CIUPRYK v Thorp - [2001] WADC 274

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: CIUPRYK -v- THORP [2001] WADC 274

CORAM: DEPUTY REGISTRAR HARMAN

HEARD: 18 JULY 2001

DELIVERED : 5 DECEMBER 2001

FILE NO/S: CIV 2901 of 1999

BETWEEN: STEVEN DALE CIUPRYK
Plaintiff
AND
DOUGLAS HENRY ALBERT THORP
Defendant

Catchwords:

Practice - Western Australia - Practice under the Rules of the Supreme Court of Western Australia - Application to set aside default judgment - Judgment entered in default of the defendant filing discovery by the due date - Delay in making application - Delay in proceeding with application

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Plaintiff: Mr T M Hobday
Defendant: Mr G J Archer

Solicitors:

Plaintiff: Lewis Blyth & Hooper
Defendant: Garrick Archer

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Alpine Bulk Transport Co Incorporated v Saudi Eagle Shipping Co Incorporated [1986] 2 LloydsRep 221
Birkett v James (1977) 2 AllER 801
Chesson v Green [2001] WASC 13
Rollond & Anor v Bank of Western Australia, unreported, FCt SCt of WA; Library No 980498; 3 September 1998
Rollond & Anor v Bank of Western Australia, unreported; FCt SCt of WA; Library No 980026; 2 February 1998

