Citibank Ltd v Fitzgerald
[2001] TASSC 31
•26 March 2001
[2001] TASSC 31
CITATION: Citibank Ltd v Fitzgerald [2001] TASSC 31
PARTIES: CITIBANK LIMITED
v
FITZGERALD, Michael J
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 137/1998
DELIVERED ON: 26 March 2001
DELIVERED AT: Hobart
HEARING DATE: 16 March 2001
JUDGMENT OF: Master Holt
CATCHWORDS:
Procedure - Judgments and orders - Setting aside - Affidavit of merits.
Evans v Bartlam [1937] AC 473; National Mutual Life Association of Australasia Ltd v Century Motors Pty Ltd 64/1984; Perry v St Helen's Land and Construction Co Ltd [1939] 3 All ER 113, referred to.
Aust Dig Procedure [269]
REPRESENTATION:
Counsel:
Applicant: In person
Respondent: C B Adams
Solicitors:
Applicant: In person
Respondent: Page Seager
Judgment Number: [2001] TASSC 31
Number of paragraphs: 10
Serial No 31/2001
File No 137/1998
CITIBANK LIMITED v MICHAEL J FITZGERALD
REASONS FOR JUDGMENT MASTER HOLT
26 March 2001
By application filed 23 February 2001, the applicant ("Mr Fitzgerald") seeks to have judgment entered against him following default of appearance to a writ endorsed for a liquidated demand set aside. The judgment which was entered on behalf of the respondent ("Citibank") on 27 January 1999 is for $9,176.85 plus interest and costs. There was no suggestion that the judgment had been irregularly entered. Citibank concedes that no prejudice would be occasioned by the setting aside of the judgment and although the application was not made until more than two years after the judgment had been entered, no point is taken concerning any delay between the time when the judgment first came to the attention of Mr Fitzgerald and the filing of his application.
The affidavit in support of the application did not explain why an appearance to the writ was not lodged. Without objection from Citibank, Mr Fitzgerald gave evidence from the witness box on this matter. He said that he was aware that failure to lodge an appearance could result in a default judgment being entered against him. He said that he had a solicitor acting for him at the time of service of the writ in relation to a number of other matters and he said that he thought he probably discussed the writ in this action with the solicitor, but has no recollection of doing so. Mr Fitzgerald did not think that he would be able to successfully defend the claim. He said, "I believed that there was no way I could actually fight these people off". In his affidavit, Mr Fitzgerald also said that he had been "unwell". No details concerning Mr Fitzgerald's health were provided. He conceded that the writ was served on 2 February 1998. The judgment was not entered until 27 January 1999. At the time of entry of the judgment, the Rules of the Supreme Court 1965 applied. Order 14, r3(1) provided:
"If a writ is endorsed for [sic] liquidated demand and a defendant fails to appear to the writ, the plaintiff may enter final judgment against the defendant for any sum not exceeding the sum endorsed on the writ ... ."
Accordingly, Mr Fitzgerald could have avoided the default judgment by entering an appearance at any time prior to 27 January 1999. Mr Fitzgerald had a solicitor and all that was needed for him to maintain the status quo, at least for a time to enable informed consideration to be given to whether he would defend the action, was the simple task of lodging a notice of appearance at the Court Registry. I am not persuaded, on the evidence provided, that Mr Fitzgerald's health materially affected his ability to attend to the lodging of an appearance between the time of service of the writ and the entry of judgment. On Mr Fitzgerald's own evidence, the only conclusion which can be drawn is that he decided not to defend the claim, doubting that he would succeed if he did.
If notwithstanding Mr Fitzgerald's earlier decision not to dispute the claim and the judgment is to be set aside, consideration needs to be given to whether any useful purpose would be served by so doing. According to his evidence, Mr Fitzgerald received through the post a brochure from Citibank indicating that it was easy to obtain credit from Citibank. In September 1995, he went to the Hobart office of Citibank and filled out an application form for a Citibank credit card. The application, signed by Mr Fitzgerald, contained information that Mr Fitzgerald was a self-employed builder earning a gross annual income of $60,000. The application form contained an authority for Citibank to discuss Mr Fitzgerald's finances with his accountant, Mr Henry Ryback. A credit card was issued to Mr Fitzgerald, having a credit limit of $10,000. Upon receipt, Mr Fitzgerald drew $5,000 on his line of credit. He said in his affidavit:
"As a consequence of the provision of the equity, the Defendant continued building, not knowing that he was trading into difficulty."
Mr Fitzgerald said, in par11 of his affidavit:
"The defence which the Defendant will lodge if the judgment is set aside is as follows:-
DRAFT DEFENCE
1CITIBANK LIMITED induced the Defendant to get a Gold Card. He wouldn't have taken one if one had not been offered to him.
2CITIBANK LIMITED did not examine the Defendant's ability to pay.
