SHANE AGELIS DEVELOPMENTS PTY LTD v MARCUS JOHN SYVERTSEN [2024] SASC 89

On Appeal from MAGISTRATES COURT OF SOUTH AUSTRALIA (MAGISTRATE PANAGIOTIDIS) CIV-22-004372 Appellant: SHANE AGELIS DEVELOPMENTS PTY LTD Counsel: MR A DAL CIN - Solicitor: ECKERMANN LAWYERS First Respondent: MARCUS JOHN SYVERTSEN Counsel: MR A LAZAREVICH - Solicitor: JOHNSTON WITHERS Second Respondent: MEGAN DANIELLE SYVERTSEN Counsel: MR A LAZAREVICH - Solicitor: JOHNSTON WITHERS Hearing Date/s: 24/05/2024 File No/s: CIV-24-001594 B SUPREME COURT OF SOUTH AUSTRALIA (Magistrates Appeal: Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment 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 in which it was generated. SHANE AGELIS DEVELOPMENTS PTY LTD v SYVERTSEN & ANOR [2024] SASC 89 Judgment of the Honourable Justice Hughes 8 July 2024 MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COMMENCING PROCEEDINGS - TIME FOR SERVICE OF ORIGINATING PROCESS AND RENEWAL This is an appeal from an interlocutory decision of a Magistrate refusing to set aside an extension of time to serve proceedings. The appellant is a building company that was contracted by the respondents to undertake building work at a property in Willunga. The construction was completed in April 2017. On 27 April 2024, the respondents brought an action against the appellant for breach of contract, breach of statutory warranties and breach of Australian Consumer Law. On 24 October 2022, just prior to the expiry of the six-month period within which the filed claim was required to be served on the builder, the homeowners applied to the Magistrates Court to extend the time for service. The application was made on the basis that the respondents required more time to obtain expert evidence necessary to properly particularise the claim. This application was granted ex parte on 25 October 2022. An election for a moratorium on the steps was taken in the proceedings on 17 November 2022, and the claim was served the following day. The respondent sought to remove the moratorium in September 2023. On 9 November 2023, the appellant applied to set aside the order dated 25 October 2022. The application was heard by a different Magistrate on 30 January 2024, at which time the application was refused with reasons given. This is the decision subject to this appeal. -- 1 of 11 -- The appellant contended that the magistrate who heard the application to set aside the extension of time erred in finding that the homeowners had discharged their duty of candour in respect of the application. The appellant also contended that as a result of the respondent's non-disclosures, it had lost the opportunity to defend the breach of warranty claim on the basis that it was out of time. Held, refusing leave to appeal: • The information placed before the first Magistrate was adequate for the making of the extension of time decision. The granting of an extension of time sought before the time has expired is a decision that permits consideration of a range of factors. • The appellant did not establish that the Magistrate’s refusal to set aside the decision to extend time was made on an erroneous appreciation of material that was, and was not, before the initial decision maker. • No question of principle or doubt arose such as to justify a grant of permission. Building Work Contractors Act 1995 (SA) s 32(5); Uniform Civil Rules 2020 (SA) r 41.1, r 64.1, r 64, r 64.5, r 213.1, referred to. Re Southern Equities Corporation Ltd (in liq); Bond v England (1997) 25 ACR 394; Bell Group NV (in liq) v Aspinall (1988) 19 WAR 561, considered. -- 2 of 11 -- SHANE AGELIS DEVELOPMENTS PTY LTD v SYVERTSEN & ANOR [2024] SASC 89 Magistrates Appeal: Civil 1 HUGHES J: The respondents (homeowners) engaged the appellant (builder) to undertake building work at a property in Willunga pursuant to a contract entered into on 7 July 2016 and regulated by, amongst other things, the Building Work Contractors Act 1995. 2 The homeowners contend that they have a right to recover damages from the builder in respect of breach of contract, breach of statutory warranties and breach of the Australian Consumer Law. The value of the contract was over half a million dollars. The homeowners claim $50,000 in damages for alleged defects. 3 The homeowners filed a claim in the Magistrates Court on 27 April 2022 in action CIV-22-004372. 4 In this decision, I am using the terms “homeowners” and “builder” to refer to the parties because the parties’ roles changed from applicant to respondent as between the proceedings in the Magistrates Court and the appeal in this Court. This decision also requires consideration of decisions made by two Magistrates, whom I shall refer to as the first Magistrate and the second Magistrate. By so doing, I intend no disrespect. I consider that this nomenclature will make the decision easier for the parties to understand. 