alternatively it was contended that even if there was such a power, then the order setting aside the dismissal should itself be set aside because it was against good faith. The first point turned on the construction of r 36.16 and whether the court had the power to make the reinstatement order. The second point turned on whether ANP had made out a case that the reinstatement order was made against good faith. 23 The learned magistrate held that there was a statutory power in r 36.16. Her Honour made reference to a number of the matters that ANP had submitted amounted to a lack of "good faith" in Hymans' approach to the proceedings for reinstatement and appears to have accepted. The following from her judgment encapsulates the reasoning she disclosed: "I find that the Uniform Civil Procedure Rules, rule 36.16, does confer a power on the Court to vary an order dismissing the proceedings. I am further satisfied that ANP was not advised by Hymans of the course Hymans took in reinstating the proceedings. There is no statement of service adduced in evidence. Further, the notice of motion for default judgment suffers from the same defect in that there was no evidence it was brought to the attention of ANP's legal representatives. It is clear on the material before me that there is a substantial matter to be tried in these proceedings. For the reasons that I have addressed, I propose to make the following orders in relation to the notice of motion which has been filed and dated 26 November 2008. The application to set aside the order reinstating the proceedings is refused." 24 She also announced her order setting aside the default judgment. Adequacy of reasons 25 Whilst her Honour did not expressly rule on the "against good faith" contention, I am of the view that it is a fair to infer that she either accepted it as made good or accepted that the reinstatement order had been made "irregularly". Her statement of acceptance of the defects in the two notices of motion not having being served upon ANP admits of no other conclusion. Making such a finding did not then mandate the setting aside of the order. The terms of r 36.15 UCPR clearly indicate that a court has a discretion as to this. The learned Magistrate's immediately following statement that "there is a substantial matter to be tried in these proceedings" leads me to conclude that she was of the view that the "just, quick and cheap" resolution of the proceedings would be best served by the matter advancing to it being determined on its merits rather than making orders that would bring the proceedings to an end and necessitating commencement afresh. 26 Criticism is made of the adequacy of the Magistrate's reasons. I accept that they are deficient in that they lack express statements of her findings on the "good faith" contention and the question of the discretion not to set aside the order notwithstanding the primary finding. It must, however be borne in mind that this was an ex tempore judgment given in proceedings that came before her Honour at the end of a busy day in a busy court. The hearing commenced not long before 4.00pm and was concluded shortly before 6.00pm. 27 In Maviglia v Maviglia [1999] NSWCA 188, Mason P said at [1]: "An ex tempore judgment should not be picked over. And appropriate allowance should be given for the pressures under which judges of the District Court are placed by the volume of cases coming before them." 28 The same can be said in respect of magistrates of the Local Court where the volume of cases is considerably greater. 29 There are, however, some minimum requirements. In Stoker v Adecco Gemvale Constructions Pty Limited [2004] NSWCA 449, Santow JA observed: "41 It is clear that the duty to give reasons is a necessary incident of the judicial process. Without adequate reasons, justice has not been seen to be done, so that failure to give adequate reasons may be an error of law: Pettitt v Dunkley (1971) 1 NSWLR 376; Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 at 278-279 per McHugh JA; Mifsud v Campbell (1991) 21 NSWLR 725; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430. But the duty does not require the trial judge to spell out in minute detail every step in the reasoning process or refer to every single piece of evidence. It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings that are critical to the determination of the proceedings." 30 I am not satisfied that the reasoning of the Magistrate was not sufficiently disclosed. Her conclusions, and the bases for them, are adequately discernible in the manner which I have set out above. Power to set aside dismissal 31 The primary argument advanced by counsel for ANP was that there was no statutory power under r 36.16 to set aside an order of dismissal made pursuant to r 12.9. In Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133, Basten JA said: "6 In Bailey v Marinoff [1971] HCA 49; 125 CLR 529 at 530, Barwick CJ stated, in relation to this Court: 'Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.' 