ABL Nominees Pty Ltd v Shellie

[2012] VCC 1049

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
BANKING AND FINANCE DIVISION

Case No. CI-11-03808

ABL NOMINEES PTY LTD	Plaintiff
v.
LISA GAYLE SHELLIE & GREAT SOUTHERN FINANCE PTY LTD	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	7 August 2012
DATE OF JUDGMENT:	7 August 2012 (revised 8 August 2012)
CASE MAY BE CITED AS:	ABL Nominees Pty Ltd v. Shellie & Anor
MEDIUM NEUTRAL CITATION:	[2012] VCC 1049

REASONS FOR JUDGMENT

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Catchwords:             Practice and procedure – Application to set aside judgment – Defendant’s failure to comply with orders – Subsequent compliance – Inadequate explanation for late compliance – Any prejudice to the plaintiff ameliorated by conditions imposed on the setting aside of the judgment.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D. Gration	Turks Legal
For the First Defendant	Mr D. Bailey	Hunts

HIS HONOUR:

1The first defendant seeks to set aside a judgment entered by the plaintiff on 8 June 2012. The judgment was entered as a consequence of the first defendant’s failure to comply with orders made by me on 25 May 2012. Those orders required the first defendant to do three things:

a.deliver a draft further amended defence and draft counterclaim;

b.initiate an application under the Corporations Act for leave to join other parties;

c.pay certain costs orders.

2        The first defendant has now complied with each part of the order:

a.The draft further amended defence and draft counterclaim were delivered shortly after 6pm on 8 June, rather than, as ordered, by 2pm;

b.a copy of the draft application to join other parties was also served at that time. The application had been issued in the Supreme Court at some time on 8 June;

c.the costs were paid on about 17 or 18 July 2012.

3The orders on 25 May 2012 followed earlier orders made by me:

a.On 10 February 2012, the first defendant’s amended defence was struck out and she was given leave to serve a further draft pleading by 2 March 2012;

b.on 2 March 2012, the proposed pleading was still inadequate and the first defendant was given a further opportunity to remedy the situation by serving a further proposed pleading by 23 March 2012;

c.on 20 April 2012, when the matter returned to court, the further draft pleading (delivered late) was inadequate and the first defendant was given a further opportunity to remedy the situation;

d.on 25 May 2012, orders were made entitling the plaintiff to enter judgment if the first defendant did not carry out the steps previously referred to by 2pm on 8 June 2012.

4On each occasion that the matter came before the Court, the first defendant’s solicitor, without filing affidavit material, informed the Court that difficulties had been encountered, including the unavailability of counsel, which would be solved by the grant of further time.

5The present application purports to be made under Rule 24.06, which applies where a party has failed to comply with an order of the Court and seeks to have judgment set aside. Whilst it was suggested that the application might, more properly, have been made under Rule 21.07, as judgment was entered in default of defence, the issue, really, is of no consequence, because the principles I must apply are similar. In any event, the judgment was permitted to be entered on the basis of default in complying with each of the three aspects of the order made on 25 May 2012.

6The material filed by the first defendant in support of the application is extremely scanty. It suggests that the reason for non-compliance with the various aspects of the order of 25 May 2012 was that until 28 May 2012, the first defendant’s solicitor was unaware that she would be overseas until after 8 June 2012. The affidavit material suggests that notwithstanding this absence there were subsequent communications between the solicitor and the first defendant and no specific difficulty is referred to which might have led to the non-compliance with the orders made on 25 May 2012. In fact, the service of documents at about 6pm on 8 June 2012 suggests that the first defendant’s solicitors would most likely have been in a position to comply with the order by 2pm.

7Much of the time in the hearing today has been taken up with a consideration of whether the first defendant has shown that she has a good defence to the plaintiff’s claim. The defence essentially relies upon a counterclaim which, in respect of the plaintiff, raises two issues:

a.a claim pursuant to s.1022C of the Corporations Act 2001 (Cth) that if the first defendant were to succeed in a counterclaim against third parties for loss or damage in relation to inadequacies in the disclosure document, then the Court should go on to make a declaration that the contract, as between the first defendant and the plaintiff, is void and should not be enforced;

b.the plaintiff, as assignee of the rights of Great Southern Finance Pty Ltd, should take, subject to whatever equities apply in relation to those rights, which in the present case include claims that Great Southern Finance Pty Ltd engaged in unconscionable conduct (in the equitable sense, not in breach of statutory requirements).

8Plaintiffs’ counsel, Mr Gration, made the following submissions in relation to the proposed counterclaim raising the matters relied upon by way of defence by the first defendant:

a.the action pursuant to s.1022C of the Corporations Act 2001 depends upon a successful claim for damages against third parties (the Great Southern companies) in respect of which there is, pursuant to s.1022B(6), a six year limitation period. The cause of action relies upon a product disclosure statement and the execution of other documents in 2003 and in the circumstances, such a claim would be statute barred. The damages claim proposed to be made against the Great Southern Companies relates to the liabilities included by the first defendant as a consequence of having entered into the arrangements in 2003.

b.the claims of unconscionable conduct in the equitable sense rely upon and disability or relationship on the part of the first defendant and, accordingly, would have little chance of success;

c.there were aspects of the counterclaim which involved the pleading of matters clearly irrelevant to the first defendant, having been simply copied from similar pleadings involving other parties in different litigation or, where purporting to be relevant to the first defendant, failed to provide particulars of the allegations as they affect her.