5 The several causes of action the homeowners relied upon have different limitation periods. By filing their action on 27 April 2022, the homeowners were within the limitation period in respect of all of their causes of action, but it is undisputed that they were only within time for the claim of breach of statutory warranties by about two days. On 24 October 2022, just prior to the expiry of the six-month period within which the filed claim was required to be served on the builder, the homeowners applied to the Magistrates Court to extend time for service.1 6 The affidavit in support of that application, sworn by the homeowners’ solicitor, said that the proceedings had been filed, “to protect the applicants’ [homeowners’] claim against the respondent [builder] with respect of (sic) statutory warranties under the Building Work Contractors Act 1995”. The affidavit states that, at the time of the filing of the proceedings, the homeowners did not have all of the expert evidence necessary to properly particularise their claims. 2 The affidavit proceeds to specify the expert proposed to provide the report. The solicitor indicated that the homeowners intended to obtain the evidence within six weeks. The solicitor requested that the application be determined prior to 28 1 FDN 15. 2 FDN 16, affidavit of Timothy John Graney. -- 3 of 11 -- [2024] SASC 89 Hughes J 2 October 2022, “being the date that the action will be placed in the list of inactive cases.” The application requested a three-month extension of time. 7 The homeowners’ application was granted ex parte in chambers by a Magistrate (the first Magistrate) on 25 October 2022. The order extended until 22 November 2022 the time within which the proceedings were required to be served on the builder. In other words, the application was granted but a shorter period of time was granted than was asked for. 8 An address for service was filed by the builder on the original action on 1 November 2022 although the proceedings had not yet been served on it. 9 On 17 November 2022, the homeowners filed an election for a moratorium on the steps to be taken in the proceedings, and the following day, served the original claim. 10 Approximately a year later, in September 2023, the homeowners sought to remove the moratorium. On 9 November 2023, the builder applied to set aside the order dated 25 October 2022 by which the extension of time had been granted. The application to set aside was heard and determined by a different Magistrate (the second Magistrate), on 30 January 2024. The application to set aside was refused. Reasons were given. The second Magistrate’s reasons 11 The second Magistrate’s decision was delivered ex tempore. The second Magistrate set out the procedural history including that the original application for the extension of time was made ex parte. The second Magistrate said, At the time Magistrate Jackson was asked to consider the application extend the time for service, she was dealing with the matter ex parte. There were other options available to the applicant and, with hindsight, it might have been better to proceed with the respondent having full knowledge of the matter. However, it was permissible for the application to be made ex parte.3 12 The second Magistrate rehearsed the grounds on which the application to set aside was made, noting that although it was alleged by the builder that there had been a lack of relevant information given to the first Magistrate, there was no allegation of fraud or impropriety.4 13 The second Magistrate rejected the builder’s contention that what had been conveyed in the affidavit in support of the homeowners’ application for an extension of time amounted to a non-disclosure of information material to the proper exercise of the first Magistrate’s discretion. Her Honour found that the supporting affidavit for the original application contained the necessary 3 [2024] SAMC 11 at [2]. 4 Ibid at [6]. -- 4 of 11 -- [2024] SASC 89 Hughes J 3 information, namely that the homeowners were awaiting expert reports, even though no explanation was offered as to why they were still awaited.5 14 The second Magistrate also found that it was evident from the solicitor’s affidavit that the proceedings had not been served on the builder at that stage, such that this could not amount to a non-disclosure.6 15 Her Honour found that the builder’s loss of the opportunity to assert that the proceedings lacked particularity, and should be struck out, was a function of the application being heard ex parte, but did not amount to a non-disclosure by the homeowners.7 16 The second Magistrate dealt in some detail with the builder’s contention that it was prejudiced by the grant of the extension insofar as the grant denied the builder a defence to the statutory warranty claim under the Building Work Contractors Act 1995. The builder contended that, without the extension of time, the time limit for the statutory warranty claim would have expired and the builder would have had an ability to rely upon the expiry of the limitation period to defend the claim. The second Magistrate found that this argument was misconceived in that the proceedings were issued within time, and that even if they were served out of time, the claim itself would not be statute-barred.8 The second Magistrate continued that if she were wrong about that, and service out of time did enliven a defence against the action insofar as it concerned the claim of breach of statutory warranty, the application to set aside the extension of time to serve would nevertheless fail. The second Magistrate considered that it could be presumed that the first Magistrate knew or could calculate the limitation periods applying to the filing of the proceedings and the time within which to serve, and understood the parties’ respective situations at the time she granted the extension of time.9 The appeal 17 The builder now appeals the second Magistrate’s order made on 30 January 2024 refusing to set aside the first Magistrate’s order granting an extension of time for the service of the proceedings. 