Charatsis v Bendigo & Adelaide Bank Ltd - [2015] SASC 131

SUPREME COURT OF SOUTH AUSTRALIA
(Miscellaneous Appeal: Civil)
CHARATSIS v BENDIGO & ADELAIDE BANK LTD
[2015] SASC 131
Judgment of The Honourable Justice Bampton
28 August 2015
PROCEDURE - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE - ACTIONS TO REVIEW OR SET ASIDE JUDGMENT
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - IN GENERAL
Mr Charatsis is the defendant in proceedings instituted by the Bendigo & Adelaide Bank (the Bank) alleging Mr Charatsis defaulted on his obligations to repay a loan – the Bank amended its pleadings to plead the breach of a settlement agreement reached at a settlement conference – the issue of the enforceability of the agreement was referred to trial.
Mr Charatsis applied in December 2013 to vacate the trial listed for 17 March 2014 and deposed to suffering from chronic depression and anxiety – that application was refused by a Master of the District Court – he again asked the Court to vacate the trial in an affidavit filed on 14 March 2014 – he failed to attend at trial on 17 March 2014 and default judgment was entered into in his absence – Mr Charatsis applied to have the default judgment set aside – the trial judge dismissed that application.
Mr Charatsis appeals against the dismissal of his application to set aside a default judgment – whether there is an adequate explanation for the failure to attend Court on 17 March 2014 and a bona fide ground of defence.
Held:
1. The Court erred in finding that Mr Charatsis had not adequately explained why he did not attend the trial on 17 March 2014 and in finding there was no arguable bona fide defence.
2. Appeal allowed.
3. Judgment in default set aside and the matter to proceed to a settlement conference and trial in the District Court at the earliest opportunity.
4. Each party bear their own costs of the default judgment, the application to set aside the default judgment and this appeal.
District Court Civil Rules 2006 (SA) r 234(2), referred to.
Ferragamo v Duffy (Unreported, Supreme Court of South Australia, Debelle J, 31 May 1991); The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, considered.

CHARATSIS v BENDIGO & ADELAIDE BANK LTD
[2015] SASC 131
Miscellaneous Appeal: Civil

BAMPTON J: On 9 December 2013 Mr Charatsis asked a Master of the District Court to vacate the 17 March 2014 trial of the Bendigo & Adelaide Bank Ltd’s (the Bank) claim against him. Mr Charatsis deposed that he was suffering an exacerbation of his depressive illness which was affecting his ability to function. The Master refused the application.
Mr Charatsis became homeless after the breakdown of his 30 year marriage on Christmas Day in 2013. He was reliant on friends for accommodation and on occasions was forced to sleep in his car. He was denied access to his papers that were left in his former matrimonial home which he claimed were necessary to defend the claim.
Mr Charatsis filed an affidavit on 14 March 2014 (the third affidavit), again asking the Court to vacate the trial deposing that he was unable to represent himself. As he did not attend the trial on 17 March 2014, default judgment in the sum of $42,234.51 plus costs was entered against him.
On 17 July 2014, Mr Charatsis filed an application supported by an affidavit sworn 17 July 2014 (the fourth affidavit) to set aside the default judgment. The Judge who had entered the judgment dismissed the application after hearing evidence from Mr Charatsis and submissions from counsel. The Judge said he was not satisfied that Mr Charatsis’ explanations for his non‑attendance, the merits of his case or the prejudice that he would suffer were such that the discretion to set aside judgment should be exercised in his favour.
Mr Charatsis appeals the dismissal of his application to set aside judgment.
Background
The pleadings
The Bank alleged that in December 2008 Mr Charatsis entered into a personal loan agreement in the sum of $35,150.
The Bank alleged that Mr Charatsis defaulted on his obligations under the contract and that the defaults were notified to him by a default notice. As at 2 March 2011, $45,492.51 was due by Mr Charatsis being the principal sum plus interest of 14.1 per cent per annum.