9I was informed that the first defendant’s application in the Supreme Court of Victoria for leave to join the Great Southern companies as parties to the present litigation had been adjourned from 3 August to 24 August 2012 to await my decision in the present matter. I was also informed that the defendants who are proposed to be added have foreshadowed that they will raise, in opposition to the first defendant’s application, a contention that any claim against them would be time-barred.

10I consider that the Supreme Court, on that application, is the appropriate forum to determine that issue. I note that I have been referred to the following authorities in respect of the issue:

a.Wardley Australia Ltd v State of Western Australia (1992) 109 ALR 247, particularly at pages 254-259;

b.Carey-Hazell v Getz Bros. & Co. (Aust) Pty Ltd [2001] FCA 703, particularly at paragraphs 34, 35 and 37;

c.Simplot Australia Pty Ltd v PSL Industries [2001] VSC 419, particularly at paragraphs 15 and 17;

d.Booth v Ward (2007) 17 VR 195, particularly at paragraph 45.

11In relation to the issue of whether a claim based upon s.1022C of the Corporations Act 2001 was arguable, Croft J determined in Clarke v Great Southern Finance Pty Ltd [2010] VSC 473 that the issue should not be determined on a summary basis, but should be permitted to go forward to trial, at least a trial of that issue as a preliminary matter. I consider that, similarly with the issues of unconscionability, it would not be appropriate for me to determine on a summary basis whether that issue was also without merit.

12In the circumstances, I consider that the first defendant has, after having been given many opportunities, articulated defences, largely in reliance upon her counterclaim, that may be arguable. The matter that I need to determine is whether she should be permitted to raise that defence in the present proceeding as a result of having failed to comply with the order of 25 May 2012 and thereby allowed judgment to be entered against her.

13The overriding consideration is to determine what justice requires in the present circumstances, and whether the first defendant should be relieved from the consequences of non-compliance with the self-executing order I made on 25 May 2012. (see Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110 particularly the comments of Forrest AJA at paragraphs 9-12 and 29-33. In my view, it would not be appropriate in the present case to shut out the first defendant from the opportunity to raise the matters she wishes to by way of defence.

14Essentially, I have come to this conclusion for the following reasons:

a.at least one of the matters raised by the draft defence has been determined by Croft J as a matter which should not be decided on a summary basis;

b.any other inadequacies in the draft counterclaim can be addressed by making an order imposing, as a condition of judgment being set aside, that the first defendant file and serve an affidavit setting out the details of discussions with representatives of the Great Southern companies, which form the basis of allegations made by her in the counterclaim, which are presently not particularised;

c.the plaintiff is engaged in a large number of similar actions, which are soon to be subject to a hearing by Croft J in the Supreme Court. The present case involves an earlier scheme than the ones generally to be determined by Croft J. Nevertheless, the issues are similar and should, subject to the Supreme Court determining that the Great Southern companies should be added as defendants to the present litigation, also go ahead.

d.any other prejudice to the plaintiff can be dealt with by an appropriate costs order and requiring that those costs be paid as a condition of judgment being set aside.

15      In the circumstances, the orders I will make will be as follows:

a.Upon condition that the first defendant:

i.by 21 August 2012, pays to the plaintiff’s solicitors the sum of $11,246.63 in respect of the costs incurred by the plaintiff as a consequence of the first defendant’s failure to comply with the orders made 25 May 2012;

ii.pursues, and is successful upon, her application in the Supreme Court of Victoria, for leave to join the Great Southern companies, which application is presently adjourned until 24 August 2012;

iii.by 21 August 2012, files and serves an affidavit by the first defendant, setting out adequate particulars of any discussions between representatives of the Great Southern companies and herself or persons acting on her behalf, relating to the allegations made in paragraphs 8 and 9 of the proposed counterclaim;

iv.by 28 August 2012, files and serves a further proposed counterclaim, providing proper particulars of the allegations made in paragraphs 8 and 9 and, if an allegation is pursued in relation to Mr Smith, proper particulars of the matters alleged in paragraph 13, and otherwise addressing matters of typographical errors or similar issues, provided they are raised in correspondence from the plaintiff’s solicitors to be delivered to the first defendant’s solicitors by 21 August 2012;

the judgment entered against the first defendant on 8 June 2012 will be set aside.

b.If the said judgment is set aside, the parties must by 7 September 2012, provide the Directions Group with details of the parties’ proposal for the further determination of the proceeding, including any interlocutory steps that may be necessary.

c.The first defendant must pay the plaintiff the total sum of $11,246.63, being the costs thrown away as a consequence of the first defendant’s failure to comply with the order dated 25 May 2012, including the costs of the first defendant’s application by summons, filed 22 June 2012, and the costs reserved on 20 July 2012. It is noted that those costs have been fixed in line with a submission received from the plaintiff entitled “Costs to claim if application to set aside allowed” with handwritten additions, which will be placed upon the Court file.

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Certificate

I certify that these 7 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 7 August 2012 (revised 8 August 2012).

Dated: 8 August 2012

Caroline Dawes

Associate to His Honour Judge Anderson