7 As explained in DJL v Central Authority [2000] HCA 17; 201 CLR 226 in relation to the Family Court, subject to limited exceptions, one being in relation to fraud, that principle continues to operate: at [50]; see also Gamser v Nominal Defendant [1977] HCA 7; 136 CLR 145 and Harrison v Schipp [2002] NSWCA 78; 54 NSWLR 612 at [2]-[4] (Handley JA) and [138]-[140] (Giles JA) and [216] (Ipp AJA). Accordingly, the power of this Court to entertain the present application depends upon two questions; first, whether the orders were entered prior to the application to vary them and, secondly, if so, whether there is some statutory authority conferring power on this Court to reopen entered orders." 32 There is no issue that the order of dismissal had been entered and thus perfected. The question then arises as to whether there was any "specific and relevant statutory provision" to reinstate the proceedings. Hymans submitted that there was in r 36.16 whilst on behalf of ANP it was submitted that there was not. 33 Counsel for ANP correctly noted that the learned Magistrate did not indicate which subrule within r 36.16 she was referring to when stating that this rule conferred a power on the Court to vary an order dismissing proceedings. He suggested, correctly in my view, that it was r 36.16(2)(b). Counsel for Hymans concurred with this. Subrule 36.16(2) is in these terms: (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment, or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. 34 It was submitted that this subrule is not apt to confer power on the Local Court to set aside an order dismissing proceedings under r 12.9 for two reasons. First, that "the power in UCPR 36.16(2)(b) operates in relation to only those circumstances where there has been a default in appearance by 'a party' in respect of a 'relevant hearing' or 'application' for a judgment or order irrespective of whether the party had notice of the 'relevant hearing' or 'application'." Counsel observed that the Court of its own motion exercises the power under r 12.9 in the absence of all parties rather than in the absence of "a party". 35 I see no reason why s 8 of the Interpretation Act 1987 should not be applied so as to construe "a party" as including both the singular and the plural. There is nothing in the subrule, the rule, or the rules generally that indicates an intention that "a party" in r 36.16(2)(b) should be construed literally to mean only the singular. In any event, to restrict the application of the subrule to judgments and orders made in the absence of one party, and hold that it does not apply where more than one party is absent, would lead to absurd results – for example it would deny relief in a case involving two defendants when a plaintiff obtained a judgment or order without notice and in the absence of them both. 36 As to the second part of the argument, I do not regard the words "whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order" as dictating the circumstances in which the subrule can be applied. Clearly, the purpose of the subrule is to provide for the setting aside or variation of judgments and orders made in the absence of parties. 37 The second reason counsel submitted that the subrule is not apt to confer power on the Local Court to set aside an order dismissing proceedings under r 12.9 was that r 36.16(2) should be read with 36.16(3) which is in these terms: (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. 38 This subrule was said by counsel to preserve the common law principle that a court has no power to set aside a final judgment or order disposing of proceedings after it has been entered. This led to the submission that for this reason r 36.16(2) should also be read as preserving that principle, otherwise there would be an inconsistency between the operation of r 36.16(2) and (3). Counsel did not explain how his argument could succeed with the inclusion of "default judgments" in r 36.16(2). In any event I reject this submission. Subrule 36.16(2) is clearly intended to apply to all judgments or orders of the type described that are entered or made in the circumstances described. Conclusion 39 I have concluded that there is no merit to any of the contentions advanced on behalf of ANP. Even if there were, I would not be disposed to grant the relief sought. There is really no utility in this proceeding. Success for ANP would only result in Hymans having to recommence the proceedings in the Local Court. If these proceedings were confined to the application for leave to appeal under s.74(2)(a) of the Local Courts Act I would be disposed to refuse leave. However, given there is the alternative relief sought under s.69 of the Supreme Court Act I have heard full argument on the matter and have dealt with the issues on their merits. For that reason alone I will grant leave to appeal. Judgment 40 1. Leave to appeal is granted. 2. The appeal is dismissed. 3. The plaintiff is to pay the defendant's costs of the appeal as agreed or assessed. 4. These orders may be entered forthwith. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.