DEPUTY REGISTRAR HARMAN: By the application before the court the first defendant seeks to set aside the judgment entered by default on 1 September 2000. It was filed on 6 December 2000.
The default upon which the judgment turned was the applicant's non-compliance with the order of 13 July 2000. That order drew upon the order of 9 June 2000 for sworn discovery in the usual terms. In short the applicant failed to comply with the terms of a springing order.
The application was heard on three occasions commencing in mid July 2001. By that time the judgment creditor had sought to execute upon the judgment. It is significant that at the date of the last hearing the applicant had not complied with the terms of the order for discovery other than to the extent that an unsworn list had been filed shortly after judgment was entered.
At the conclusion of the submissions on 30 August 2001 the applicant submitted that the list could satisfy the order it being the applicant's list of discoverable documents and a Justice of the Peace/Commissioner having endorsed it.
There is no evidence that the list is the defendant's list of discoverable documents accordingly I can make no judgment as the defendant proposes. The list is not endorsed by anyone other than the applicant.
There is no jurisdiction provided by the rules for the court to make either a determination as to the form in which discovery is to be provided or to dispense with the requirement that discovery be sworn. Even if there was some broader jurisdictional basis, there would appear to be no good reason to have resort to it simply to assist the applicant.
Ultimately the applicant undertook to comply with the order of 13 July 2000 no later than 2.30pm on 6 September 2001. I note that sworn discovery was filed by the defendant on 6 September 2001 at 2.24pm. As to service I have not been informed by the defendant that the order has been complied with.
No issue was taken with the regularity of the judgment. In entering judgment the court was satisfied that the defendant had been served with the springing order and that the defendant had not given discovery within the period of seven days from the date of service.
The onus in seeking to set aside the judgement is upon the applicant. The test to be satisfied is whether in all of the circumstances the court ought to set aside the judgment. Consideration is properly given to the delay in bringing the application, the delay in bringing on the application for hearing, the reason for delay, the merits of the substantive evidence and the prejudice to the parties in the event of the success or failure of the application.
It is evident from the file that on 22 August 2000 the court issued to the parties what is known as a case management summons. Case management implements a strategy by which the court imposes time constraints on litigants in bringing on an action for trial. In the absence of an indication that a party has taken a particular step by a predetermined date the court will issue such a summons.
Despite the fact that the party with the primary interest in bringing on the action for trial was in the process of seeking to enforce its entitlement under the rules, the court evidently considered that it still had a managerial role to play. It determined that it would require the parties to attend at the court on 12 September 2000 and upon issuing that requirement, put them on notice that the issue of delay in the provision of discovery would then be considered.
That summons was issued after the date of service of the springing order.
The significance of the above is that the applicant gives evidence that the last document received by him prior to being made aware of the judgment was that summons. It stated that the last date for compliance was 21 August 2000. It went on to provide that:
"On the hearing of this summons the court will make such orders in respect of the said default and give such directions for further management of this action as it shall consider necessary."
In the applicant's affidavit of 5 December 2000 he deposes:
"11.I filed my discovery of documents early 12.9.00, leaving the filing as late as possible in order to try to incorporate an item of central importance, an affidavit from Richard Sydney Thorp, which was not forthcoming until well after this date.
12I then attended the directions hearing 12.9.00 at 2.15 p.m., but was advised that there was no hearing, and that a default summary judgment had been issued 1.9.00."
It would appear to me that at the very least the action taken by the court in issuing the summons was unnecessary. It appears that it may have distracted the defendant.
The period between the date of being advised of the judgment and the date of the application is significant enough to be characterised as a period of delay. There is no explanation for that period of delay. However it is apparent that for some period the defendant may have been waiting for some evidence. Of the three affidavits filed along with the application, those of the other witnesses were sworn on 19 October 2000 and 14 November 2000. The applicant's was sworn on 5 December 2000.
The same can be said for the period between the date of the application and the date of the hearing. Again there is no explanation for that delay.
The first relevant claim of the plaintiff arises from a transaction between the parties for the sale and purchase of a motor vehicle.
In his re-amended statement of claim filed 31 March 2000 the plaintiff pleads as follows:
"3. On or about 3^rd January, 1996, the plaintiff orally sold and delivered, and the first defendant purchased and took delivery of, a Mazda MX5 Coupe motor car registration number 9ES 510, for an agreed price of $28,000 of which the first defendant has paid $10,000 to the plaintiff leaving an unpaid balance due of $18,000.
3A. On or about 3^rd January, 1996, the plaintiff orally agreed to lend the first defendant the said balance of $18,000 repayable on demand."
The defendant's amended defence filed 5 January 2000 responds in the following terms:
"3. As to paragraph 3, save that the defendant agrees that he purchased and took delivery of a Mazda MX5 Coupe motor car registration 9ES 510 ('the vehicle') on or about 3^rd January 1996, the defendant denies that he agreed to pay $10,000.00 to the plaintiff leaving an unpaid balance due of $18,000.
4. The defendant states that he purchased the vehicle on 3^rd January 1996 from the plaintiff at the request of the plaintiff and was done only in order to provide the plaintiff with finance to invest with a third party, and the vehicle purchase was financed by means of a hire purchase agreement through Esanda Finance Corporation Limited ACN 004 346 043 dated 9^th January 1996, contract number 611392162, the proceeds of $28,000.00 which were made available to the plaintiff to the complete and total satisfaction of the plaintiff for the transaction.
5. From the date of purchase of the vehicle until the written demand by the plaintiff 's solicitor dated 21^st June 1999, the plaintiff had not made any demands on the defendant and had not made mention to the defendant of any debt owing on the vehicle to him by the defendant."
The defendant referred to in the amended defence is the only remaining defendant to the action. He filed that pleading himself. The allegations at par 3A of the claim emerged in the process of re-amendment to the statement of claim for which the plaintiff obtained leave on 11 April 2000. The defendant did not file any amended pleading prior to judgement being entered. The time for an amended defence has past accordingly par 3A is deemed admitted.
Ignoring that fact for the present, at par 3 of his defence the defendant denies an allegation not made by the plaintiff of an agreement to pay $10,000. The relevant assertion of the plaintiff is that the first defendant paid $10,000. That is deemed admitted, so too the allegation as to the purchase price being $28,000. The defendant admits that he purchased and took delivery of the vehicle. There is no allegation of the defendant as to the payment of the balance of the purchase price of the vehicle. Arguably if the denial in par 3 of the defence is distributive, there is a denial of either the balance due or the quantum of that balance. However on the admitted case the plaintiff may simply be entitled to $28,000 of which in effect he abandons $10,000.
It may be that on the pleadings the plaintiff would be entitled to judgment.
In my opinion the best that could be said of the defendant's pleading is that it puts the plaintiff to the proof of his case.
Paragraph 4 of the amended defence suggests that there was a particular purpose for the transaction but it is not pleaded as a condition of the agreement. It would appear to be the case that the condition was fulfilled, as the transaction was evidently productive of funds to the extent of $28,000. The significant pleading is that the proceeds of the hire purchase agreement by which the defendant financed the purchase are expressed to have been made available to the plaintiff. On the facts pleaded by the defendant it is reasonable to infer that Esanda made funds available to the defendant for distribution as the defendant directed. There is no pleading as to whom those funds were directed or by whom. The defendant alleges that the plaintiff's interest as vendor was satisfied by the fact that $28,000 was made available to the plaintiff.
On that pleading an issue is raised as to whether any direction was given to the defendant by the plaintiff or to Esanda by the defendant as to the allocation of $28,000. Significantly the defendant does not allege that any part of that $28,000 was paid to the plaintiff or that the plaintiff directed the defendant to advance $28,000 to a third party on his behalf, only the curious pleading that $28,000 was made available to the plaintiff to the satisfaction of the plaintiff.