Mellor Olsson acted as solicitors for the Bank until 23 January 2013 when Hudson Lawyers filed a notice of acting
In September 2013, the Bank amended its claim to seek enforcement of a settlement it alleged was entered into with Mr Charatsis on 9 September 2011. The Bank alleged that the terms of the settlement are that Mr Charatsis agreed to a compromise of the Bank’s claim whereby: he would, on 11 October 2011, and monthly thereafter, pay the sum of $330 to the Bank until the claim was fully satisfied; and in the event of default Mr Charatsis would consent to judgment in favour of the Bank. The terms of the compromise are set out in a memorandum of agreement signed by the parties on 9 September 2011.
The Bank’s solicitor, Janelle Wilksch, deposed in her affidavit sworn 23 October 2013 that the Bank reached a resolution with Mr Charatsis at a settlement conference on 9 September 2011. Exhibited to Ms Wilksch’s affidavit is a copy of a handwritten settlement agreement on Mellor Olsson note paper.
In his third defence, Mr Charatsis alleged with respect to the settlement agreement that:
·the Bank agreed to provide a detailed deed of settlement which would, importantly, include provision for Mr Charatsis to remedy any default by virtue of missing a monthly payment;
·a detailed deed of settlement was never provided;
·there was no agreement between the parties on 9 September 2011 as to the payment of interest or legal fees or any other amounts whatsoever; and
·there was an agreement to vary the settlement agreement to include a period of moratorium of monthly payments which was pending a review in June 2013 and that therefore he is not in default.
In his third defence, in respect of the matter as a whole, Mr Charatsis alleged that:
·he was ill and suffering from anxiety and severe depression at the time the default notice was issued;
·the illness affected his ability to earn an income and that he contacted the Bank to seek hardship assistance, which was granted only temporarily, and requested a variation to the contract which he alleges was unreasonably refused, amounting to unconscionable conduct; and
·the hardship provisions of the National Consumer Credit Protection Act 2009 (Cth) (or alternatively the Consumer Credit Code Part 4, Division 3) apply and the time for payment should be extended.
In its reply, the Bank:
·denies that it acted unconscionably, and asserts that it is not subject to the National Consumer Credit Protection Act 2009;
·denies that it agreed to vary the settlement agreement to provide for a moratorium of monthly payments;
·denies that there was an agreement to provide a detailed deed of settlement; and
·pleads that the 9 September 2011 agreement operated as a complete accord and satisfaction of the dispute between it and Mr Charatsis.
The referral to trial
Whilst the proceedings were issued and a settlement conference took place in 2011 it was not until August 2013 that the Bank agitated its claim.
By reference to the Court record, it appears the Bank’s solicitors telephoned and emailed the District Court Master’s chambers on 5 August 2013 and asked that the matter be listed for hearing as Mr Charatsis “had defaulted on his instalment arrangement” with the Bank.
Mr Charatsis appeared in person before a Master on 19 August 2013 at which time the Master ordered the Bank to amend its pleadings to plead a breach of the agreement. The amended statement of claim was filed on 16 September 2013. The third defence was filed 4 November 2013.
On 24 October 2013, the Master referred only the issue of the enforceability of the alleged settlement agreement to trial. The Master directed that the trial be listed with priority and adjourned the matter to 25 November 2013 for further directions.
On 5 November 2013, the matter was listed for trial on 17 March 2014.
Mr Charatsis emailed the Master’s chambers on 21 November 2013 asking that he be permitted to participate in the 25 November directions hearing by telephone as he was “unwell at the moment”.
Mr Charatsis participated in the directions hearing by telephone. The Master ordered that if Mr Charatsis asserted any impediment to signing the certificate of readiness, he was expected to file and serve an application relating to any such impediment by 9 December 2013. The matter was adjourned to a further directions hearing on 17 December 2013.
