CBFC Ltd v Charitopoulos - [2009] SASC 30

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
CBFC LIMITED v CHARITOPOULOS & ORS
[2009] SASC 30
Judgment of The Honourable Justice White
18 February 2009
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - JUDGMENTS AND ORDERS
Application for default judgment under r 75.14 of the Supreme Court Rules 1987 - plaintiff claimed an entitlement to enforce guarantees provided by each defendant - matter was listed for trial on 4 February 2009 - all defendants aware of trial date - first and second defendant did not appear - third defendant appeared in order to make applications for a stay or an adjournment of the trial - third defendant left the Courtroom after the refusal of the stay and adjournment applications, but before the commencement of the trial - plaintiff applied for a default judgment under r 75.14.
Held: Plaintiff is entitled to judgment under r 75.14 of the Supreme Court Rules 1987 - default judgment entered against each defendant
South Australian Supreme Court Rules 1987 r 75.14; South Australian Supreme Court Rules 1987 r 23.01; Bankruptcy Act 1966 (Cth) Part X, referred to.
Reg v Gobert (1958) SR (NSW) 114, applied.
Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508; Banque Commerciale S.A., en Liquidation v Akhil Holdings Limited (1990) 169 CLR 279; Barker v Furlong [1891] 2 Ch 172, distinguished.
Crotty v Clarke (1896) 22 VLR 594, considered.

CBFC LIMITED v CHARITOPOULOS & ORS
[2009] SASC 30
Civil

WHITE J: The plaintiff (CBFC) sues to enforce a guarantee given to it by each of the defendants on 10 July 2000. The action came on for trial on 4 February 2009. On that day, acting under r 75.14 of the Supreme Court Rules 1987, I entered judgment for CBFC against each defendant in the sum of $5,334,679.08. I said that I would publish reasons later. These are those reasons.
Prior to 2006, a number of companies associated with Golden Chef Australia Pty Ltd (GCA) were involved in the supply and delivery of lunches and snacks to factories, offices and building sites in both Adelaide and Melbourne. The business of the group was conducted using a fleet of vans.
Each of the defendants was a principal of some of the companies involved in the business. The first and second defendants are husband and wife and the third defendant their son. It is convenient to refer to them in these reasons by their first names of George, Rosa and Pantelis.
At relevant times, George and Rosa were directors of GCA. Pantelis was the director and sole shareholder of Asset Management Solutions Pty Ltd (AMS). Much of the plant and equipment, including the vans, used in the business was owned by AMS.
In August 2001 CBFC advanced to AMS, by way of a chattel mortgage, finance amounting to $6.6 million. AMS used the money to consolidate existing debts, and to acquire vehicles and catering and computer equipment. The term of the loan was 85 months. AMS was to pay 84 monthly instalments of $83,828.13 and to make a final payment of $1,980,000.00. In addition to the chattel mortgage itself, the security provided to CBFC on 6 August 2001 comprised registered equitable mortgages from AMS, GCA and another group member, Golden Chef (Vic) Pty Ltd (GCV). Further, GCA and GCV provided a joint and several guarantee as, in a separate deed, did George, Rosa, Pantelis and GCA.
On 10 June 2005 a creditor of GCA issued a summons seeking its winding up. By that time AMS had also failed on more than one occasion to pay the monthly instalment due under the chattel mortgage by the specified date. On learning of the issue of the summons Mr Neil Smith, a Credit Manager employed by CBA but with responsibilities for credit management of loans advanced by CBFC, issued on 8 July 2005, a number of notices of demand to GCA and AMS demanding the payment of sums said to be due and payable. In particular, CBFC demanded the payment by AMS of the sum of $4,452,303.81 said to be due by it under the registered equitable mortgage which it had granted on 6 August 2001. The defendants’ pleading raises an issue about the validity and efficacy of the demand to AMS by CBFC.
A liquidator of GCA (Mr Rudaks) was appointed on 29 July 2005.
On 20 December 2005 CBFC issued written demands to each of the three defendants and to GCV. The demands to the three individual defendants were relevantly identical. In each, CBFC demanded payment of the sum of $4,336,569.46 under the guarantee of 10 July 2000. As there was no compliance with the demands, CBFC commenced the within proceedings on 6 February 2006. CBFC alleges that the non-compliance by the defendants with each of its demands entitles it to enforce the guarantee against them. The amount originally claimed was $4,376,403.98 with interest accruing at the rate of $905.33 per day. With the accrual of interest since 6 February 2006, CBFC now claims the sum of $5,334,679.08.