I am unable to determine what is meant by either of those allegations. Significantly par 4 of the defence does not constitute a denial of par 3 of the claim. It may elaborate upon par 3 of the defence and plead that rather than ever agreeing to pay the plaintiff $10,000 leaving a balance due of $18,000, the total of $28,000 was simply made available to the plaintiff and to his satisfaction.
It is appropriate to reflect upon the relevant evidence in support of the application. The defendant's evidence is recorded in three affidavits. The first is sworn 5 December 2000 in which it is implicit that he purchased the vehicle. He states that there has never been a debt owing in relation to the purchase of the vehicle. That is consistent with the defendant's original defence where he simply denies any unpaid balance. The evidence could only be reconciled with amended defence along the lines that either the whole of the purchase price was paid by the defendant immediately it was due or that it was somehow reconstituted perhaps as the plaintiff contends in par 3A of the claim.
In his second affidavit sworn 17 July 2001 the defendant deposes:
"12. My brother has sworn on affidavit that he is the third party that owes the money to the plaintiff. I had nothing to do with this transaction, in that I did not benefit from it at all. No documentation is available by EITHER the plaintiff or me as no documentation was signed. It was an agreement between my brother and the plaintiff."
Dealing with the first sentence of that paragraph, it is not the case that the defendant's brother Richard Sydney Thorp has said that he owes money to the plaintiff. Richard Thorp merely identifies himself as the third party to whom the defendant refers in his pleading. There is no allegation in the pleading either that the third party received any of the money or that he owes any money to the plaintiff. The other interesting feature of the defendant's evidence is that on the inferences open on the pleading, the defendant had the capacity to allocate the $28,000. Even if he had nothing to do with any relevant transaction between the plaintiff and Richard Thorp he fails to explain what happened to the money.
On the pleading the only clear understanding I have of the transactions is that the defendant has the vehicle for which he agreed to pay the plaintiff $28,000, he has either not paid to the plaintiff or accounted to the plaintiff for $18,000. He was central to the financing arrangement and to the purchase. He had control of the funds in his own capacity as purchaser. He gives no clear evidence but could reasonably be expected to do so. I accept that the defendant may have a poor memory or lack of access to documentation but there is no evidence to that effect.
In her affidavit of 14 November 2000 Tisla Lerani Thorp deposes as follows:
"14. On many occasions over some years subsequent to the sale of his vehicle to the defendant, the plaintiff badgered me to ask the defendant to ask the defendant's brother, Richard Sydney Thorp, about the $18,000 he had loaned the latter from the proceeds."
The loan is evidently not the loan to which the plaintiff refers at par 3A of the re-amended statement of claim. That was a loan by the plaintiff to the defendant.
That evidence suggests that the plaintiff had advanced funds to the defendant's brother, which is arguably also the import of the defence. The significance of the evidence in the present context is that it creates some doubt in relation to the plaintiff's case. Yet it does not meet the significant gap in the defendant's evidence in relation to the transaction. The defendant was the primary actor. Either he was possessed of the amount of $28,000 or he had the capacity to direct payment of that fund. He has failed to identify with what the plaintiff was satisfied or provide evidence of what directions he received from the plaintiff and what he did with the fund.
To this point I have canvassed the application as it was presented on 18 July 2001. On that date the applicant completed his submissions and the hearing was adjourned to enable the plaintiff to respond.
Prior to the hearing on 30 August 2001 the applicant filed an affidavit sworn 29 August 2001, which provides as follows:
"4.I purchased a Mazda MX5 Coupe registration number 9ES 510 ('the vehicle') on or about 3 January 1996 from Esanda Finance Corporation.
5.The plaintiff sold the vehicle to Esanda Finance Corporation. Attached to this affidavit and marked 'DHAT 1' is a true copy of the invoice from the plaintiff to Esanda Finance Corporation. The signature on the invoice is that of the plaintiff.
6.Esanda Finance Corporation paid the plaintiff $28,000 for the vehicle. I personally saw the cheque made out for $28,000 in favour of the plaintiff.
7.The plaintiff wanted to lend $18,000 to my brother for some share deal, and I was never made aware of the details of this by either the plaintiff or my brother. I agreed to assist the plaintiff by banking the Esanda cheque through my business account, and gave a cheque for $10,000 to the plaintiff on the plaintiff's direction, and then cheques totalling $18,000 to others on the plaintiff's direction and as required by my brother.
8.I did not borrow any of these proceeds from either the plaintiff or my brother. I purchased the vehicle only to assist the plaintiff in the deal he wished to complete with my brother. Indeed I very rarely used the vehicle after it was purchased. The plaintiff requested me at the time of the transfer not to allow my brother to use the vehicle until the plaintiff had received a record of the transaction between him and my brother. In keeping with that request, I did not allow my brother to use the vehicle until late July 1999, from which date I allowed my brother to use the vehicle exclusively.
9.Prior to the commencement of this action the plaintiff had never spoken of or discussed or demanded any debt owing by me to him for the transfer of this vehicle."
I appreciate that the transaction occurred some time ago and that may explain the difference between the defendant's pleading and that evidence in relation to the sale and purchase of the vehicle. It is implicit that the defendant would wish to amend the defence as to the admission that he was the purchaser of the vehicle. It is also implicit that the defendant recognises that the accuracy of his memory is less satisfactory than the contemporaneous record of the purchase by Esanda. None of those considerations explain why it is that the defendant did not previously give evidence in relation to the transaction of the cheque through his account.
The significant features of the evidence are that $10,000 was paid by the defendant to the plaintiff and that a direction was given by the plaintiff to the defendant in relation to the balance.
There is no evidence of what it was that the defendant considered to be the direction. There is no evidence of how it was that the defendant considered that he had complied with any such direction.
I do not know whether the evidence of the defendant at par 12 of his affidavit of 17 July 2001, that no document was signed relates to the purchase of the vehicle or the broader transaction. On checking through the defendant's discovery filed subsequent to the last hearing of the application no relevant cheque is identified. In my opinion it is curious that the defendant in his affidavit of 29 August 2001 refers to what must be a minimum of four cheques, yet eight days later deposed in the terms required for discovery and evidently fails to disclose them.
It is appropriate to presume that the plaintiff's case is as it is pleaded and that he is able to bring some evidence in support of each of the allegations of material fact. As to the application, on an analysis of the merits of the defence I am not satisfied that the defendant has discharged the onus. Despite the largely negative results of the analysis, if even at the last affidavit the defendant had been prepared to provide some evidence rather than simply a conclusion as to the direction of the plaintiff the result may have been different. Whilst I have some reservations as to the plaintiff's case those reservations are not sufficient to provide a basis to disturb the judgment even though that the judgment was obtained by default.
The next claim of the plaintiff is expressed as follows:
"4.From prior to May, 1996, until April, 1999, the plaintiff was employed by the first defendant in the said business or alternatively by the first defendant until 27 August, 1998, and thereafter by the second defendant.
5.Between 30^th November, 1996, and 10^th May, 1997, the first defendant delivered to the plaintiff the 22 banker's cheques for $500.00 each, in a total value of $11,000.00, payable to the plaintiff, particulars of which are set out in schedule 'A' annexed hereto, each cheque being one week's wages net of tax due by the first defendant to the plaintiff payable on the date of each of the said cheques.
6.At the express oral request of the first defendant the plaintiff deferred banking the said cheques in order to accommodate the first defendant and in or about mid-1997 at the express oral request of the first defendant the plaintiff delivered up the said cheques to the first defendant who represented that the accounts on which the said cheques were drawn had been closed, undertook to deliver to the plaintiff a fresh and available cheque for the said sum of $11,000.00 but has not done so."