Mr Charatsis’ applications to vacate the trial
In compliance with the Master’s order, Mr Charatsis made application on 9 December 2013 seeking to vacate the trial and deposing in his second affidavit that he was unable to certify the certificate of readiness as his chronic depression and anxiety had deteriorated to the extent that it was affecting his ability to manage and assimilate information. Mr Charatsis’ application was supported by a letter from his treating psychiatrist, Dr Loukas, dated 27 November 2013. Dr Loukas stated in the letter:
I am Mr Charatsis’ psychiatrist and I verify that he suffers from a depressive illness with accompanying anxiety. His symptoms are aggravated by his stressors which currently are high. He reports poor concentration, poor memory, anxiety, fatigue, amotivation and he needs medication to sleep. Overall he has become more disorganised which has adversely affected his work and level of functioning. It would be appreciated if you took these matters into consideration when reviewing this case.
Mr Charatsis emailed the Court on 5 December 2013 asking whether he could attend the directions hearing on 17 December by telephone “due to continuing ill health”. The Court agreed and on 17 December the Master refused to vacate the trial date saying Mr Charatsis’ affidavit “does not deal with” Mr Charatsis’ condition “as anticipated as at 17.03.2014”. The Master dispensed with the requirement for Mr Charatsis to sign the certificate of readiness.
Mr Charatsis again asked the Court to vacate the trial in his third affidavit filed on 14 March 2014. The affidavit was not served until Sunday 16 March, the evening before trial. In Mr Charatsis’ absence, on the first day of trial default judgment was entered pursuant to r 234(2) of the District Court Civil Rules 2006 (SA). This rule gives the Court the power to enter judgment in default if a defendant fails to attend for trial.
The application to set aside judgment
On 17 July 2014, Mr Charatsis applied for an order that the default judgment be set aside. In the fourth affidavit Mr Charatsis deposed to his marriage breaking down on Christmas Day 2013, his house being subject to a possession order and to having no fixed place of residence from December 2013 to the date of the trial in March 2014.
Mr Charatsis said that his wife denied him access to the papers necessary to properly defend the action, as well as other belongings he had left in the former matrimonial home. Mr Charatsis deposed that in March 2014 he was not equipped to properly attend to the defence of the action at trial.
Mr Charatsis also deposed that at the time of swearing his affidavit he was managing his condition with psychotherapy and medication and, while he was still suffering depression and anxiety, his former home was in the possession of the first mortgagee and he no longer felt overwhelmed by his circumstances.
The hearing of the application to set aside judgment
Mr Charatsis filed a further affidavit sworn 22 October 2014 detailing matters supporting the pleas in his third defence.
Argument on the application to set aside the default judgment was heard on 31 October 2014 and on 13 January 2015, the application was dismissed.
The appeal
Mr Charatsis argued on appeal that the Judge erred in refusing to set aside judgment by:
·finding that there was no reasonable explanation for his non‑appearance on 17 March 2014;
·finding that his defence to the claim was without merit, and in so doing applied an unreasonably high standard;
·erring in his assessment of the prejudice to the respective parties of setting aside default judgment; and
·failing to properly take into account the implications his mental illness had on his ability to manage the proceedings and the consequences of his non-appearance.
In determining this matter, I need to consider whether there is an adequate explanation for the failure to attend court on 17 March 2014 and a bona fide ground of defence.
As the decision under appeal involved an exercise of a discretion, for the appeal to succeed I must be satisfied not only that I would have exercised the discretion differently but that the Judge fell into error.
Explanation for non-attendance at trial
It was submitted by counsel for Mr Charatsis that he was incapable of representing himself in court on 17 March 2014 due to severe depression and anxiety.
In his reasons the Judge stated that he might have been persuaded to adjourn the trial if Mr Charatsis had appeared and sought an adjournment on the basis of his psychiatric condition but said it was by no means certain he would have done so.[1] The Judge did not accept that Mr Charatsis’ psychiatric illness was a sufficient explanation for his non-attendance.
[1] Bendigo & Adelaide Bank Ltd v Charatsis [2015] SADC 1 at [26].
