Chapman v Bellbird Workers Club Limited
[2009] NSWDC 28
•10 February 2009
CITATION: Chapman v Bellbird Workers Club Limited [2009] NSWDC 28 EX TEMPORE JUDGMENT DATE: 10 February 2009 JURISDICTION: Civil JUDGMENT OF: Sidis DCJ DECISION: 1. On the motion filed on behalf of the second defendant, the order made on 20 July 2007 entering verdict and judgment for the first defendant on the plaintiff’s claim is set aside for the limited purpose of allowing the court to determine the cross-claim brought against the first defendant by the second defendant.
2. The motion filed on behalf on the first defendant is dismissed.
3. The second defendant is to pay the first defendant’s cost of both motions.
4. The plaintiff is to pay her own costs of both motions.
5. The affidavits are returned.
6. The hearing date of 12 February 2009 is vacated.
7. The proceedings are listed for status conference on 25 March 2009.
8. Costs occasioned by the adjournment are reserved.CATCHWORDS: Application by second defendant / cross-claimant to set aside orders made on settlement of plaintiff’s claim against the first defendant – Principles to be applied – Loss of rights by cross-claimant – Irremediable prejudices to cross-defendant CASES CITED: James Hardie & Company Pty Limited v Seltsam Pty Limited (1998) 196 CLR 53; Allesch v Maunz (2000) 203 CLR 172 PARTIES: Suzanne Chapman (Plaintiff)
Bellbird Workers Club Limited (First Defendant and Cross Defendant)
Artisan Commerical Tiling Pty Limited (Second Defendant)FILE NUMBER(S): 402/06 COUNSEL: Mr Benson (Plaintiff)
Mr Cummings (First Defendant and Cross Defendant)
Mr Mayberry (Second Defendant)SOLICITORS: Slater and Gordon Lawyers (Plaintiff)
McCabe Terrill Lawyers (First Defendant and Cross Defendant)
Curwoods Lawyers (Second Defendant)
JUDGMENT
1 The plaintiff commenced proceedings by a statement of claim filed on 23 August 2006. The claim related to an accident alleged to have occurred on the first defendant’s premises in 2003. The statement of claim named two defendants, the Bellbird Workers Club Limited as the first defendant and Artisan Tilers Pty Limited as the second defendant.
2 On 24 October 2007 the statement of claim was amended to correct the name of the second defendant to Artisan Tiling Pty Limited. The statement of claim was served on the first defendant on 1 September 2006. The first defendant filed a defence on 22 December 2006. Its defence was served on the second defendant on 5 January 2007.
3 The proceedings came before the registrar in March 2007 and were fixed for arbitration hearing on 20 July 2007. At a further status conference before the registrar in May 2007, the question of the status of the second defendant was raised. On 13 June 2007 the court and the first defendant were told that the plaintiff did not intend to proceed against the second defendant.
4 Terms of settlement of the claim against the first defendant were filed on 20 July 2007. They involved consent orders for verdict and judgment for the defendant and obliged the defendant to pay the plaintiff’s costs agreed in the sum of $20,000. The sum of $16,565.60 was paid to the plaintiff in December 2007, the balance having been paid to Medicare Australia.
5 In August 2007 the statement of claim was served upon the second defendant. On 18 April 2008 the second defendant was given leave to issue a cross-claim against the first defendant. At that time the first defendant was not before the court. In May 2008 the cross-claim was filed. There followed correspondence between the defendants concerning the efficacy of the cross-claim having regard to the decision in James Hardie & Company Pty Limited v Seltsam Pty Limited (1998) 196 CLR 53.
6 The defence to the cross-claim filed on 13 August 2008 did not raise this issue. An amended defence filed on 14 November 2008 pleaded the verdict entered in favour of the first defendant as a complete defence to the cross-claim.
7 There were two applications before the court. The cross-defendant sought dismissal of the cross-claim. The cross-claimant sought to set aside the verdict and judgment entered in favour of the first defendant.
8 The application to set aside that verdict and judgment was made pursuant to Rule 36.16, I assume on the basis that although at the time of entry of the terms of settlement it had not been served with the statement of claim, the second defendant was a party who was not present.
9 I was referred to a number of decisions to assist me in the determination of the issues between the two defendants, most of which dealt with situations where the adversely affected defendant was before the court at the time the plaintiff’s claim against a co-defendant was resolved by court order. They all applied the law as established in Hardie v Seltsam. I found the most relevant of those authorities to be that of Allesch v Maunz (2000) 203 CLR 172. The High Court in that case dealt with the principles to be applied in exercising the discretion to set aside an order made in the absence of a party.
10 General principles set out in that case to be considered by the court when faced with such an application were as follows:
- 1. It is a very basic requirement that a party have the opportunity to be heard before an order adverse to that party’s interest is made and where the party has not been heard the court will ordinarily set aside the judgment, provided the following two principles are met.
2. The party adversely affected must provide an adequate explanation for its absence before the court and an adequate explanation for any delay in the application.
3. The court must consider whether even if judgment were to be set aside no different result was likely to be achieved and whether there would be irremediable injustice to the other party.
