CBS Reinforcing Pty Ltd trading as CBS Developments Aust v Nguyen

[2020] NSWLC 12

Local Court

New South Wales

Medium Neutral Citation:

CBS Reinforcing Pty Ltd trading as CBS Developments Aust v Nguyen [2020] NSWLC 12

Hearing dates:

27 May 2020

Date of orders:

28 May 2020

Decision date:

28 May 2020

Jurisdiction:

Civil

Before:

Nash LCM

Decision:

Default judgment entered on 5 February 2020 set aside

Catchwords:

CIVIL PROCEDURE — Default judgment — Defendant’s motion to set aside default judgment — no question of principle —whether bona fide ground of defence

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503

Byronv Southern Star Group Pty Ltd t/as KGC Magnetic Tapes (1995) 123 FLR 352

Cohenv McWilliam (1995) 38 NSWLR 476

Daviesv Pagett (1986) 10 FCR 226

Evansv Bartlam [1937] AC 473

Simpsonv Alexander (1926) SR (NSW) 296

Texts Cited:

Nil

Category:

Procedural rulings

Parties:

CBS Reinforcing Pty Limited (Plaintiff)
Thi Ngoc Anh Nguyen (Defendant)

Representation:

Solicitors:
Ian Plowes, Solicitor (Plaintiff/Respondent on motion)
Jason Chai, Solicitor (Defendant/Applicant on motion)

File Number(s):

2019/00320680

Publication restriction:

Nil

Judgment

1. Before the Court is the Defendant’s motion filed on 16 April 2020 seeking an order setting aside the default judgment entered in favour of the Plaintiff on 5 February 2020.

2. Such an order can be made, if appropriate to do so, under Pt 36.16(2) of the Uniform Civil Procedure Rules 2005.

3. The following principles apply on this motion, and are extracted from the judgment of Hope JA in Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 at 506–507:

1. The court has to look at the whole of the relevant circumstances and decide whether or not sufficient cause has been shown;

2. The existence of a bona fide ground of defence and an adequate explanation for the default are the most relevant matters to consider;

3. The defendant must swear to facts which, if established at the trial, will afford a defence: Simpson v Alexander (1926) SR (NSW) 296 at 301;

4. If the judge concludes that the applicant is lying about the alleged defence and is thus dishonest in raising it, the defence is not “bona fide”;

5. The applicant does not necessarily fail for want of an adequate explanation for the default. It depends on the circumstances. “[I]f merits are shown, the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication”: Evans v Bartlam [1937] AC 473 at 489;

6. The absence of an explanation for the default, particularly if it is coupled with prejudice to the plaintiff, may justify the denial of relief, but only when considered with other relevant circumstances.

4. The importance of a defence on the merits relative to countervailing considerations (per Evans v Bartlam, above) has been emphasised. In Byron v Southern Star Group Pty Ltd t/as KGC Magnetic Tapes (1995) 123 FLR 352, Priestley JA said at 364:

“Frequently, persons have been let in to defend who have had little or no explanation for their delay but who have shown reasonable grounds of defence; in some cases such persons are put on severe terms concerning provision of security or payment into court or the like, but the court sees to it that subject to compliance with such terms, a person who has an arguable defence and wishes to have it determined on the merits, will be heard by the court before judgment.”

5. In Cohen v McWilliam (1995) 38 NSWLR 476 at 480 – 481, Priestley JA re-affirmed what he had said in Byron and, by way of illustration, quoted with approval from the Full Federal Court decision in Davies v Pagett (1986) 10 FCR 226 at 232, as follows:

“The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed.”

6. The Plaintiff’s claim relates to outstanding payment for homewares and decking supplies and project management services. The claim is for $17,263.21.

7. On this motion, the following evidence was adduced:

1. Affidavit of Jason Chai, affirmed on 16 April 2020. Mr Chai is the solicitor on the record for the Defendant; and

2. Affidavit of Rashid Benzerouk, affirmed March 2020 (precise date not stated). Mr Benzerouk is the director of the Plaintiff company.

8. Mr Benzerouk’s affidavit sets out a short chronological history of the proceedings. In summary, the Plaintiff’s Statement of Claim was filed on 14 October 2019 and served on the Defendant on or about 21 October 2019. A defence was filed on or about 1 November 2019.