It was submitted that the Judge fell into error by not finding that Mr Charatsis had a reasonable explanation for non-attendance at trial in circumstances where:
·Mr Charatsis was incapacitated due to mental illness;
·Mr Charatsis had attempted to vacate the trial several months before the listed trial date due to the same incapacity; and
·Immediately before trial Mr Charatsis had ensured that material was put before the Court explaining his absence on the first day of trial.
It was submitted that Mr Charatsis by filing and serving the third affidavit did everything that could reasonably be expected of him to give the Court notice of his difficulties. Mr Charatsis exhibited a letter from Dr Loukas dated 14 March 2014 to his affidavit. Dr Loukas stated:
I am Mr Charatsis’ psychiatrist and I verily [believe] that he suffers from a depressive illness with accompanying high anxiety. His symptoms are aggravated by his stressors which currently are high. At this stage he is incapacitated from working and in representing himself in Court and his symptoms have led to him having a low level of functioning in most areas of his life. It would be appreciated if the Court took these matters into account when considering his case.
At the hearing of his application to set aside judgment Mr Charatsis was cross-examined by the Bank’s counsel about his reason for non attendance. In particular, he was questioned about the fact he had attended the District Court on Thursday 13 March 2014.
Mr Charatsis attended court on 13 March 2014 before another District Court Judge in action no. 263 of 2014 seeking removal of a caveat on his house lodged by another financier. It would appear from the following excerpt from the transcript of Mr Charatsis’ evidence on 13 October 2014 that the Bank’s counsel was in court as an observer when Mr Charatsis told the Court on 13 March 2014 that he would not be pursuing his application to remove the caveat for personal reasons:[2]
The previous day I turned up to court and let the matter go. I left a caveat that shouldn’t have been on my property that’s now the subject of me being plaintiff in proceedings that I let go. That wasn’t representing myself. I just let it go. I should have contested it that day but I wasn’t up to it and I let that matter go. You were in the body of the court and you heard me say that. For personal reasons I can’t find this matter.
I assume this last sentence should read, “You were in the body of the court and you heard me say that for personal reasons I can’t fight this matter”.
[2] T26-27, 31 October 2014.
Mr Charatsis also gave evidence that his “only explanation” for not attending on 17 March 2014 “is that my life, again it’s an explanation it’s not an excuse, it was just a total disaster, just total overwhelming disaster”.[3]
[3] T30.
Mr Charatsis filed the third affidavit in the District Court on Friday 14 March 2014. He then failed to attend at trial on Monday 17 March 2014. No attempts were made to contact Mr Charatsis when he did not attend other than calling his name outside of the courtroom.
Ten days after the default judgment was entered, Mr Charatsis phoned the District Court Registry and was told of the default judgment. Upon receiving the bankruptcy notice, served on 4 July 2014, Mr Charatsis made application on 17 July 2014 to set aside judgment.
Counsel for the Bank argued that the Judge properly considered the nature and circumstances of the failure of Mr Charatsis to attend at trial. In particular, he considered the third affidavit filed by Mr Charatsis as supporting a proposed application by Mr Charatsis to adjourn the trial.
It was submitted that the evidence filed on behalf of Mr Charatsis was not that he was unable to attend Court, but that he was unable to present his case. He did not explain his failure to attend Court and make an application for adjournment of the trial based on his condition. It was argued that Mr Charatsis had been able to attend Court on 13 March 2014 before Judge Brebner, and yet was unable to attend court on 17 March.
Mr Charatsis is a solicitor who knows the expectations of a litigant and the possible consequences of a failure to attend at trial. It would appear that he was suffering from a depressive illness which left him unable to represent himself in Court between December 2013 and March 2014. Mr Charatsis deposed that his depressive illness had been deteriorating for some time from around late November 2013.
