Ace Contractors and Staff Pty Ltd v Rowe, Elizabeth Mary

[2009] VCC 856

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

EXPEDITED CASES DIVISION

Case No. CI-04-05181

ACE CONTRACTORS & STAFF PTY LTD	Plaintiff
v
ELIZABETH MARY ROWE	Defendant

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	16 July 2009
DATE OF JUDGMENT:	16 July 2009 (revised 20 July 2009)
CASE MAY BE CITED AS:	Ace Contractors & Staff Pty Ltd v. Rowe, Elizabeth Mary
MEDIUM NEUTRAL CITATION:	[2009] VCC 0856

REASONS FOR JUDGMENT

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Catchwords:  Practice and procedure – Application to set aside judgment – Judgment
entered after defendant defaulted in paying the costs of a trial date
being vacated – Long delay after judgment entered before application
made – Defendant affected by aftermath of operation to remove cancer.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N. Frenkel	HWL Ebsworth
For the Defendant	Mr J. Kohn	Hunt & Hunt
HIS HONOUR:

1     The defendant seeks to set aside a judgment entered against her on 10 May 2007. The judgment was entered as a consequence of her failure to pay costs in the sum of $8,000. By an order made 26 March 2007, she was required to pay the costs by 2 April 2007 as a consequence of a trial date being vacated. After the defendant defaulted in the payment of costs, a further hearing was conducted on 10 May 2007. Judgment was not simply entered by default because the plaintiff had sought orders for the payment of interest from a date earlier than the issue of the writ and also sought indemnity costs. At the hearing on 10 May 2007, Mrs Rowe appeared in person and judgment was entered against her in the sum of $51,917.20 together with interest and costs. A stay of execution on the judgment of 30 days was granted

2

The terms of the order made on 26 March 2007 provided that if the defendant defaulted in the ordered to be struck out forthwith and the plaintiff was to be at liberty to enter judgment in default of defence. Between May 2007, and shortly prior to the issue of the present application to set aside judgment on 2 March 2009, the defendant took no steps to pay the costs of $8,000 or until recently to pay the judgment debt or to make application to set aside the judgment entered in May 2007, or even to give notice to the plaintiff that such an application would be made. The defendant’s explanation for her lack of action during this period was said to be her poor health.

3     It appears that shortly after the judgment was entered in May 2007, the defendant whilst travelling in China, had an emergency operation. The oncologist who had treated her following her return to Australia, has reported that the operation in China removed a cancer and that, as a consequence of the operation, the defendant’s physical condition was impaired for a considerable period of time.

4     An affidavit filed on behalf of the plaintiff deposes to the defendant’s participation in a proceeding in the Supreme Court during 2007 and 2008. I consider however, that this participation is not inconsistent with the views expressed by the defendant’s oncologist.

5     There are, however, extensive delays which have occurred and these must be considered in the context of the matters in issue in the proceeding. The plaintiff submits that the litigation reached a state of finality with the judgment entered in May 2007, at a hearing at which the defendant was present, and it would not be in the interests of justice to interfere with that judgment.

6      It is necessary, in order to determine this matter, to examine the basis of the plaintiff’s claim and the defendant’s counterclaim in the proceeding. The defendant was a director of a company engaged in a development project. At some stage, there was concern that the development company may not have the financial resources to continue with the project. The sub-contractors met with representatives of the company, including on one occasion with the defendant. As a result of discussions at those meetings, the defendant executed a guarantee in which she personally guaranteed the obligations of the company. She said, in respect of the guarantee, that an alteration had been made to its terms and, although she had been prepared to enter into an earlier guarantee with a cap on her liability of $225,000, the guarantee given by the plaintiff in this action was not subject to this limitation. Further, in the counterclaim she alleged that the guarantee had been executed after undue influence had been exercised upon her including by representatives of the plaintiff at a meeting in July 2004. She alleged that at the meeting, she was threatened that if security were not provided by the defendant, the project would not permitted to proceed either then or at any time and that illegal methods might be employed against the defendant .

7     These matters have never been litigated, although the proceeding, which commenced by writ on 1 November 2004, proceeded through substantial interlocutory processes including the filing of witness statements by the plaintiff’s witnesses. Although the statements refer to the discussions and meetings between the parties leading up to the execution of the guarantee by the defendant, there is little or no material from the plaintiff relating to the allegation of undue influence.

8 the Federal Magistrates’ Court. Subsequently, the plaintiff paid the whole of the amount of the
judgment debt including interest and costs. The present application to set aside judgment was

In late 2008, bankruptcy proceedings against the defendant were pursued by the plaintiff in condition of the further adjournment of the summons, the defendant was required to pay the outstanding costs order of $8,000, which her failure to pay in 2007 led to the entry of judgment. The present position is therefore that the plaintiff has obtained judgment on its claim against the defendant based upon a guarantee of the debt of the company of which she was a director. Following bankruptcy proceedings, that judgment debt has been paid in full. The default which led to the entry of judgment without a consideration of the merits of this matter, has been satisfied as a condition of the present application being adjourned.

9     The matters which must be weighed in the balance in considering this application are:

a.	there has been no adjudication of the merits of the dispute between the parties;
b.	if the judgment were not set aside, the defendant would not be able to pursue the matters she raised by way of counterclaim attacking the validity of the guarantee on the basis of the circumstances in which she said it was entered into;
c.	the plaintiff has since May 2007, at least up until shortly before this application was issued in March 2009, believed that the matter was finalised;
d.	the defendant’s state of health during the period from May 2007 to the present date provides some explanation for her lack of action in seeking to have the judgment set aside;
e.	The original default by the defendant which led to the entry of judgment has been met by the payment of the costs order of $8,000 and the plaintiff’s judgment including interest and costs has also been fully paid.

10 Although it is almost five years since the dispute arose and proceedings were issued, it

seems to me that the justice of the situation demands that the judgment should be set aside
and the defendant given the opportunity of pursuing her counterclaim which seeks to have the
guarantee set aside on the basis of the allegation of undue influence. If the defendant were
successful, she would be entitled to have the monies she paid pursuant to the judgment

repaid.

11 I will make orders setting aside the judgment entered on 10 May 2007 and will hear further

submissions from the parties about the appropriate consequential orders.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 16 July 2009 and revised on 20 July 2009.

Dated: 16 July 2009.

Julien Lowy

Associate to His Honour Judge Anderson