18 The builder requires permission to appeal because the judgement appealed against is interlocutory.10 I will return to this in due course. 19 The builder raises three grounds of appeal, numbered 2-4, which numbering I shall adopt in these reasons for ease of cross-reference to the parties’ written and oral submissions. 5 Ibid at [10]. 6 Ibid at [11]. 7 Ibid at [12]. 8 Ibid at [15]. 9 Ibid at [17]. 10 Rule 213.1 of the Uniform Civil Rules 2020 (“UCR”) provides that leave is required for an appeal against an interlocutory decision (including an order or judgement). -- 5 of 11 -- [2024] SASC 89 Hughes J 4 Ground 2 20 Ground 2 alleges errors in fact and law by the second Magistrate in dismissing the application to set aside the earlier decision. This ground asserts error in the second Magistrate’s finding that the process before the first Magistrate had not miscarried by virtue of insufficient explanation and disclosure by the homeowners in the extension of time application. Ground 3 21 Ground three asserts that the exercise of the second Magistrate’s discretion miscarried by virtue of the errors identified in ground 1. Ground 4 22 This ground asserts that the first Magistrate’s order to extend time ought to have been set aside because it was made following an ex parte consideration of the application, which led to a failure in disclosure of relevant information, namely that: • There was no explanation for the failure to serve the claim within time; • There was no explanation for the failure to have obtained expert reports; • If the extension were granted, the builder would lose the limitation defence in respect of the statutory warranty aspect of the claim. Builder’s submissions 23 The builder was represented by Mr Dal Cin of counsel. Counsel for the builder submitted that permission to proceed should be granted because sufficient doubt attends correctness of the decision under appeal in light of the builder’s contentions as to how the exercise of discretion should have been approached. The particular aspect that demands consideration, in the builder’s view, is whether, in circumstance in which an application to extend time to serve is made ex parte, an applicant is obliged to clearly draw to the Court’s attention the time limit for the underlying cause of action, and that the other party will lose the opportunity of a particular defence if the application is granted. 24 In support of the significance of this issue, counsel for the builder observed that the substantive claim was filed one day before the statutory time limit in respect of the statutory warranty cause of action expired, and was not able to be extended: s 32(5) Building Work Contractors Act 1995. 25 The builder relies upon the homeowners’ obligation to have served the proceedings “as soon as practicable” pursuant r 41.1.11 In any event, r 64.1 11 UCR, r 41.1. -- 6 of 11 -- [2024] SASC 89 Hughes J 5 required it to be served within six months (i.e. by 27 October 2022), or as ordered by the court.12 26 The builder submits that the homeowners did not serve as soon as practicable and waited until 24 October 2022 to seek the extension of time. The application was granted by the first Magistrate the following day. 27 Relying on a note to r 64,13 the builder contended that the homeowners should have applied for a moratorium in respect of the action which, at that stage, they did not do. The Note says: Note— The Court expects a party to serve a respondent if possible. If the claim is for damages for personal injuries and the applicant’s condition is not yet stable or there is other good reason for no further steps to be taken in the proceeding for the time being, the Court expects the applicant to elect for a moratorium on steps under rule 64.5 rather than seek an extension of time for service. 28 The builder argued that the homeowners failed to disclose to the first Magistrate the date of the expiry of the limitation period for the bringing of the proceedings insofar as they asserted a breach of statutory warranty. The builder further argued that there had been inadequate explanation before the first Magistrate as to why the proceedings could not be served within time. As a result of these two failures, the builder had been unfairly deprived of its ability to defend the action on the basis that the proceedings had not been served within time. 29 In reliance upon Re Southern Equities Corporation Ltd (in liq); Bond v England,14 the builder contended that in the ex parte hearing before the first Magistrate, the homeowners were under an obligation to disclose all matters known to them that would have been raised by the other party in opposition to the application. 