In the schedule the plaintiff identifies the cheques by date and number.
In the defence filed 22 October 1999 the defendant denied each of the relevant paragraphs.
In the amended defence the defendant pleads as follows:
"6.The defendant admits paragraph 4.
7.The defendant admits paragraph 5, except that he denies that each cheque of $500.00 was of one week's wages net of tax due by the defendant to the plaintiff payable on the date of each of the said 'wages' cheques, and states:
(a)that only a lesser part of the gross amount paid to the plaintiff was for wages earned at his employment with the defendant; and
(b)that the larger part of the gross amount paid to the plaintiff was for payment towards the defendant's account with the plaintiff; and
(c)that the income tax paid to the Australian Taxation Office on the gross amount paid to the plaintiff was paid on the plaintiff's behalf, and partly contributed further as payment towards the defendant's account with the plaintiff; and
(d)that this means repayment of borrowings was as requested by the plaintiff in 1995; and
(e)the plaintiff requested the repayments be taxed and summarised as income; and
(f)the 'wages' cheques banked by the plaintiff are summarised in attached schedule 1.
8.The defendant admits paragraph 6, except that he denies that he undertook to ever deliver to the plaintiff a fresh and available cheque for the sum of $11,000, and states that he had requested the plaintiff to bank no more cheques through the business account which was being closed, but that despite this request the plaintiff then attempted to bank two cheques on that account, causing both to be dishonoured by the bank."
The claim is for the value of the cheques. The defendant admits that he provided the cheques and requested that presentation be deferred. He later represented that the account upon which they were drawn had been closed. The cheques were returned to him. The fact that the plaintiff attempted to bank two cheques appears to be of no consequence.
The defendant's allegations at par 7 are confusing as he pleads payment without providing particulars of the manner of payment or the date of payment He admits that he has the cheques and has not provided a fresh cheque.
As the pleading is in response to the claim, the parties agree that at least part of the value of the cheques were for wages, those wages appear to have been regularly provided and the dates of the cheques in the plaintiff's schedule correspond with what may be considered to be voids in the defendant's schedule I accept that the defendant's intention may have been to plead the allegations in relation to both presented and non-presented cheques. Why he pleads in relation to payments made eludes me. Ultimately the significance of the non-presented cheques is only their value. The plaintiff claims that he is entitled to their full value as wages, the defendant's case appears to be that he was not.
It is a fair judgment that the detail in the defendant's schedule may reflect the allegations in par 7. On that basis a cheque for $500 would reflect a gross weekly income for the plaintiff of $138.25, and the balance, taking into account an unusual tax adjustment would represent a repayment of borrowings to the plaintiff such as to reduce the outstanding borrowings by $522.95. However there is no pleading that for example the plaintiff's wage component was $138.25.
Furthermore to the extent that the relevant cheques represent wages, on the defendant's pleading as a whole the plaintiff has not yet been paid, has a judgment and there is no defence.
It is a matter of considering whether the applicant provides any useful evidence which would establish a meritorious defence such that it would sufficiently question the judgment.
In his affidavit of 17 July 2001 the defendant deposes in relation to the relevant parts of the claim as follows:
"15.On the plaintiff's case, the plaintiff was paid $661.20 gross for 6.5 hours work on a Saturday and three hours on a Sunday, when the award wage would be approximately $120."
That evidence would suggest that the plaintiff was employed to a limited extent. The defendant seeks to portray that the plaintiff's case is that he only worked 9.5 hours per week. That is not the plaintiff's case and he gives no such evidence. Any conclusion which may be open on that paragraph is unsupported.
The defendant's evidence continues:
"16.The plaintiff was only ever paid superannuation on the real amount of his wage ($120). This was for 5 years that the superannuation was paid at the consistent rate on a consistent amount."
Again there is no evidence of the value of the plaintiff's entitlement or the value of any actual payment. The flavour of the defendant's case would appear to be that at the relevant times the plaintiff was only employed part time for a few hours each week. Support for that case was drawn from affidavits of the defendant's employees.
In his affidavit of 28 August 2001 Terence Michael Reddy deposes that the plaintiff did not work in a full-time capacity in the period between March 1994 and the present. In her affidavit of the same date Tisla Lerani Thorp gives similar evidence for the period October 1993 to June 1998. The evidence of those witnesses is of no utility without an understanding of what they mean by the term "full time capacity".
Coralie Faye Hayles gives evidence that she was the defendant's accounts clerk. At par 5 of her affidavit of 28 August 2001 she deposes: -
"I was aware that the plaintiff had some financial arrangements with the Defendant and the Defendant's business, but I was not aware of all the details. As the accounts clerk I regularly made out the cheques to the Plaintiff, and I was well aware that only part of most of the payments made to him was for wages."
Whether the deponent is referring to the particular cheques to which the plaintiff refers in the claim or to which the defendant refers in his defence I do not know.
Tisla Lerani Thorp in her affidavit of 14 November 2000 deposes as follows:
"17I am aware that the defendant had arranged to make payments to the plaintiff of $500 per week net after tax, from late 1995, at the plaintiff's request, being partly for wages for the plaintiff's weekend work, but mostly for repayment of cash lendings the plaintiff had been making and was continuing to make to Valhalla Games and Hobbies."
Significantly the defendant who presumably could give a full appraisal of the arrangements between the parties has chosen not to do so. As to my presumption, the defendant admits the plaintiff's employment; accordingly he could be expected to maintain not only tax records but also wages records. It is two years since the date of commencement of the action and more than six months since the application was made. The defendant makes no reference to the non-existence of such records or to any difficulty he may have in locating them. It is fair to say that the defendant does not give discovery of such records.
Although I am not particularly interested in the plaintiff's evidence, I note that the plaintiff has annexed to his affidavit of 18 July 2001 copies of what he contends are his group certificates signed by the defendant for the years 1996, 1997 and 1998. Those certificates would disclose what is described as gross salary, wage, bonus, etc in the first case as $27,000, the second $33,739 and the third $21,318. Those certificates would tend to suggest that the defendant employed the plaintiff during the period covered by the cheques in issue on the statement of claim (30 November 1996 to 10 May 1997) on a significant income. The defendant does not give discovery of those group certificates.
Before I determine the result of the application in relation to this part of the judgment I will take the opportunity to comment upon the defendant's case to the extent that he refers to the running account.
The cheques were returned to the defendant in mid 1997. According to the version of the account presented by the plaintiff's pleading, at no time during that year was the balance owed by the defendant to the plaintiff less than $14,000.00. At par 10 of his affidavit of 29 August 2001 the defendant gives evidence which generally accords with par 8 of the defence. The defendant concedes that part of each cheque was for wages. It is curious that at a time when the plaintiff was in possession of 22 cheques valued at $11,000.00 and at a time when the plaintiff was owed at least $14,000.00 on that account, he would simply hand back the cheques with no apparent consideration even to the wage component for which the defendant contends.
I accept that the arrangement between the parties in relation to the subject cheques is unusual. It is apparent that the failure of the defendant to deliver on the undertaking pleaded by the plaintiff may have had no immediate impact on the relationship between the parties. None the less in my opinion it is significant that the defendant gives no evidence as to the context in which the cheques were returned to him.
The defendant does give evidence of an unusual feature of the plaintiff's employment in his affidavit of 17 July 2001where he deposes:
"14.The Plaintiff specifically asked me to run his business accounts through the book together with his wages so that he would pay more tax up front. I thought this a very unusual request but I contacted the ATO who informed me that it could be done but is usually separated into a 'taxed' amount and an 'untaxed' amount. In conversations with the Plaintiff I learnt (sic) that he earned significant amount cash moneys (sic) for conducting some sort of testing (without protective equipment) for his father's company. Although I viewed this as unusual and perhaps even illegal, I chose not to delve or get in any way involved in this part of the plaintiff's life. I made sure with the ATO that whatever I did was perfectly legal."