Mr Charatsis had on two occasions in late 2013 asked to attend hearings before the Master by telephone because he was unwell. On 9 December 2013 and 14 March 2014, he exhibited to his affidavits letters from his treating psychiatrist detailing the condition he suffered.
The fact that Mr Charatsis had attended Court on 13 March 2014 in another personal matter should not be held against him particularly in circumstances where he told the Court on that occasion that he was not going to fight the matter for personal reasons. The next day before filing the third affidavit he consulted his psychiatrist, Dr Loukas. Dr Loukas wrote that he was at that time incapacitated from working and representing himself in Court.
Mr Charatsis had attempted to bring this illness to the attention of the Court in December 2013 when his initial application to vacate the trial was denied. Subsequent to that application, Mr Charatsis’ world appears to have come to a crumbling mess on Christmas Day. He further attempted to give notice to the Court that he was not in a fit state to deal with the trial on the Friday before the trial was listed to begin. No opportunity was given to Mr Charatsis to explain his non-attendance at trial.
In the circumstances where Mr Charatsis:
·was suffering from a depressive illness and anxiety;
·applied to have the trial date vacated in December 2013:
·put further evidence in an affidavit attempting to vacate the trial on 14 March 2014;
·attended at court for another matter 13 March 2014 but did not pursue his application for personal reasons; and
·was given no opportunity to explain his non-attendance at trial and demonstrate a reasonable explanation for his non-attendance,
the Judge erred in finding that he did not have a reasonable explanation for his non-attendance at trial.
Merits of the defence

The question as to the merits of the defence is not whether Mr Charatsis has a strong defence but rather whether Mr Charatsis has a bona fide and plausible defence.
In Ferragamo v Duffy,[4] Debelle J said:
Primary among the considerations is that the defendant is able to demonstrate that prima facie he has a good defence on the merits: Vacuum Oil Co Pty Ltd v Stockdale;[5] Watson v Anderson.[6] Generally speaking, where a defendant has an apparently good defence, he should not be refused the opportunity of defending, even though a lengthy interval of time has elapsed, provided that no irreparable prejudice is thereby done to the plaintiff.
[4] (Unreported, Supreme Court of South Australia, Debelle J, 31 May 1991).
[5] (1942) 42 SR (NSW) 239, 243.
[6] (1976) 13 SASR 329, 334-335.
Mr Charatsis has deposed in his affidavit sworn 22 October 2014 to the defence he intends to pursue at trial. Mr Charatsis claimed that upon entering into the settlement agreement on 9 September 2011 he was told by the Bank’s solicitor that he would be sent, for his review and execution, a deed of settlement containing additional terms. Mr Charatsis claimed that he was told the formal deed of settlement would include provisions permitting him to make up instalment payments which were missed under the settlement agreement for whatever reason, after fair notice was given by the Bank about any missed payment.
Mr Charatsis asserted that he was not provided with the deed of settlement and, as a result, the representations which caused him to sign the handwritten settlement agreement were untrue. Mr Charatsis said that he felt pressured and overborne at the settlement conference. Mr Charatsis maintained that he told the solicitors at the settlement conference that he could only afford repayments of $100 per month. He claimed that he was pressured to accept an obligation to pay $330 per month and simply signed the settlement agreement in order to end a process which was making him feel uncomfortable and more unwell.
Mr Charatsis claimed he asked the Bank’s representatives at the settlement conference to advise him of the total amount of the debt owed. He asserted he was told the total amount of the debt due would be included in the deed of settlement that would be sent to him.
Mr Charatsis contended that the Bank agreed to vary the settlement agreement in or around March 2013 after he made a complaint to the Financial Ombudsman Service (“FOS”). Mr Charatsis deposed that a representative of the Bank phoned him on 28 February 2013. The Bank agreed to a six month moratorium on monthly repayments on the basis of an immediate three month moratorium for March to May 2013 inclusive. Thereafter, Mr Charatsis said he was told the Bank would contact him to assess his situation to see what he could be offered by way of further assistance for a further three months.
