AGC Capital Pty Ltd v SHANKARALINGAM

[2013] WADC 65

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   AGC CAPITAL PTY LTD -v- SHANKARALINGAM [2013] WADC 65

CORAM:   REGISTRAR KINGSLEY

HEARD:   3 APRIL 2013

DELIVERED          :   3 MAY 2013

FILE NO/S:   CIV 3995 of 2011

BETWEEN:   AGC CAPITAL PTY LTD

Plaintiff

AND

T SHANKARALINGAM
First Defendant

SAIRAM RESOURCES PTY LTD  (ACN 134 496 414)
Second Defendant

Catchwords:

Practice - Setting aside judgment - Defective indorsement

Legislation:

Nil

Result:

Judgment set aside as irregular

Representation:

Counsel:

Plaintiff:     Mr B L Nugawala

First Defendant             :     Mr A P Hershowitz

Second Defendant         :     Mr A P Hershowitz

Solicitors:

Plaintiff:     Tan & Tan Lawyers

First Defendant             :     Law Mantra Lawyers

Second Defendant         :     Law Mantra Lawyers

Case(s) referred to in judgment(s):

ABB Service Pty Ltd v Hetherington [2001] WASCA 235

Buttigieg v VL Finance Pty Ltd [1986] VR 392

Glendinning v Cuzens [2009] WASCA 21

Renowden v McMullin (1970) 123 CLR 584

The Queen v Bunting [2003] SASC 252

REGISTRAR KINGSLEY

1. The plaintiff (AGC Capital) lodged an amended indorsed writ dated 6 February 2012.  The indorsement reads:

   The plaintiff's claim against the first defendant, is for the sum of AUD85,000 paid to the second defendant on or about 5 May 2011, for and on behalf of the first defendant and at the first defendant's request, which sum the first defendant became and is liable to repay to the plaintiff; and/or

   As against the second defendant, is for the sum of AUD85,000 advanced or lent by the plaintiff to the second defendant as a loan, under an agreement made between the plaintiff and the first defendant, as director of the second defendant, on or about 5 May 2011, which sum the second defendant became and is liable to repay the plaintiff.

2. Default judgment was entered against the first and second defendants on 13 March 2012.  By an affidavit sworn 25 January 2013 the first defendant seeks to set aside the default judgment on the ground that it is irregular.

3. The first defendant's argument is that the indorsement as against the first defendant is defective and cannot support the judgment.  The first defendant's counsel argues that no cause of action is identified – is the cause a loan, or is there some other contractual arrangement between the parties.  Further, counsel argues, there is no indication how the liability to pay the plaintiff arises, nor when that liability arose.  That being the case, as the indorsement is defective, the judgment entered is irregular.

4. Counsel for AGC Capital submits that the indorsement as a whole refers to a loan transaction - that it is sufficient the indorsement sets up the obligations or liability to repay without the need to use the word loan.  Counsel for AGC submits that an indorsement of claim must not be narrowly construed as it is a precursor to a more fully pleaded statement of claim.

5. An indorsement is not intended to be in the nature of a pleading.  Renowden v McMullin (1970) 123 CLR 584 is authority for the proposition that:

   … it should not be construed as such, but read for what it is, namely a notice of the nature of the plaintiff's claim, of the cause thereof and of the relief sought in the action.  It suffices if it conveys that information generally and without particularity save where and to the extent to particularity is indispensible to notify the required element of the indorsement …

6. The decision of the Court of Appeal in Glendinning v Cuzens [2009] WASCA 21 contains a convenient summary of the principles in relation to an indorsement, namely:

   1.it informs the defendant of the nature of the claim made and the relief sought so as to enable the defendant to determine whether he or she should enter an appearance;

   2.it enables the determination, for the purposes of the relevant Limitation Act, of whether a cause of action is contained in the writ; and

   3.it sets out the metes and bounds within which the statement of claim must be framed.

7. Whilst not intended to be a pleading and only a summary of the nature of the claim, a proper indorsement must give adequate notice to the defendant of the nature of the plaintiff's claim and relief sought.  The nature and expanse of the information necessary to fulfil the requirement does not depend on any rigid formula.  Relevant information can be conveyed in different ways and adequacy is to be determined from the indorsement as a whole:  ABB Service Pty Ltd v Hetherington [2001] WASCA 235.

8. In considering the adequacy of an indorsement a common sense approach is to be taken to the construction of an indorsement in its character as an indorsement. (Buttigieg v VL Finance Pty Ltd [1986] VR 392, 397)

9. With respect to the indorsement of claim as against the first defendant I am left to speculate how a claim arises against the first defendant.  As against the second defendant the indorsement states that the relationship between AGC Capital and the second defendant is that of lender and borrower.  (As an aside the indorsement in relation to the second defendant states that the first defendant is a director of the second defendant.  It is common cause between the parties that that is not the case.)

10. However, as between AGC Capital and the first defendant there may be a number of bases where the first defendant has become personally liable to AGC Capital.  In my opinion the indorsement of claim as against the first defendant is not framed so that a reasonable person would instantly recognise the nature of the claim.  In this matter the indorsement does not put the facts in a recognisable legal framework showing how AGC Capital's claim arises and the relationship between that claim and the loss alleged.

11. By letter dated 16 April 2013 the plaintiff's solicitor referred me to the decision The Queen v Bunting [2003] SASC 252 [24] – [30]. The plaintiff's solicitor writes that the issue of a joint default judgment was raised by me during the course of argument. The plaintiff's solicitor writes that Bunting's case will be of some assistance on the question of severability. 

12. The paragraphs of Bunting's case referred to above concern the impact of an invalid part of a warrant issued pursuant to the Listings Services Act 1972 (South Australia).

13. Counsel for the plaintiff and first defendant have conferred, and it is the submission of counsel for the first defendant, that Bunting's case has no application in this case.  I agree with that submission.

14. Accordingly, I am of the opinion that the judgment is irregular and must be set aside.

15. That being the case, I do not propose to examine the merits of the purported defence to the plaintiff's claim.

16. I will hear counsel on the orders sought, and on costs.