The above summary is derived from the pleadings and from the evidence which CBFC led at the trial on 4 February 2009 in support of its application under r 75.14.
Each of the defendants denies liability. Their further amended defence discloses a number of separate grounds of defence. These include a claim that there was no valid consideration for the guarantee, a claim that Rosa was a volunteer and in a position of special disadvantage such that the guarantee should not be enforced against her, a claim that the guarantee had been wholly discharged by payment, a claim that the demand made by CBFC on AMS was invalid or ineffective and a claim that the receivers and managers who had sold the property of AMS and GCA had not exercised care to obtain the best price reasonably obtainable.
The defendants were previously represented by solicitors. However on 4 July 2008 the defendants commenced to act for themselves. On 3 September 2008 the Adelaide firm of Hume Taylor and Co, acting as town agents for Macpherson + Kelley Lawyers, a Melbourne firm of solicitors, filed a notice of change of solicitor. It seems that the terms of retainer of that firm were never finalised. On 23 December 2008 the defendants filed addresses for service indicating again that they were acting for themselves. Despite this, on the basis of what the Court was told at directions hearings and at the commencement of the trial on 4 February 2009, it is apparent that Pantelis has received some legal advice from the Adelaide firm of Commercial and General Law and the Melbourne firm of Ephron and Associates in relation to the proceedings.
Neither George nor Rosa have appeared at any of the directions hearings in the periods during which the defendants have been self represented. Neither appeared when the trial was called on for hearing on 4 February 2009. Pantelis informed the Court that his father was overseas. It seems that he has been overseas for sometime. Pantelis told the Court on 4 February 2009 that he had last spoken to his father approximately 14 days previously and that George was aware of the trial commencement date. Pantelis also informed the Court that Rosa was aware of the trial date. Pantelis sought to represent both his father and mother in the trial. Pantelis is not a legal practitioner. The Court had previously explained to him on several occasions his inability to represent his parents.
At the commencement of the trial Pantelis sought a stay of the proceedings on the basis that each defendant had recently taken action to appoint a controlling trustee under Part X of the Bankruptcy Act 1966 (Cth). In the alternative Pantelis sought an adjournment of the trial so that he, George and Rosa could obtain legal representation for the trial. During the course of his submissions in support of the stay and adjournment applications, Pantelis informed the Court that, in the event of a refusal of his application, he would not be staying in the Court for the trial. For reasons given at the time, both the application for the stay and for the adjournment were refused.
Following the completion of the ruling, Pantelis confirmed that he proposed leaving. Mr McCarthy, CBFC’s counsel, then informed the Court, in the presence of Pantelis, that in the event that he did depart, CBFC would seek a default judgment under r 75.14. The Court then explained the effect of r 75.14 to Pantelis and encouraged him to stay and participate in the trial. Despite that, Pantelis did leave and took no further part in the trial.
CBFC then applied for default judgments against each of the three defendants under r 75.14 of the 1987 Rules. CBFC’s reliance on r 75.14 makes it unnecessary to consider the Court’s inherent powers in circumstances of the present kind.[1] Rule 75.14(1) provides:
(1) If, when an action is called on for trial, the plaintiff appears and the defendant does not appear, then the plaintiff, in all cases in which he, she or it would have been entitled to final judgment for the whole or any part of their claim had default been made in filing a notice of address for service, shall be entitled to judgment for the whole or such part of their claim, and in other cases may prove their claim so far as the burden of proof lies upon them.
[1] Cf Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508 at 525.
In general terms, the effect of r 75.14 is to entitle a plaintiff, if a defendant does not appear when an action is called on for trial, to obtain a default judgment in the same way as if the defendant had not filed a notice of address for service. Those circumstances are set out in Rule 23.01 of the Supreme Court Rules 1987 which provides:
23.01 Where a defendant fails to file his notice of address for service within the prescribed time and:
Liquidated claim
(a) the relief or portion of the relief claimed is for a liquidated sum the plaintiff may enter final judgment against any such defendant in default for a sum not exceeding the liquidated sum, interest and costs; or
Damages
(b)the relief or portion of the relief claimed is for pecuniary damages, or for detention of goods with or without a claim for pecuniary damages, the plaintiff may enter interlocutory judgment for assessment of his claim for damages or detention. The assessment shall be made by a Master, unless the Court otherwise directs; or
Possession of land
(c)where the relief or portion of the relief claimed is for possession of land and the defendant is in immediate possession of the land or any part thereof the Court may order possession to be given immediately or at some subsequent time and with or without conditions. Where the defendant is not in immediate possession of the whole or some part of such land the Court may require notice of the application for judgment to be served on the person so in possession; or
Other relief
(d)where the plaintiff claims any other remedy it shall be sought either by application under Rule 25 or by an application made returnable in open Court under Rule 75.19.