On a review of the pleadings and of the relevant evidence it is clear that at best there is the hint of a case that somehow the plaintiff has received a benefit from the defendant either in the form of an advance by the defendant to the plaintiff via the Australian Taxation Office or by way of credit to the running account between the parties in relation to their "business activities" or both.
It is relatively easy to apprehend that the plaintiff may receive the benefit of additional tax paid by the defendant in relation to unearned income.
I have difficulty in understanding how the plaintiff could actually derive any benefit from an arrangement which culminated in the provision to him and presumably the Commissioner of a group certificate in which the quantum of deductions reflect the tax due on income shown in the certificate.
I do not suggest that the arrangement between the parties has to make sense. Yet I fail to see that any accounting entry in the form of a credit to the running account would confer any benefit upon the plaintiff until it was matched by an actual receipt. I can only see a benefit to the Commissioner.
The important consideration for the purposes of the application is that there is no utility to the setting aside of a default judgment unless there is some purpose to be served in having a trial. The onus is wholly upon the applicant. At best the applicant only hints at a case. As was the case in relation to the part of the claim that relates to the value of the motor vehicle I am cognisant of the fact that to allow judgment to remain on foot may amount to a considerable injustice to the defendant however upon the case which the defendant puts forward I can find no justification to exercise jurisdiction to set aside the judgment in relation to that part of the claim which relates to the undertaking of the defendant to provide the plaintiff with a fresh cheque for $11,000. The defendant has not made out a defence on the merits. Principally there is no evidence that the plaintiff was employed during the relevant period at an income of less than $500.00 net per week. There is no useful evidence which would suggest that he was employed for significantly less than on a full time basis.
The next part of the plaintiff's case is pleaded as follows:
"7.The plaintiff duly worked for the first defendant during each of the weeks ended:
7.115 February, 1997;
7.220 September, 1997;
7.327 September, 1997;
7.48 November, 1998;
and thereupon became entitled to wages of $500 net of tax in respect of each week but the defendant has failed, neglected, or refused to pay the same to the plaintiff or any part thereof."
The relevant portion of the amended defence is as follows:
"9.The defendant denies paragraph 7, in that:
(a)The defendant denies that the plaintiff worked for the defendant during the week ended 15 February 1997, the period being accepted as 'leave without pay', and states that it is an error on the part of the plaintiff in claiming to have worked for any of the week ended 15 February 1997.
(b)The defendant made payment to the plaintiff for part-time work for the week ended 20 September 1997 included in cheque number 555579 dated 20 September 1997 for the amount of $500.00, banked 25 September 1997, and states that it is an error on the part of the plaintiff in claiming not to have been paid for the week ended 25 September 1997.
(c)The defendant made payment to the plaintiff for part-time work for the week ended 27 September 1997 included in cheque number 555604 dated 27 September 1997 for the amount of $500.00, banked 1 October 1997, and states that it is an error on the part of the plaintiff in claiming to have not been paid for the week ended 1 October 1997.
(d)The defendant denies that the plaintiff worked for the defendant during the week ended 8 November 1997, the period being accepted as 'leave without pay', and states that it is an error on the part of the plaintiff in claiming to have worked for any of the week ended 8 November 1997."
It is evident that in par 9(d) the defendant may have treated the allegation of the date in par 7.4 of the claim as an error and that any claim of the plaintiff relates to the week ending 8 November 1997. However that is not the plaintiff's case. There is nothing in the evidence or submissions which would indicate that the defendant would seek to amend the pleading. No issue is raised in the action as any entitlement to payment for the week ending 8 November 1998. The defendant is deemed to admit par 7.4 of the claim.
As to par 9(a), the denial appears to be qualified by the allegation of the period being accepted as leave without pay. The use of the word "accepted" is curious. Evidently the proposition was not accepted by the plaintiff upon the issue of the writ. Otherwise I cannot determine who accepted the proposition for which the defendant contends.
As to the balance of par 9 the allegation is that the plaintiff was paid and that the plaintiff is in error.
In his evidence the defendant in his affidavit of 17 July 2001 simply deposes as follows:
"17.The plaintiff either did not work on these occasions or the plaintiff was paid for the work done."
In his affidavit of 29 August 2001 he deposes as follows:
"11.I deny that the plaintiff worked for me during the week ended 15 February 1997 and the week ended 8 November 1997. This time off was leave without pay and the plaintiff is not entitled to any remuneration for it.
12.I paid the plaintiff for working in the week ending 20 September 1997 by cheque #555579 dated 20 September 1997. This cheque was banked on 25 September 1997.
13.I paid the plaintiff for working in the week ending 27 September 1997 by cheque #555604 dated 27 September 1997. This cheque was banked on 1 October 1997."
The obvious point to make is that on this occasion the defendant goes some of the way in the process of providing some useful evidence in support of his defence in order to establish a meritorious defence.
That evidence ought be credible in order to pass the test. The difficulty that I have with par 11 is that the periods were so long ago that it would not be possible for the defendant to recall that the plaintiff had time off at all let alone that it was as "leave without pay". I imagine that the defendant has given the evidence by way of reference to a document, perhaps of a record of wages. Unfortunately the source of the information is not disclosed neither is there any statement of belief in the accuracy of the content of any such document.
In relation to the evidence of the cheques I make the same observations. It is stretching credibility for the defendant to have me accept that he retains independent recollection of the detail provided in his evidence. I presume that the evidence was given upon a review of some paper work. There is no evidence of the nature of that paperwork or of the deponent's belief in the accuracy of its content.
In my opinion the applicant has failed to satisfy the onus in relation to that part of the judgment.
The next part of the plaintiff's case raised on par 8 and par 9 of the plaintiff's pleading is as follows:
"8.By way of payment for wages net of tax, the first defendant delivered to the plaintiff three cheques for $500 each dated 20 December, 1997, 27 December, 1997, and 3 January, 1997 (dated in error 1997 for 1998) but orally requested the plaintiff to defer banking the said cheques for a reasonable period to enable the first defendant to overcome a liquidity difficulty.
9.The three cheques referred to in the preceding paragraph are now stale and the authority of the drawee bank to pay the same has been terminated by operation of ss 3(5) and 89 of the Cheques and Payment Orders Act, with the consequence that the first defendant has failed to pay the said wages."
The defendant pleads:-
"10.The defendant admits par 8, except that he denies the cheques of $500 each were by way of payment only for wages net of tax, in the same manner as described in par 7 above.
11.The defendant admits par 9, except that he denies that he has failed to pay the said wages."
The reference in par 10 to par 7 of the defence does not assist the defendant. I have already considered par 7, it relates to payments made. Here again the plaintiff alleges that no payment was made. There are no particulars to support the proposition that payment was made.
There is no evidence which supports any part of the defendant's pleading.
In my opinion the defendant has failed to satisfy the onus.
The next part of the plaintiff's claim is as follows:
"10.On or about 21 May, 1999, the second defendant represented by one Coralie Hales delivered to the plaintiff a cheque for $500.00 payable to the plaintiff in substitution for a cheque originally drawn by the first defendant in favour of the plaintiff dated 23 November, 1996, as payment for a week's wages due by the first defendant to the plaintiff on 23 November, 1996, which was dishonoured by non-payment, but orally requested the plaintiff not to bank the said replacement cheque until expressly authorised by or on behalf of the second defendant.
11.Neither the first nor the second defendant has given authority to the plaintiff to bank the cheque referred to in the preceding paragraph."
The defendant's response is as follows:
"12.The defendant admits par 10, but denies that Coralie Hales represents the defendant, and denies that the cheque of $500.00 was by way of payment only for wages net of tax, in the same manner as described in par 7 above.
13.The defendant admits par 11, but denies that the onus of giving the authority to bank the cheque was on the defendant, in that the consistent conduct of the parties for more than two years had been the plaintiff would seek authority before banking any cheques."

