Akierman Holdings Pty Limited v Dar

[2018] NSWDC 178

District Court

New South Wales

Medium Neutral Citation:	Akierman Holdings Pty Limited v Dar [2018] NSWDC 178
Hearing dates:	6 April 2018
Date of orders:	06 April 2018
Decision date:	06 April 2018
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1)   Set aside the default judgment granted 24 February 2017. (2)   Grant leave to the plaintiffs to file a notice of discontinuance of the proceedings, that notice to be filed within seven days. (3)   Plaintiffs to pay the defendant's costs of the proceedings including the costs of the notice of motion. (4)   Note that the intent of the costs order is that the defendant be entitled to enforce the costs order against either plaintiff.
Catchwords:	COSTS — notice of motion - party/party — bases of quantification — indemnity basis
Legislation Cited:	Uniform Civil Procedure Rules 2005, r 10.20
Category:	Costs
Parties:	Akierman Holdings Pty Limited (first plaintiff) Wilfers Developments Pty Limited (second plaintiff) Gillian Dar (defendant)
Representation:	Counsel: Mr M P Cleary (plaintiffs) Mr S R Meehan (defendant)   Solicitors: Rankin Ellison Lawyers (plaintiffs) Harris Freidman Lawyers (defendant)
File Number(s):	2017/19980
Publication restriction:	None

Judgment

1. Akierman Holdings Pty Limited and Wilfers Developments Pty Limited commenced proceedings against Gillian Dar in January 2017 and obtained default judgment on 24 February 2017. Ms Dar applies to set aside that default judgment and for other orders. The parties have agreed on, or do not oppose, orders setting aside the default judgment, granting leave for the plaintiffs to discontinue the proceedings, the plaintiffs being directed to file any notice of discontinuance within seven days, and the plaintiffs to pay the defendant's costs of the proceedings apart from the notice of motion.

2. Where the parties are at issue are the costs of the notice of motion. Akierman and Wilfers seek an order that the costs of the motion to set aside the default judgment be subject to an order that each party pay their own costs, whereas Ms Dar submits that the appropriate order should be that the plaintiffs pay her costs of the notice of motion on an indemnity basis.

3. Akierman and Wilfers rely principally upon the usual rule, that a defaulting defendant ought to meet the costs of the notice of motion to set aside the default judgment because costs were incurred by the default. However, in this case, Akierman and Wilfers do not insist upon that order and submit that since they are not pressing the proceedings, the appropriate order is that each party pay their own costs of the notice of motion.

4. Although Akierman and Wilfers obtained default judgment, it is apparent that Ms Dar was not then in default. The affidavits relied on in the application for default judgment contained some ambiguities which appear to have caused the Registrar to form a mistaken impression that service occurred prior to 30 January 2017, the date when the notice of appearance was filed and when service is taken to have occurred in accordance with Uniform Civil Procedure Rule 10.20(5). Service on 30 January 2017 meant that default judgment could not be obtained unless Ms Dar failed to file a defence by or before the end of 27 February 2017. So Ms Dar was not in default on 24 February 2017. On 24 February Ms Dar had sought particulars of the claim.

5. The irregularity in obtaining a default judgment several days prior to the first occasion when a default could have occurred is sufficient both to justify orders setting aside the judgment and entitling the defendant to the costs of so doing. The circumstance that the plaintiffs have recognised the irregularity and accepted that orders should be made to correct it tends only to reinforce this view.

6. As to an order in favour of Ms Dar for indemnity costs of the notice of motion, there are a number of concerns raised in the evidence about the haste with which the default judgment was obtained and the evidence filed to prove the entitlement. Some of those concerns remain unexplained, including, as an example, the suggestion in the affidavit accompanying the application for default judgment that service occurred on 20 January 2017. But the language in the affidavit of service on that point is not unequivocal and there is no other evidence to indicate conscious wrongdoing.

7. Ms Dar’s notice of motion made no reference to an order for indemnity costs. The application for that special order was first raised before me today. That matter militates against such an order as it precludes the opposing party to calling evidence against the making of a special costs order.

8. Ms Dar principally relies on the late capitulation by the plaintiffs in respect of the default judgment. Whilst early settlement is preferable to late settlement, I am not persuaded that the circumstance that Akierman and Wilfers coming to realise that the claim cannot be maintained should itself be sufficient to justify an order for indemnity costs.

9. A third matter that I take into account is that although Ms Dar knew that there had been proceedings commenced against her, she took no steps to inquire regarding the progress of those proceedings, prepare a defence, or complain to the plaintiffs about the absence of a response to her letter of particulars. This inaction persisted for about 12 months. The defendant’s delinquency does not remove the irregularity in the plaintiffs obtaining of default judgment, but it is relevant to take into account in determining whether a special costs order should be made in her favour.

10. So for these three reasons - namely that the defendant made no application until today for a special costs order; that a concession or even capitulation late in the day without something more is not enough to justify a special costs order; and thirdly, the circumstance that the defendant did not seek to progress her defence of the proceedings expeditiously but stood by for approximately 12 months whilst the proceedings remained on foot - I do not propose to grant an indemnity costs order.

11. The orders of the Court are:

1. Set aside the default judgment granted 24 February 2017.

2. Grant leave to the plaintiffs to file a notice of discontinuance of the proceedings, that notice to be filed within seven days.

3. Plaintiffs to pay the defendant's costs of the proceedings including the costs of the notice of motion.

4. Note that the intent of the costs order is that the defendant be entitled to enforce the costs order against either plaintiff.

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Decision last updated: 03 July 2018