As noted earlier, in the present case, neither George nor Rosa appeared at all when the action was called on for trial at 10.00 am on 4 February 2009. Pantelis did appear at that time. However, he left the courtroom after the rejection of his stay and adjournment applications and before the commencement of the trial.
The word “appear” and its cognates as used in r 75.14 is capable of more than one meaning. As was pointed out by Street CJ in Reg v Gobert[2]:
The word “appear” in its ordinary use in the English language means “to show oneself; to come forth into view”, and obviously, in the common use of the word, a person cannot “show” himself unless he is there present in person. But in legal proceedings “appearance” has a more special meaning. It may be no more than the mere filing of a document in court, and this amounts to an appearance for certain purposes. So also in the conduct of proceedings in court an appearance may be made either by the party appearing in person or appearing by counsel or solicitor. If counsel appears in court for a party, then that party is taken to have appeared in the proceedings.[3]
[2] (1958) SR (NSW) 114.
[3] Ibid at 116-117.
In the context of r 75.14 it is clear enough that parties may “appear” in the relevant sense either in person or by counsel. That is to say, there are two means by which a party may appear. However, whichever means is used, parties “appear” in the requisite sense only if they present themselves for the trial. Parties who are present in the body of the courtroom when the action is called on for trial but who do not announce themselves, in person or by counsel, do not “appear” in the sense required by r 75.14. Nor do parties who present at the bar table (in person or by counsel) but only for the purposes of seeking an adjournment of the trial. Such persons do not “appear” before the court for the trial.
In the present case, Pantelis’s appearance when the action was first called on at 10.00 am on 4 February 2009 was not for the trial. It was, as he made plain, only for the purpose of his stay and adjournment applications. Because of his departure from the courtroom Pantelis was not present when, after the stay and adjournment applications had been refused, the trial commenced. In these circumstances it could not be said that Pantelis had appeared for the trial. I note that a similar view was taken by Madden CJ in Crotty v Clarke[4] in respect of the corresponding rule of the Victorian Supreme Court in circumstances in which a plaintiff’s counsel withdrew after the Court’s rejection of an adjournment application. For these reasons I was satisfied that the circumstances to which r 75.14 refers existed.
[4] (1896) 22 VLR 594 at 604.
The relief claimed by CBFC in its summons comprised a liquidated claim within the meaning of r 23.01. Having pleaded the guarantee and the circumstances alleged to give rise to the entitlement to enforce the guarantee, CBFC alleged in paragraph 8 of its statement of claim:
The amount now outstanding by the defendants jointly and severally to the plaintiff is the sum of $4,376,403.98 with interest accruing at a rate of $905.33 per day.
By paragraph 1 of the prayer for relief CBFC sought “judgment against the defendant in the sum of $4,376,403.98 together with interest.”
I granted leave to CBFC to amend paragraph 8 to substitute a claim for $5,334,679.08 and a claim for continuing interest at the rate of $898.52 per day. The increased claim amount represented the accrual of interest between 2 February 2006 (when the statement of claim was prepared) and 4 February 2009. That being so, the sum of $5,334,679.08 was the “claim” of CBFC to which r 75.14 referred. The amendment was not the addition of a new claim, nor a material variation of the existing claim, so as to indicate that CBFC was seeking a default judgment on a claim which it had not made when it commenced its proceedings.[5] I was satisfied that CBFC would have been entitled, under r 23.01(a), to judgment in the sum of $4,376,403.98 in addition to accrued interest to the date of judgment had there been a default in the filing of a notice of address for service and the amount of $5,334,679.08 was the quantification of that claim.
[5] Cf Banque Commerciale S.A., en Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 288, 297; Barker v Furlong [1891] 2 Ch 172 at 178-9.
These were my reasons for the orders made by the Court on 4 February 2009. I add my view that as CBFC was seeking judgment under r 75.14, the evidence which it led on 4 February 2009 was unnecessary.
I will hear from the parties in relation to the monies paid into Court by the defendants pursuant to the order made on 28 March 2008.