It would appear that par 13 of the defence relies upon the course of dealing between the parties. As a matter of law the course of conduct between parties may affect the existing relationship between them. None the less, it is evident that whatever relationship existed between these parties has broken down. The plaintiff is in possession of the defendant's cheque which patently is stale. I accept that is not pleaded by the plaintiff, however the defendant has pleaded to the claim and has not suggested that the cheque would be met upon presentation. The defendant has admitted the transaction including the request. He pleads that it is for the plaintiff to seek permission to present the cheque. In my opinion it is appropriate to conclude that if permission was sought that it would be granted.
I could repeat my observations in relation to par 7. Otherwise there is no sufficient pleading of any defence. There is no relevant evidence.
The applicant has not satisfied the onus upon him.
The next part of the plaintiff's claim is as follows:
"12.On or about 10 September, 1996, the plaintiff orally agreed to loan to the first defendant the sum of $1,995.75 repayable on demand, and advanced the said amount in cash to Jerdon Pty Ltd, a creditor of the first defendant.
13.On or about 10 September, 1996, the first defendant altered a cheque payable to Jerdon Pty Ltd (for) $1,995.75 to show the plaintiff as the payee of the said cheque but requested the plaintiff not to bank the same in order to accommodate the first defendant.
14.In or about mid-1997 at the express oral request of the first defendant, the plaintiff returned the said cheque for $1,995.75 to the first defendant who represented that the account on which the said cheque had been drawn had been closed and undertook to deliver to the plaintiff a fresh and available cheque for the said sum of $1,1995.75 (sic). The said loan remains unpaid and the first defendant has not provided a fresh cheque for $1,995.75."
The amended defence is as follows:
"14.The defendant admits paragraph 12, except that he denies that the plaintiff orally agreed to loan the defendant the sum of $1,995.75 repayable on demand, and states that the plaintiff voluntarily paid the said amount in cash to Jerdon Pty Ltd.
15.The defendant admits paragraph 13, except that he denies that he requested the plaintiff not to bank the cheque in order to accommodate the defendant.
16.The defendant admits paragraph 14, except that he denies that he requested the plaintiff to return the said cheque or that he undertook to deliver to the plaintiff a fresh and available cheque or that there was a loan requested from the plaintiff or that any money remains unpaid, other than that the said amount became part of the running account."
It is apparent from the last phrase of par 16 that the defendant would attribute some impact on the relevant transaction on the running account maintained by the parties. That said, on analysis the pleadings demonstrate that the defendant accepts that $1,995.75 was paid by the plaintiff to Jerdon Pty Ltd, a creditor of the first defendant. On the same day the first defendant altered a cheque payable to Jerdon Pty Ltd for $1,995.75 to show the payee as the plaintiff. Some months later the cheque was returned to the defendant by the plaintiff.
Although the defendant denies the payment to Jerdon as being constituted as a loan, as a matter of law the sum paid is payable on demand to the plaintiff. The defendant put the plaintiff in possession of a cheque for that sum. On its terms the defence would suggest that the request not to bank the cheque was to accommodate the defendant. It is open to interpretation that the defendant requested the plaintiff not to bank the cheque. Be that as it may the cheque was not banked and was returned to the defendant. The pleading does not explain how it is that the plaintiff's entitlement to repayment became subsumed by the running account.
The only evidence which bears upon the pleading is that of the defendant at par 23 of his affidavit of 17 July 2001, which is in the following terms:
"The plaintiff paid the cheque of $1,995.75 to the creditor (Jerdon) because he wanted that particular stock in the store. Over time these amounts were more than repaid upon my accounting of the situation."
The "accounting" is presumably a reference to the running account which is Schedule 3 to the amended defence. The first entry dated 9 September 1996 is expressed as a debt of $1,995.75 and the detail accompanying that entry on 10 September 1996 is expressed as "Jerdon".
I accept that the defendant has sought to portray that entry in the Schedule as an integral part of the running account however the schedule is not the running account in the sense that it is a journal upon which entries have been made by one or other or both of the parties. There is no evidence in relation to operation of the running account. The detail in relation to the subject cheque may simply appear in Schedule 3 on the basis that the schedule is a reconstruction based upon detail that the defendant has drawn from one or various sources. It is conceivable that the source in relation to the particular entry is the statement of claim.
It is significant that the parties agree that the return of the cheque occurred in mid 1997 yet the entry in the schedule is dated 9.10.96 at which time the defendant would have it that the plaintiff had both a credit and the cheque the presentation of which by the plaintiff on one interpretation may have been unconstrained.
If it was the case that upon the return of the cheque the value of the cheque was to be incorporated into the account I would have expected a pleading to that effect and some evidence. There is none.
In my opinion the defendant has not satisfied the onus.
The next part of the plaintiff's claim is as follows:
"15.During the period between 3 August, 1996, and 30 May, 1998, the plaintiff delivered goods or money to the first defendant or to third parties on behalf of the first defendant, at the express oral request of the first defendant to the total value of $27,404.88 and received in payment from or on behalf of the first defendant amounts totalling $10,880.00 leaving a balance due and payable by the first defendant of $16,524.88.
16.During the period between 9 September, 1998, and 20 February, 1999, the plaintiff delivered goods or money to the second defendant or to third parties on behalf of the second defendant, at the express oral request of the second defendant to a total value of $925.00 and received in payment from or on behalf of the second defendant amounts totalling $950.00. The plaintiff hereby sets off the said excess of $25.00 against the liability of the first defendant to the plaintiff the said payment having been made by the second defendant in reduction of the liability of the first defendant.
17.The effect of the said payment by the second defendant referred to in the preceding paragraph is to reduce the indebtedness of the first defendant to the plaintiff in respect of the said supply of goods and monies to $16,499.89.
18.The said transactions which occurred between the plaintiff and the first and second defendant between 3 August, 1996, and 30 May, 1998, and between 9 September, 1998, and 20 February, 1999, are particularised in Schedule 'B' annexed hereto."
In his amended defence the defendant pleads as follows:
"17.The defendant admits paragraph 15, except that he denies that goods or money delivered by the plaintiff to him were done at his express oral request, that the total balance due and payable by him to the defendant on the 'running account' over the period 3 August 1996 to 20 February 1999 amounts to $5,095.63 and states that any goods or money delivered by the plaintiff to him were delivered voluntarily by the plaintiff, often without prior knowledge of the defendant.
18.The defendant admits paragraph 16 except that he denies that goods or money delivered by the plaintiff to him were done at his express oral request, that the total balance due and payable by him to the plaintiff on the 'running account' over the period 3 August 1996 to 20 February 1999 amounts to $5,095.63 and states that any goods or money delivered by the plaintiff to him were delivered voluntarily by the plaintiff, often without the prior knowledge of the defendant and the defendant rejects the plaintiff setting off the alleged excess of $25.00 against any alleged liability of the defendant.
19.The defendant denies paragraph 17 as to their being any indebtedness to the plaintiff.
20.As to paragraph 18, the defendant denies the completeness of the particulars of transactions as in the plaintiff's Schedule B."
It is difficult to know what to make of par 17 and par 18 of the defence. The denial of the express oral request would appear to be of no consequence as the benefit of the transactions is admitted. As to quantum it would appear that the defendant has chosen to reframe each of the plaintiff's allegations and deny those allegations. In so doing he has not responded to each of the plaintiff's allegations and is deemed to admit. It may be that the defendant intended rather to make a positive allegation that for the period pleaded the balance due to the plaintiff was $5095.63. I do not know whether that was his intention. I also do not know what to make of the fact that the allegation appears to be repeated. It is also difficult to determine what to make of the defendant's rejection of the plaintiff's set-off although I suppose conceivably the defendant would deny the payments totalling $950.00.