9. Mr Benzerouk asserts that the Defendant has no valid defence to the Plaintiff’s claim.

10. Mr Chai’s affidavit provides further historical information in relation to the proceedings. Mr Shea was initially engaged to act on the Defendant’s behalf in the proceedings. On 18 December 2019, Mr Shea attended a pre-trial conference and advised the Defendant of the orders generally made on that day but apparently did not detail the exact nature of the orders made. The Defendant formed the view that the proceedings were set down for hearing in March 2020, but was expecting to be told about the exact date.

11. Mr Shea ceased acting for the Defendant because he relocated to another jurisdiction and the Defendant was unaware that she was required to take any steps in the proceedings, including complying with Court orders. She had understood that Mr Shea had complied with the Court orders made on 18 December 2019.

12. Unaware she needed to attend, the Defendant did not attend the pre-trial conference on 5 February 2020 and in any event, she was attending to important family commitments on that day. Her non-attendance at the pre-trial conference resulted in her defence being struck out. It was not until 14 February 2020, or thereabouts, that she became aware that, consequent on the striking out of her defence, the default judgment had been entered against her by the Plaintiff.

13. When she became aware of this, she sought legal advice. Mr Chai was retained. He caused to be filed a motion seeking to set aside the default judgment entered on 5 February 2020. That was done on 20 February 2020. The motion was listed for hearing on 18 March 2020. On that same day, Mr Chai contacted the Sutherland Local Court registry, by email, asking that the motion be adjourned to a later date (after 25 March 2020) due to conflicting Court commitments on 18 March 2020.

14. On 24 February 2020, Mr Chai received an email from the court registry advising that he should liaise with the Plaintiff to find a mutually agreed date for the hearing of the motion. Since that date, he was unable to contact the Plaintiff for that purpose, and advised the registry accordingly by email. It came to his attention that the email was not properly sent, due to a technical issue. The motion was listed for 18 March 2020 and was not adjourned but rather was dismissed due to non-appearance by the Defendant. This outcome was communicated directly to the Defendant, who did not understand its significance. As soon as Mr Chai became aware of the dismissal of the motion, he took steps to file a new motion, being the motion I am now determining.

15. I was informed during the parties’ submissions at the hearing of this motion that it is not disputed that the Defendant has an adequate explanation for the default in filing a defence as required. I accept that agreement. It appears from a combination of a lack of understanding of court procedure, together with an unfortunate series of events involving the Defendant’s past and present lawyers, that she cannot be blamed for having failed to file her defence as required.

16. As to whether the Defendant has a bona fide defence, this motion is not the occasion for the Court to adjudicate on the likelihood of success of any defence. Mr Chai gives evidence that, as the Defendant’s solicitor, the Defendant has a defence to the Plaintiff’s claim on the following bases:

1. The quantum claimed is excessive;

2. The Defendant is not indebted to the Plaintiff;

3. The Plaintiff’s goods and services exceed the agreed scope between the parties;

4. The Plaintiff’s goods and services were not of good quality and contrary to Australian Consumer Law standards; and

5. The Defendant has had to pay additional moneys for rectification works associated with the Plaintiff’s services.

17. Mr Chai was not cross-examined on his evidence, and as a solicitor and officer of the Court, I must accept that he has formed a professional opinion that the Defendant may appropriately and legitimately mount a defence to the Plaintiff’s claim on the bases outlined above. Each of the 5 bases outlined above is, in my view, a bona fide defence to the Plaintiff’s claim. Of course whether the defences are ultimately proved to be meritorious is another question. But that question does not arise on the determination of this motion. Accordingly, it is not appropriate, in the circumstances, to deny the Defendant her day in Court and she should be permitted to file and serve her defence within 28 days.

18. I also note that Mr Chai’s evidence is consistent with the general thrust of the defence which the Defendant had originally filed on 1 November 2019. With the greatest of respect to whoever authored that defence, it was obviously not drafted by a lawyer. But it does give the Court some additional comfort that, if properly crafted consistent with Mr Chai’s evidence, a bona fide defence which is capable of being properly and fully understood is on its way.

19. I also note that the Plaintiff has not pointed to any particular unfair prejudice it may suffer in the event the Defendant is afforded a further opportunity to pursue her defence.

20. In these circumstances, the orders sought in the Defendant’s motion should be made.

21. Consistent with the reasons I have given, the orders of the Court are:

1. The default judgment entered in favour of the Plaintiff on 5 February 2020 is set aside.

2. The Defendant is to file and serve her defence to the Plaintiff’s Statement of Claim, and any cross-claim, by 25 June 2020.

3. The costs of the Defendant’s motion are costs in the cause.

Magistrate Scott Nash

Sutherland Local Court

28 May 2020

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Decision last updated: 29 June 2022