Mr Charatsis said that during the phone call from the Bank’s representative he was pressed strongly to abandon his FOS dispute and he did so on the basis of the variation of the settlement agreement agreed to in the telephone conversation. Mr Charatsis alleged that a letter he received from the Bank, dated 21 March 2013, inaccurately records the review that was to be conducted at the conclusion of the moratorium.
Mr Charatsis said that he was contacted in June or July 2013 by National Credit Management Limited (“NCML”) seeking payment of the June 2013 instalment. When Mr Charatsis tried to explain that he had agreed to a good‑faith review process, the NCML representative insisted that the agreement was for three months only and it did not need to assess his situation with a view to further assistance.
The second statement of claim alleges that Mr Charatsis failed to make payments of $330 on 11 March, 11 April and 11 May 2013. Mr Charatsis alleges that these three payments were the subject of a moratorium of payments and he is therefore not in default of those payments.
Mr Charatsis does not dispute he borrowed money from the Bank or that he was, by 2011, in default of the loan. What are in dispute are the alleged agreement entered into on 9 September 2011 and the conversations/discussions that took place between Mr Charatsis and the Bank in 2013. The Bank amended its statement of claim to allege the settlement agreement and it was pleaded into issue by the third defence. It was this discrete issue of the enforceability of the settlement agreement that the Master referred to trial.
The Judge also did not have proper regard to the fact that Mr Charatsis’ defence raises factual issues regarding what was said between him and the Bank’s agents. Further, the Judge did not take into account that the Bank did not depose to or call any evidence to contradict Mr Charatsis’ evidence regarding the discussions. The only affidavit filed by the Bank is of Janelle Wilksch, which simply annexes the signed settlement agreement of 9 September 2011. I note that Ms Wilksch was not present at the settlement conference as the Bank was, at that time, represented by Ms Olsson.
The Judge should have for the purposes of the application accepted Mr Charatsis’ evidence and found he had an arguable defence. Instead, he made a finding which contradicted that evidence.
Likewise with the issue of whether there was a subsequent agreement that Mr Charatsis would withdraw his complaint to the FOS concerning the Bank in exchange for a moratorium of payments and review of his position due to hardship. Mr Charatsis had deposed to this aspect of his defence yet the Judge, without any other evidence, made findings contrary to that evidence.
In addition, there is at least a question of whether the default notice issued by the Bank and now relied upon remains valid, given the events that have transpired since the issuing of that notice, and particularly given the assertion by Mr Charatsis that a settlement deed containing additional terms was to be provided to him. I note that the 9 September 2011 document which has been signed does not expressly reserve the Bank’s rights in relation to the notice of default.
The Judge erred in finding that the 9 September 2011 document was a binding settlement agreement without hearing evidence from Mr Charatsis and the Bank. The issue in dispute on the pleadings is whether the handwritten document dated 9 September 2011 constitutes a complete and binding agreement. The Judge said:[7]
It is significant that the present proceedings are based upon an agreed compromise between the parties. The parties agreed upon a plan for payments and they reduced that agreement to writing at a settlement conference. The defendant … eventually failed to comply with that agreement.
[7] At [31].
As submitted by counsel for Mr Charatsis, the handwritten document, on the face of it, does not exclude the possibility of oral terms or a collateral agreement. Mr Charatsis deposed that the Bank’s legal representatives had orally promised him that a full settlement deed would be prepared which included appropriate hardship provisions that the parties would “sort out” between them. Mr Charatsis said that he signed the settlement agreement after this promise was made to him.
In my view, it is arguable, as submitted on behalf of Mr Charatsis, that the 9 September 2011 document was either an agreement which included a condition (or collateral agreement) that a deed in appropriate terms would be negotiated, or alternatively, that it was not a concluded agreement at all until a deed was prepared and executed.