Before I leave the pleadings there is no indication as to how the defendant arrives at either the figure of $5,095.63 or double that figure. They do not emerge from any analysis of the Schedules attached to that pleading. In particular, Schedule 3 which is expressed to be "Debts and cash payments additional to those shown by (the plaintiff)", (presumably in the schedule to the statement of claim) together with the plaintiff's schedule does not reflect that sum. Although I have not reproduced the relevant evidence as to quantum to this point it is my conclusion that the evidence does not support that aspect of the defendant's pleading at all.
In the evidence the defendant deposes in his affidavit of 5 December 2000 as follows:
"4.I deny any debt owing by me to the plaintiff of money loaned to my business for the purchase of stock, and I believe the plaintiff's claim is based on his shoddy and deficient bookwork, and I refer to paragraphs 14 to 20 of the amended defence.
5.I claim that the plaintiff owes me $11,504.25 as additional net payment and as set-off against the claim of money by the plaintiff for loans to my business for the purchase of stock."
As I have just noted, the first point to make in relation to the evidence is that it is inconsistent with the pleading. The inconsistency goes beyond what could be characterised as an obvious mis-statement to the extent that it is impossible to reconcile the evidence with the pleading.
I accept that the affidavit being more recent and the defendant having had more time to devote to the case it may be appropriate to consider that the evidence is the better source of information and in any event, the information is provided in the form of evidence. Further, that an application to set aside default judgment ought be determined upon evidence rather than a pleading. However the pleadings determine the issues which are live in the action and whilst there is scope for a party to give evidence as to inaccuracies in an earlier pleading it is not the case that the defendant offers any qualification of the allegations and importantly, concessions made in his amended defence.
In the circumstances it is appropriate that I treat the concession made in the pleading as an admission to the extent of the admission and recognise that on the evidence the defendant presents an unsubstantiated set-off and a counterclaim which would extinguish the liability arising on the admission.
It is also appropriate to record that although the defendant characterises the plaintiff's accounting as being shoddy and deficient, it is some time since the affidavit was filed, the defendant has since filed 3 affidavits and there is no hint in those affidavits that he faults any entry of the plaintiff in the plaintiff's version of the running account. If the criticism was intended to refer to omission, the closest the defendant comes to evidence in support of that conclusion is as to overpayments canvassed in his affidavit of 17 July 2001 in which he deposes as follows:
"18.From 1995 to 1999, a period of 5 years, the plaintiff managed various aspects of my store, and I gave him great leeway in doing so. The plaintiff also had a quasi-ownership of the store, and both he and I viewed our common goal as growing the store. Indeed it was said to me by my family that he was like the son I never had.
19.Throughout the 5 years the plaintiff would invest in the business, whether it be in stock or merely paying trade creditors. He was never asked to do this, but always did so on his own volition and initiative. He would get repaid over time through the business. This is the 'running account' referred to by both parties.
20.The plaintiff was in charge, amongst other things, of ordering and monitoring the repayments to himself for the investment he had made in the business. Indeed both our business and personal relationships started to deteriorate when I queried him in early 1998 about the payments made to him. It seemed to me at that time that there were some overpayments. When I did notice this, I started noticing stock going missing from the store. Ultimately these issues caused our relationship to break down and I revoked his access to the store (he previously having keys and full unsupervised after hour access to the store) in February 1999.
21.Our relationship did not recover, and the plaintiff left my employ in May 1999.
22.After the plaintiff left I though (sic) he might owe me some small amount of money in overpayment of the running account. I did not know the actual size of the overpayments until after the plaintiff commenced this action against me when I conducted my own accounting of the situation. After conducting my accounting, it seems to me that the plaintiff has overpaid himself through my business over $11,000. I did not notice this amount as the payments were always small (between $100-$200) and over a long period (5 years). When I say he paid himself, he had the authority to tell my accounts clerk to write and sign cheques, including four cheques to himself, and he has done so for these overpayments.
23.The plaintiff paid the cheque of $1,995.75 to the creditor (Jerdon) because he wanted that particular stock in the store. Over time these amounts were more than repaid upon my accounting of the situation."
The defendant in his affidavit of 29 August 2001 may give some precision to the reference to overpayment as follows:
"14.Attached to this affidavit and marked 'DHAT2' are schedules of cheques banked by the plaintiff, including a calculation of the amount paid to the 'running account' in the column headed 'credited to account'.
15.Attached to this affidavit and marked 'DHAT3' is a schedule calculating the balance owing under the 'running account'."
But for one entry, between December 1995 and May 1999 "DHAT2" reveals a series of payments banked by the plaintiff by way of reference to the date of a payment, the amount of that payment, the tax paid (presumably to the Australian Taxation Office by the defendant in relation to the payment banked by the plaintiff) the gross wages due for the relevant period and the amount credited to "account". In each case but one, the cheque amount is expressed as $500.00, the tax paid $161.20, the "gross payment" of $661.20, the "gross wages due" of $138.25 leaving a credit of $522.95.
Between July 1996 and March 1998 the schedule varies to reflect the fact that the tax paid (again presumably to the Australian Taxation Office by the defendant in relation to the payment banked by the plaintiff) exceeded the gross sum due to the plaintiff, the difference being credited to "account". In each case, the gross due to the plaintiff was $138.25, the tax paid $161,20 and the credit $22.95.
"DHAT 3" is headed "debts and cash payments additional to those shown by S. Ciupryk". The reference in the heading is presumably to the schedule to the plaintiff's statement of claim. There are a number of transactions on that statement in relation to which the first is evidently the debit arising as a consequence of the payment by the plaintiff to Jerdon Pty Ltd of $1,995.75 the total of which debits amount to $2,796.75. The payments and other credits itemised in the schedule total $14,301.00.
One component of the asserted overpayment-and thereby, omission- appears to be comprised by the value of 4 cheques. They are not identified in any manner at all. Significantly all of the transactions in the plaintiff's schedule are either recorded as cash or purchase, evidently by the plaintiff from third parties. Equally the defendant's relevant schedule, (DHAT 3) is headed "cash payments". There is no reference to any cheque in either schedule. No 4 amounts recorded in "DHAT 2", which is entitled "payments banked by (the plaintiff)", and which were presumably cheques, combine to produce a total of more than $2500.00.
The asserted "overpayment of himself" in par 22 is made in a context where the plaintiff in his schedule identifies the source of each payment. There is no suggestion in any of the defendant's affidavits that on any one of the occasions that the defendant is identified as the source of payment (in my assessment at least 80 per cent of such entries) that the plaintiff is either wrong as to quantum or that the plaintiff paid the defendant's cash to himself.
As to the defendant's schedules he gives the following evidence in his affidavit of 30 August 2001:
"3.The schedule marked 'DHAT2' attached to my affidavit dated 29 August 2001 was prepared from information usually kept within my business, in relation to wages payments. Amounts marked on the schedule 'credited to account' were complied by me, the accounts clerk being aware only that the net amount paid to the plaintiff was well in excess of the amount due as wages to the plaintiff.
4.The schedule marked 'DHAT3' attached to my affidavit dated 29 August 2001 was prepared from information also supplied to the plaintiff in hand written form, both in his and my hand writing, much but not all of which was returned to me as a disorganised bundle by the plaintiff when I requested his reconciliation of our 'running account'. I say that much of the information which has been supplied was not in his returned bundle, including records in favour of the plaintiff in the 'running account'. My own records were used in the business accounts, and were kept on a computer. The person completing the business accounts, during the financial years the 'running account' ran, was instructed by me to include the transactions in the accounts and, to the best of my knowledge, that was done.
5I say that the information in schedules 'DHAT 2' and 'DHAT3' is true to the best of my knowledge."
The significance of that evidence is that the defendant has maintained some record of payments made to the plaintiff independently of those kept by the plaintiff yet he provides no detail of the evidence other than at par 5. Although the content of the schedules was sourced from documents at least generally identified, there is no evidence of the deponent's belief in their accuracy.