11 Applying those principles therefore and dealing with the question of the opportunity to be heard, the current circumstances were that the defendant was not before the court when the consent orders for verdict and judgment for the first defendant were made. That opportunity could only have extended to the question of whether, notwithstanding the consent of the plaintiff and the first defendant, the orders sought should not be made. That opportunity has now been afforded to the second defendant and I can therefore proceed to consider the remaining matters.
12 The second defendant’s absence from the court was easily explained. It was not served. It was pointed out by the first defendant that it did serve a copy of its defence on the second defendant in January 2007 and it was argued that this ought to have alerted the second defendant to the proceedings and to the need to take action. I disagree. The second defendant had not been served with a statement of claim and therefore was not only under no obligation to participate, it had no right to appear or to be heard.
13 As far as delay is concerned, a problem arises because the second defendant was served in August 2007 and the terms entered into between the plaintiff and the first defendant were completed in December 2007 when the monies payable by the first defendant were paid. It was not until April 2008 that the second defendant sought and obtained leave to file the cross-claim. It was argued that this delay put the first defendant in a position where it was significantly prejudiced and that action should have been taken prior to December 2007, when the terms of settlement were finalised.
14 I have noted that the accident occurred in 2003. Experience suggests that time would necessarily be involved on the part of the second defendant and its advisers in investigating the circumstances of the accident and determining whether another party might reasonably bear some liability. I am satisfied that the delay between August 2007 and December 2007 is not such that of itself it should disqualify the second defendant from the relief sought.
15 As far as whether a different outcome would have been the result had the second defendant been before the court, I noted that Dr Cook in his report identified three problems with the tiled ramp from the ladies toilet on which the plaintiff allegedly fell and suffered injury. The slope of the ramp was steep and exceeded current building code requirements. The tiles used were not non slip, as required by current building code requirements. The tiles used were unsuitable for use on the floor generally. The first defendant was the owner and occupier of the premises on which the tiled ramp was situated. The second defendant was the tiler. There was thus a situation where liability as between the defendants would clearly be an issue in deciding the plaintiff’s claim.
16 On the question of irremediable prejudice the first defendant argued that it was prejudiced because it had not been heard on the application for leave to file the cross-claim. I consider the issues likely have been ventilated to be the same as those now before the court, namely, whether in the light of the fully executed terms of settlement leave should be granted. The first defendant has now been provided with the opportunity to be heard on those issues.
17 It was also argued that having complied with the terms and paid the plaintiff, the first defendant was entitled to finality, particularly in circumstances where it took a commercial approach to the claim and finalised it by the payment of money several months before the cross-claim was filed. The first defendant questioned the consequences to the agreed settlement that might follow were the cross-claim to proceed, as to whether it would remain binding on the plaintiff and whether it could recover the money paid to the plaintiff if it were ultimately found not to be liable.
18 These are all valid considerations, particularly having regard to the payment by the first defendant to the plaintiff of money pursuant to the agreed terms. The plaintiff’s advisers informed the court that it was not her intention to abandon the settlement with the first defendant. Thus the first defendant was assured that it will not be exposed to any greater liability to the plaintiff and to that extent, at least so far as the plaintiff is concerned, the first defendant has achieved the finality that it sought.
19 In the absence of the presence of the second defendant before the court at the time the terms were filed the first defendant did not secure for itself a position of finality against a cross-claim. The first defendant claimed that it relied upon the statement by the plaintiff’s representatives that she did not intend to pursue the second defendant, but it not make any provision in its terms to hold the plaintiff to this statement of intention, or to require her to indemnify it in the event that a cross-claim was made upon it by the second defendant. It did not request that the plaintiff seek orders dismissing the proceedings commenced against the second defendant.
20 In Hardie v Seltsam the adversely affected defendant was before the court and did not oppose the entry of terms agreed between the plaintiff and the remaining defendants. It was pointed out by Justices Gummow and Gaudron that the adversely affected defendant had a number of options available to it. They were to participate in negotiations, to argue against the entry of judgment, to seek to defer the entry of judgment, to limit the effect of the judgment on its rights of contribution or indemnity, and finally, if those arguments failed, it retained a right of appeal.
21 In the circumstances of this case the second defendant was deprived of the opportunity to take any of those steps.
22 In the light of the factors that I have considered I was not satisfied that the first defendant was irremediably prejudiced by the cross-claim, but I was persuaded that the justice of the situation required that the relief sought by the second defendant should be granted.
23 Each defendant seeks to have the costs of both motions. The first defendant’s argument is that had it been before the court when the application for leave to file the cross-claim was made then the costs of these motions might well have been avoided. In my view that is a valid argument and in the circumstances the second defendant is to pay the first defendant’s costs of the motions.
ORDERS
24 On the motion filed on behalf of the second defendant, the order made on 20 July 2007 entering verdict and judgment for the first defendant on the plaintiff’s claim is set aside for the limited purpose of allowing the court to determine the cross-claim brought against the first defendant by the second defendant.
25 The motion filed on behalf on the first defendant is dismissed.
26 The second defendant is to pay the first defendant’s cost of both motions.
27 The plaintiff is to pay her own costs of both motions.
28 The affidavits are returned.
29 The hearing date of 12 February 2009 is vacated.
30 The proceedings are listed for status conference on 25 March 2009.
31 Costs occasioned by the adjournment are reserved.
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