Allanglen Lodge Pty Ltd v Speranza

[2013] VCC 1761

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-13-02081

ALLANGLEN LODGE PTY LTD	Plaintiff
v.
FRANK SPERANZA	Defendant

---

JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	18 November 2013
DATE OF JUDGMENT:	18 November 2013 (revised 19 November 2013)
CASE MAY BE CITED AS:	Allanglen Lodge Pty Ltd v. Speranza
MEDIUM NEUTRAL CITATION:	[2013] VCC 1761

REASONS FOR JUDGMENT

---

Catchwords:             Practice and procedure – Application to set aside default judgment – Whether defence on the merits – Agreement for the training of racehorses – Assertion that defendant had orally terminated the agreement – Inconsistent with terms of later letter purporting to terminate the agreement – Proposed counterclaim for negligence and for an accounting in respect of winnings – Defence barely arguable – Order to set aside judgment made conditional upon payment of $45,000 into court.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. Caillard	Hardys Lawyers
For the Defendant	Ms A. Mapp	Mason Black

HS HONOUR:

1The defendant makes application to set aside judgment entered in default of defence on 18 July 2013 for the claimed amount of $119,567.20 and interest for 75 days of $2,579.70.

2The principal issue for determination is whether the defendant has shown that he has an arguable defence on the merits. It appears that no defence was filed, although in discussions between the parties’ solicitors, an extension of time for the filing of a defence was given and the document was not filed during that time. Further, it appears that the application to set aside judgment was not made until a bankruptcy notice was served on the defendant.

3The claim arises in relation to training fees in respect of a number of racehorses. The plaintiff is a racehorse trainer and the defendant is a part owner of horses who has engaged the services of the plaintiff since about 2003.

4The defences raised by the defendant are as follows:

a.the defendant says that from 2010 he had difficulty paying the training fees and on a number of occasions he orally directed the plaintiff to cease training the horses. There is a dispute on the affidavit material in relation to these conversations. The plaintiff suggests that there were conversations in which the arrears of training fees were sought and statements made as to whether the horses would continue to be raced. There were responses from the defendant to the effect that, if the horses were not to be raced, then they should not continue to be trained;

b.the defendant says that, because the plaintiff failed to race certain horses when they were two year olds or three year olds, he lost the opportunity to make winnings from those horses. This was demonstrated from the fact that, as a four year old, the horse Ankara was successful and therefore would have likely won races at an earlier age. It is suggested that this has also had the effect of devaluing the horses because they had no winning record during the period that they were not racing;

c.it is suggested by the defendant that certain winning in respect of the horses for the period after July 2013 have not been accounted for to the defendant, although he was a part owner of those horses. 

5In relation to the plaintiff’s claim for training fees prior to March 2013, it is clear from the invoice statement exhibited to the affidavit of the plaintiff’s solicitor, upon which judgment was entered, that the amount owing in March 2013 was $119,567.20.

6On 19 March 2013, the defendant wrote to the plaintiff stating, “This letter is to confirm that as of today’s date 19/3/13 I Frank Speranza have decided to not continue with the horse racing venture I have with you. Please do not invoice me any further from what already has been invoiced”. The letter later indicated that the sum of $40,000 was offered on account of the monies owing, to be paid when the defendant was able to sell his house. The letter appears to be suggesting that the arrangement would be terminated “as of today’s date 19/3/13” and that it was only “further” charges that should not be invoiced after that date. This appears to be confirmed by an email dated 25 October 2013 between the defendant and Mr John Sinisgalli where the defendant said, “I had an agreement with Allan that upon settlement of my family home I would pay $40,000 towards the outstanding invoice to continue racing with him”.

7The argument raised by the defendant that the value of the horses, and in particular the horse Ankara has been devalued, and that he has lost his share of potential winnings would, to have any force, appear to also depend upon whether the plaintiff was obliged to continue racing the horse in circumstances where the defendant was not paying his share of training fees. Further, in the letter dated 19 March 2013, there does not appear to be a specific complaint about this matter. Similarly, in relation to the claim that winnings since July 2013 have not been accounted for, the present judgment relates to outstanding training fees prior to March 2013 and it is not clear whether the plaintiff as a co-owner of the horses would continue to have any responsibility for the cost of maintaining the horses after March 2013 against which any winnings were said to have been applied.

8I consider, in the circumstances, that at best, the matters of defence raised are barely arguable. However, subject to the condition that I intend to impose, the judgment will be set aside and the defendant will have the opportunity of raising the matters in dispute and having them tried.

9Under the terms of the training agreement, the plaintiff apparently has a lien in respect of its training fees and can sell the horses to recover the amount owing to it. It is suggested, in the circumstances, that the plaintiff has security for the judgment sum and that, therefore, it would not be appropriate to make an order requiring the defendant to pay money into Court as a condition of having the judgment set aside.

10There are two valuations of the horses in question; one by the defendant himself, and one by a bloodstock valuer engaged by the plaintiff. Whilst the defendant sought to cast doubt on the appropriateness of the bloodstock valuer’s valuation, in fact the total value of the horses valued by the bloodstock valuer is a figure higher than the total of the valuations made by the defendant. I have made a calculation based upon the mid point between the valuations in respect of each of the horses and the interest the defendant has in each of the horses and on my calculation the value of the defendant’s interest in the horses is approximately $50,000. The share of prize money the defendant says was not property accounted for, on my calculation, totals about $28,500.

11If these two sums, $50,000 and $28,500, were off-set against the amount of the judgment and the interest that would now be payable in respect of that judgment is added, there is still a shortfall of about $45,000. I consider that the judgment should only be set aside upon condition that the defendant pays that sum into Court or otherwise provides security in a form that would be acceptable to the plaintiff.

12The orders I will make are as follows:

a.Upon condition that the defendant, by 4pm on 9 December 2013, pays into Court the sum of $45,000, or otherwise provides security in that sum in a form that is acceptable to the plaintiff, or upon further application to the Court prior to 2 December 2013 is considered by the Court to be an appropriate form of security, the judgment entered in default of defence on 18 July 2013 shall be set aside.

b.By 4pm on 16 December 2013, the defendant shall file and serve his defence and any counterclaim.

c.The proceeding shall be set down for trial on 2 April 2014 as a cause before a judge sitting alone (estimate 3 sitting days).

d.By 19 December 2013, the parties must submit to the Directions Group either agreed or separate suggestions for the pre-trial timetable, including a date for the completion of mediation.

e.The defendant must pay the plaintiff’s costs thrown away by the entry of judgment being $2,058.60 and the costs of the defendant’s summons filed 30 September 2013 and of the hearing today and of the costs reserved on 30 October 2013, to be assessed by the Costs Court in default of agreement.

f.Reserve liberty to apply.

- - -

Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 18 November 2013 and revised on 19 November 2013.

Dated: 19 November 2013

Catherine Kusiak

Associate to His Honour Judge Anderson