3In and about these negotiations the Plaintiff owed the Defendant the following duties -
a a statutory duty not to engage in unconscionable conduct (Trade Practices Act, s 51 ab [sic])
b a statutory duty not to engage in misleading and deceptive conduct (Trade Practices Act, ss 51a [sic] and 52).
c A statutory duty not to make a false or misleading representation concerning the existence or effect of any condition, warranty, guarantee, right or remedy in connection with the services to be provided by the Plaintiff to the Defendant (Trade Practices Act s 53(g))."
The evidence is as follows:
(i) Mr Fitzgerald was in need of finance to enable him to pay his trade creditors.
(ii)Citibank had represented to Mr Fitzgerald that it was easy to obtain a credit card line of credit.
(iii)Acting on that representation, Mr Fitzgerald on 14 September 1995 applied to Citibank for a credit card.
(iv)In his application he told Citibank that he already had credit cards, being an ANZ Visa credit card and a Westpac Mastercard. He said also that he had a savings account, a cheque account and an investment account. He said his gross annual income was $60,000.
(v) The application was approved and a card with a line of credit of $10,000 was provided.
(vi) Mr Fitzgerald almost immediately obtained $5,000 on the line of credit.
(vii)Mr Fitzgerald carried on his building business unaware, because of the credit that had been provided to him, that he was trading into difficulties.
There was no evidence as to the following matters or by which any of them might be inferred:
(i)That Mr Fitzgerald, at the time he applied for the line of credit, was a person who was not or may not have been able to service his proposed credit obligations.
(ii) That Citibank knew that Mr Fitzgerald was such a person.
(iii)That circumstances existed which should have caused Citibank to make better enquiries about Mr Fitzgerald's financial position.
(iv) That Citibank failed to make proper enquiries as to Mr Fitzgerald's financial position.
(v) That Mr Fitzgerald obtained the credit as a result of being misled or deceived.
(vi) That the deception was a result of the conduct of Citibank.
(vii)That Citibank made representations to Mr Fitzgerald which were false or misleading.
(viii)That Mr Fitzgerald suffered financial loss or other detriment as a result of the furnishing of the line of credit and the payment to him of the sum of $5,000, or as a result of conduct which was unconscionable, misleading or deceptive or as a result of representations which were false or misleading.
Mr Fitzgerald does not dispute the making of the loan nor his failure to repay. To have any prospect of successfully defending the claim, if the matter went to trial, he would need to adduce evidence in support of at least some of the matters which I have mentioned above. If a plea of negligence was to be made and sustained with damages set off against Citibank's claim, a duty of care, its breach, damage and a causative link between the breach and the damage, would all have to be shown. To set off damages or obtain other relief for breaches of the Trade Practices Act, there would have to be evidence of the essential facts constituting the breach or breaches. The materials presented are inadequate to show that there is an issue to be tried.
The Supreme Court Rules 2000 took effect on 1 May 2000. Pursuant to Sch4, the new Rules apply to applications to set aside a judgment entered before the commencement date. The new r355 provides:
"Any judgment by default under these rules may be set aside or varied by the Court or a judge either unconditionally or on any terms the Court or a judge considers appropriate."
As was the case pursuant to the old O14, r10, the discretion confided is a general discretion. In considering the exercise of its discretion, the Court will usually consider whether there is a defence on the merits; the reason for the default; whether the application to set aside the judgment was made promptly; and whether setting the judgment aside would cause prejudice to the plaintiff which could not be adequately compensated for by a suitable award of costs or the giving of security. However, although these matters are the usual considerations, they should not be read as laying down rigid rules which would deprive the Court of the general discretion conferred upon it. Evans v Bartlam [1937] AC 473 at 480, and National Mutual Life Association of Australasia Ltd v Century Motors Pty Ltd 64/1984. For example, the practitioner for a plaintiff might indicate to the defendant that default judgment would not be entered without prior notice and then proceed to enter the judgment without giving the notice promised. In such a case, justice might require the setting aside of the judgment without the court making any enquiry as to the merits of a prospective defence. Usually, however, the court will look to see whether there exists a basis for the court to suppose that the applicant might be able to successfully defend the claim. If no reason for such a supposition is demonstrated to the court, then in most cases it would be expected that the court would see no useful purpose in setting aside the judgment and unless for other reasons justice required a setting aside order, the judgment would be allowed to stand.
Here Mr Fitzgerald has identified some theoretical bases for defending the claim by the credit card provider, but has not supplied evidence of facts sufficient to support his proposed defences. Nor has he provided any material which indicates that he might, if the judgment is set aside, obtain evidence of facts which would constitute a defence.
The situation here is that Mr Fitzgerald allowed the judgment to be entered because he doubted his ability to successfully defend the claim. Unlike, for example, in Perry v St Helens Land and Construction Co Ltd [1939] 3 All ER 113 his belief that Citibank would succeed in the claim was not the result of any mistake induced by Citibank. He made a decision not to defend the claim and now wishes to change his mind, but has put forward no information by which the court could conclude that he might successfully resist the claim. Mr Fitzgerald carries the onus and I am not persuaded that any injustice might result from allowing the judgment to stand.
The application will be dismissed.
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