30 Adopting the language of Bell Group NV (in liq) v Aspinall,15 the builder contended that there had been a “material non-disclosure” by the homeowners to the first Magistrate which “throws a new and different light on the situation of the parties involved”.16 31 The builder contended that the second Magistrate’s finding that the homeowners’ explanations were sufficient, failed to address the fact that the experts whose opinions were sought for the defects were not retained at the time the application was made. The builder maintains that the claim was sufficiently pleaded to have been served when the application to extend time was made. 12 Ibid, r 64.1. 13 Ibid, r 64. 14 (1997) 25 ACR 394. 15 (1998) 19 WAR 561 at 15. 16 Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561. -- 7 of 11 -- [2024] SASC 89 Hughes J 6 Homeowners’ submissions 32 The homeowners were represented by Mr Lazarevich of counsel. The homeowners contend that there is not sufficient doubt attending the decision, that it raises no principle of general importance, and no substantial injustice to the builder would be caused by refusal because the dispute will be heard on its merits.The homeowners maintain that permission to appeal should be refused. 33 The homeowners contend that the crux of the builder’s argument is that it has lost the opportunity of a defence, namely that the claim is statute-barred. The homeowners submit that because the claim was filed within time, no such ‘defence’ arises. 34 The homeowners contend that the builder delayed in making its application to set aside the order, there being approximately a year between the builder filing an address for service and making the application to set aside the order of the first Magistrate. The homeowners observe that the builder did not appeal the decision when the claim and amended claim were served in November 2022. 35 The homeowners agree that the statutory warranty limit expired on or about 29 April 2022. 36 The homeowners contend that their affidavit in support of the application sufficiently signalled to the Magistrate that the extension of time to serve was made following the filing of a claim made close to the end of the limitation period. As to grounds 2 and 3, the homeowners submit that there was no obligation to explain any delay in obtaining an expert’s report or not serving the claim. 37 In relation to ground 4, the homeowners assert that there was no breach of the duty of candour in the making of the application, and the builder did not lose the benefit of a limitation period. They argued that s 32(5) of the Building Work Contractors Act 1995 requires the proceedings to be commenced, not commenced and served, within five years. They say that it is not in dispute that the proceedings were commenced within time. 38 In any event, r 64 allows the time to serve to be extended even after the time for service has expired.17 If the time limit for service had expired, the claim would have been placed on the inactive list and could have been reinstated. 39 The homeowners argue, citing Cook v Dodds,18 that an application to set aside such as was made to the second Magistrate was correctly refused, given that the original decision could have been appealed, and in the absence of “additional material evidence” that was not before the Court when it made the original decision. 17 UCR, r 64. 18 (1985) 40 SASR 79. -- 8 of 11 -- [2024] SASC 89 Hughes J 7 40 It was submitted that injustice, if the order were set aside, would accrue to the homeowners, because the delay by the builder in bringing the application to set aside means that if the application were granted, all of the causes of action, and not just the statutory warranty claim, would likely be time-barred. 41 The home-owners contended that in addition to the reasons given by the second Magistrate, the application to set aside should be refused on any re-exercise of the discretion by this Court because of: • The delay between service of the claim and the application for setting aside; • Lack of prejudice to the builder; • The fact that the gap between the time by which the proceedings were required to be served in order to be within the six-month outer limit (27 October 2022), and the date on which the claim was in fact served (18 November 2022), was short. 42 The homeowners contend that they should be awarded costs on an indemnity basis. Consideration 43 The builder came before the Court with an ambitious task. That task was to persuade this Court to set aside an interlocutory order made in the exercise of a broad discretion. Further, if successful, this Court would be required to remit to the Magistrate’s Court the making of the original decision and that is also a decision made in the exercise of a broad discretion. For the reasons that follow, that task has not been achieved. 44 The builder did not establish, either before the second Magistrate or before the Court, that the homeowners breached the duty of candour for an extension of time to serve the proceedings. The information placed before the first Magistrate was adequate for the making of the extension of time decision. 