I accept that "DHAT 3" contains the Jerdon debt and 10 other debts which, if the content of the schedule was constituted as evidence, would favour the plaintiff. I have previously considered the Jerdon debt. There is no reason why the unidentified debts should be considered any different way than were the alleged additional payments.
As I have previously noted on the subject of quantum there is no consistency between the defendant's pleading and his evidence. However it is a fair assessment of the defendants documents that if the statement of the running account provided at "DHAT 3" is as it is expressed to be and is added to the debits expressed by the plaintiff in his Schedule the total debits amount to $31,728.75 and the total credits, $26,131.00. That may indicate that the plaintiff is entitled to some $5597.75. However if as evidently the defendant contends the further detail at "DHAT 2" is taken into account, it is my understanding of the there would have been overpayment to the plaintiff to the tune of some $35,192.35.
That prospect is deserving of some attention and has been given due attention at that part of the claim which bears upon par 7 of the amended defence and the related evidence. I am not satisfied that the defendant has discharged the onus in relation to the plaintiff's entitlement to income of $500.00 net per week. I note that the "arrangement" in relation to the plaintiff's income as indicated in "DHAT 2" appears to have commenced on 23 December 1995, a date some time prior to the date of the first entry of the running account constituted by Schedule "B" to the statement of claim and "DHAT 3". That first entry being 3 August 1996. That raises the prospect that the plaintiff's business accounts were being run through the book together with his wages (to paraphrase par 14 of the defendant's affidavit of 17 July 2001) at a time when there was no relevant business account. Further that at the same time and again on the defendant's case, significant components of each cheque were being paid to the plaintiff for no reason at all. When I say significantly, the gross entitlement is recorded at $138.25, the actual amount received was $500.00 and evidently there was a payment of tax in respect of that receipt by the plaintiff in the amount of $161.20. In effect, a gross outlay of $661.20 on behalf of the defendant to reward an entitlement recorded at $138.25.
In the application there is no onus on the plaintiff he has a judgment. It is for the defendant to show that there is a meritorious defence. It is conceivable that there the defendant may have such a case. In my opinion having had the benefit of the defendant's submissions and having reviewed the defendant's evidence that case is not sufficiently made out to justify the exercise of discretion to set aside the judgment in relation to that part of the judgment which relates to the running account.
It follows that on each element of the judgment I am not satisfied that the defendant has discharged the onus.