The Judge found that there was no reason to believe that any detailed settlement deed would have been more favourable to Mr Charatsis and that it was “reasonably clear” any review of his position would not have resulted in more favourable payment terms. These findings are made in the absence of evidence from the Bank. Further, the findings do not have regard to the fact that, on his case, Mr Charatsis has been denied the opportunity of more favourable outcomes.[8]
[8] The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64.
Counsel for the Bank submitted that nowhere in his defence or on appeal does Mr Charatsis deny that the debt is owing. It was submitted that the Judge took Mr Charatsis’ evidence at its highest and gave the benefit of any doubt in respect of that evidence and correctly held that there was no merit in the defence.
In my opinion, the Judge made factual determinations in relation to disputed issues without the hearing of evidence to support those determinations. I am satisfied that Mr Charatsis has an arguable defence.
Delay
Counsel for the Bank pointed out that it was only when Mr Charatsis was served with the Bankruptcy Notice that he took action to set aside the judgment.
Mr Charatsis, in his fourth affidavit, suggested that the delay in making the application to set aside judgment was due to being totally overwhelmed by his circumstances. He deposed to being unable to cope and unable to attend to the matters necessary to defend the Bank’s claim and represent himself. He explained that he, at the time of swearing the affidavit, was managing his condition with psychotherapy and medication and, while he was still suffering depression and anxiety, he no longer felt overwhelmed by his circumstances.
Prejudice
Counsel for Mr Charatsis submitted that the Judge appeared to give limited weight to the question of prejudice. I agree that the Court should have recognised that as a matter of fact Mr Charatsis would have been unable to participate in a trial on 17 March 2014 regardless of whether he attended or not and that a delay in the trial was inevitable.
It was submitted that the Court contradicted itself by not being prepared to have regard to the risk that Mr Charatsis would be bankrupted and be unable to carry on his profession as a solicitor, yet it was prepared to have regard to similar secondary consequences for the Bank, namely a risk that costs orders might prove unrecoverable.
It was submitted on behalf of the Bank that the Judge correctly discounted the “secondary consequences” of a refusal to set aside the judgment. It was contended that it is not open to a Court to deprive the Bank of its rights simply because Mr Charatsis is a solicitor. It was argued that the submission of and evidence to the effect that Mr Charatsis was in no position to even resume payments of $330 per month suggests that he has no assets available to meet any costs order that may be made against him.
The Judge correctly noted that Mr Charatsis and the Bank “would suffer some prejudice in the outcome of the application”. However, in the particular circumstances of this matter where on 17 March 2014:
·the Bank had notice of Mr Charatsis’ mental health issues in December 2013;
·the Bank’s counsel was in Court when Mr Charatsis told Judge Brebner he would not continue his application for personal reasons;
·the third affidavit was served on the Bank (albeit late); and
·Mr Charatsis had an arguable defence;
any prejudice was outweighed by considerations of fairness. Those considerations, in my view, dictated that the judgment should have been set aside allowing Mr Charatsis to defend the proceedings when he was able. Mr Charatsis deposed in the fourth affidavit that he was managing his condition with psychotherapy and medication and was no longer overwhelmed by his circumstances. Accordingly, the matter, once judgment had been set aside, should have been promptly listed for trial to avoid any further delay and possible prejudice.
In the particular circumstances of this matter, a costs order in favour of the Bank is not warranted on the entering of the default judgment, the application to set aside the default judgment, or this appeal.
Conclusion
The Court erred in finding that Mr Charatsis had not adequately explained why he did not attend the trial on 17 March 2014 and in finding there was no arguable bona fide defence.
The delay in making application to set aside judgment was not great and is, in my view, explained by the turmoil Mr Charatsis deposed his life was in at the time.
The fundamental duty of the Court is to do justice between the parties. It follows that the parties should be allowed a proper opportunity to put their cases upon the merits of the matter. I order that the appeal be allowed, that judgment in default be set aside and that the matter proceed to a settlement conference and trial in the District Court at the earliest opportunity.
I order that each party bear their own costs of the default judgment, the application to set aside the default judgment and this appeal.