45 The grant of an extension of time to serve proceedings is a decision that permits consideration of a range of factors, and the attribution of weight to any of those factors by reference to the particular circumstances of the case. In Gibbs v Williams19 the Full Court of the Supreme Court of South Australia set out the factors which are material to an application to renew a summons. Sangster J observed that these included the applicant’s reasons for the failure to serve within time, the contribution of each party to the failure to serve, the effect on each party in respect of the litigation, whether the claim would be statute-barred and where the interests of justice lay.20 These factors may also be relevant to the determination of an application to extend time to serve before the time has 19 (1979) 24 SASR 243. 20 At p 247. -- 9 of 11 -- [2024] SASC 89 Hughes J 8 expired. However, an application that is made within time will generally create less tension between the parties’ competing interests than one that is made after time has expired because a respondent will not have had a basis to anticipate that litigation will not ensue and because the applicant has not been derelict in complying with the procedural rules. The proceedings had been commenced within the statutory time frame for all of the causes of action asserted. The time limit for one of the causes of action, the breach of statutory warranty, subsequently expired. The homeowners’ application to extend time to serve was within the period within which service was required. 46 The chronology of relevant events was not withheld from the first Magistrate. 47 Not only were the proceedings filed within time, the application for service to be extended was made at a time when it was still possible for the homeowners to serve the builder if the order extending time to serve was not made. There was a day or so following the determination of the homeowners’ application in which the homeowners could have effected service within time if the application had been refused. Whilst the builder contends that if the order had not been made then the homeowners would not have served their application within time, the builder has not established that factual proposition. 48 At its highest, what was not disclosed by the homeowners was the possibility that if the application was refused and the homeowners failed to serve the proceedings within the following day or so, the action would have been moved into the inactive case lists and one of the causes of action would have become statute-barred. Such a disclosure was not required. The extrapolation from the circumstances in Re Southern Equities Corporation Ltd (in liq); Bond v England21 is not apt. In those proceedings, there were failures to disclose evidence of past events (expiry of time limits) and future intentions (to take certain proceedings) that bore upon the exercise of the discretion. In this proceeding, the second Magistrate correctly concluded that no fact that was required to be disclosed was omitted from the homeowners’ application. 49 The fact that the homeowners were nearly out of time was not a matter that required disclosure. There was no “material non-disclosure” of facts or materials. 50 The allegation of a failure by the homeowners to provide sufficient explanation for the need for an extension of time was also within the second Magistrate’s discretion to reject. 51 The discretion to extend time to serve for the purpose of enabling a claimant to gather evidence is one that entails a balance of factors. Had the proceedings been served without the evidence, a further cost may have been incurred in subsequent dispute as to the pleadings. The homeowners sought a three-month extension. The first Magistrate granted an extension of approximately four weeks. 21 (1997) 25 ACR 394. -- 10 of 11 -- [2024] SASC 89 Hughes J 9 The order required that the homeowners serve notice of the impending claim before making any further application for an extension. 52 The order made reflected a flexible, balanced approach justified by the desirability of keeping litigation progressing whilst enabling the parties to prepare in a way that maintains the opportunity of settlement but ensures that the parties are ready to proceed to trial if settlement cannot be achieved. 53 The application to the second Magistrate to set aside an earlier order made in the exercise of a discretion, was required to be approached in a manner that did not convert it into a de facto appeal of the first Magistrate’s decision. The second Magistrate was required to focus on the adequacy of the material upon which the original exercise of discretion was made. The second Magistrate quite properly did so. The builder did not establish that the second Magistrate’s refusal to set aside the first Magistrate’s decision to extend time was made on an erroneous appreciation of material that was, and was not, before the first Magistrate. 54 Accordingly, the builder’s appeal does not succeed. 55 I do not consider that the appeal raises a point of general principle warranting permission. The principle as to disclosure on an ex parte application is not enlivened on these facts in a way that requires exploration of the parameters of that principle. 56 I do not consider that sufficient doubt attends the exercise of the discretion by the second Magistrate not to set aside the extension of time, to warrant a grant of permission to appeal. 57 It is not necessary to canvas the re-exercise of the discretion. I consider that the appeal is without merit and leave is refused. 58 In light of these conclusions, I award indemnity costs to the homeowners in respect of the appeal. -- 11 of 11 --