Commonwealth Bank of Australia v Dinh
[2019] WASC 159
•18 APRIL 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: COMMONWEALTH BANK OF AUSTRALIA -v- DINH [2019] WASC 159
CORAM: ARCHER J
HEARD: 17 APRIL 2019
DELIVERED : 18 APRIL 2019
FILE NO/S: CIV 1376 of 2014
BETWEEN: COMMONWEALTH BANK OF AUSTRALIA
Plaintiff
AND
PETER DINH
First Defendant
ANNE TRAN DINH
Second Defendant
Catchwords:
Application to set aside a judgment - Judgment entered on motion under O 41 of the Rules of the Supreme Court 1971 (WA) - Defendant failed to appear through no fault - Delay in bringing the application - Injustice
Legislation:
Rules of the Supreme Court 1971 (WA), O 34 r 3
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | C H Thompson |
| First Defendant | : | No appearance |
| Second Defendant | : | S K Shepherd |
Solicitors:
| Plaintiff | : | Dentons Australia |
| First Defendant | : | No appearance |
| Second Defendant | : | Forbes Kirby |
Case(s) referred to in decision(s):
Bevan v Bevan [2016] WASC 7
Cox v Mann [2006] WASC 125
Koushappis v The State of Western Australia [2015] WASC 64
Koushappis v The State of Western Australia [No 2] [2012] WASCA 194
ARCHER J:
(This judgment was delivered orally and has been edited from the transcript.)
On 5 September 2018, I entered judgment in favour of the plaintiff against the second‑named defendant, Ms Dinh. Ms Dinh now seeks to set aside that judgment.
Background
The plaintiff, the Commonwealth Bank of Australia (Bank), commenced an action seeking possession of four properties as against two defendants, Ms Dinh and Mr Peter Dinh, her husband. The Dinhs were the registered proprietors of each of those properties. The Bank also sought against Ms Dinh amounts owing pursuant to a loan agreement and mortgages, interest and costs.
On 9 February 2015, Ms Dinh filed a defence.
On 10 February 2015, default judgment was entered against Mr Dinh, who was a bankrupt.
On 16 September 2015, Ms Dinh filed a substituted defence and counterclaim (Defence).
Mediation conferences were held at the end of 2015 and early 2016, but both failed.
Subsequently a number of status conferences and case management conferences were conducted throughout 2016 and early 2017. On occasions, Ms Dinh was represented. On other occasions there was no appearance by her, or by others on her behalf.
The matter was entered into my CMC list on 7 February 2018.
In a directions hearing on 14 March 2018, I made various orders. On that occasion, Ms Dinh was represented. Order 10 required her to provide particulars of various paragraphs of her Defence by 18 May 2018. Order 11 required the parties to file and serve witness statements on those matters on which they bore the onus of proof by 8 June 2018. I also listed the matter for trial in October and for further directions on 20 June 2018.
Ms Dinh failed to comply with orders 10 and 11 (and another order) of the orders made on 14 March 2018.
Prior to the directions hearing on 20 June 2018, the parties sent competing minutes of proposed orders. Both minutes proposed an order that, unless Ms Dinh complied with orders 10 and 11 by a certain date, her Defence would be struck out. Ms Dinh proposed that the date be 30 June 2018, but, as that was a Saturday, I made it 29 June 2018. The matter was otherwise listed for directions on 18 July 2018.
Ms Dinh did not comply with those orders by 29 June 2018, or at any time.
On 2 July 2018, the Bank sought orders to strike out the Defence. I made those orders the following day.
On 10 July 2018, the Bank filed a motion for judgment against Ms Dinh pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 41 (Motion), seeking that the Motion be heard on 18 July 2018, when the matter was next before the court. On 12 July 2018, the Bank's solicitors served the Motion on Ms Dinh's solicitors by email.[1]
[1] Affidavit of Shane Edward Calalesina sworn 22 March 2019 (Calalesina March 2019 Affidavit) [37].
At the directions hearing on 18 July 2018, Ms Dinh was not represented and did not appear. I refused to hear the Motion on that day and instead made orders requiring Ms Dinh to file a defence and comply with orders 10 and 11 of the 14 March 2018 orders by 31 August 2018. I also listed the plaintiff's Motion for hearing on 5 September 2018, and gave liberty to apply.
The associates' record and the transcript of the proceedings on 18 July 2018 were emailed to Ms Dinh's solicitors. The Bank's solicitors wrote to Mr Dinh's solicitors on 24 July 2018, enclosing a copy of the associates' record and the transcript of the proceedings on 18 July 2018. The letter also set out the effect of the orders that had been made and foreshadowed that the Bank would move for judgment on 5 September 2018.[2]
[2] Exhibit A.
Ms Dinh did not comply with the orders of 18 July 2018 and did not appear on the date the Motion was listed to be heard, 5 September 2018.
The Motion is granted
On 5 September 2018, counsel for the Bank tendered five affidavits[3] and a certificate pursuant to cl B(3) of the Memorandum of Common Provisions in relation to the outstanding debt as at that date. The evidence proved the matters alleged in the statement of claim.
[3] One of which simply proved the associates' record and the transcript of the proceedings on 18 July 2018 had been emailed to Ms Dinh's solicitors - the affidavit of Shane Edward Calalesina sworn 3 September 2018.
At the time, I was conscious of the fact that there was no contradictor. However, the original springing orders had been made with the consent of Ms Dinh's legal representatives, and they had been advised of the Motion for judgment and its hearing date. As at the hearing date, there was no defence in existence in relation to the Bank's claim, and the evidence required to have been filed by Ms Dinh had not been filed. She did not appear at the hearing for the Motion, did not seek to oppose it, and did not provide any reason why it should not be granted.
The Bank's unchallenged evidence proved the matters alleged in the statement of claim. There was no defence raising a basis upon which the claim could be defended. I entered judgment for the Bank and made orders in terms of the Bank's Motion.
Application to set aside
On 20 September 2018, Forbes Kirby Lawyers filed a notice of change of representation for Ms Dinh. In February 2019, a chamber summons to set aside the judgment was lodged by Ms Dinh. The chamber summons was an application pursuant to O 13 r 14 of the RSC for orders that 'the default judgment' entered against Ms Dinh on 5 September 2018 be set aside.
The judgment I gave was not a default judgment. It was a judgment made following a motion for judgment under O 41 of the RSC.
This was acknowledged by counsel for Ms Dinh in supplementary submissions. Ms Dinh now seeks to set aside the judgment under O 34 r 3 of the RSC.
Regrettably, both the Bank and the court only became aware of the new basis for the application when the supplementary submissions were filed at 4.00 pm the day before the application was to be heard on 16 April 2019.
On 16 April 2019, I adjourned the hearing to the following afternoon to give the Bank sufficient time to deal with the changed foundation, and to give Ms Dinh the opportunity to file the proposed amended application and correct the deficiencies in her affidavit material. I made orders permitting her to file the proposed amended application and further affidavits by 5.00 pm that day.
The proposed amended application was duly filed, as was a further affidavit from Mr Vu, a solicitor at Forbes Kirby. The proposed amended application sought leave to amend the original application, an extension of time to apply for an order setting aside the judgment, and an order that the judgment be set aside under O 34 r 3 of the RSC (Order 34 Application).
At the hearing on 17 April 2019, I gave Ms Dinh leave to amend the original application in terms of the proposed amended application.
Power to set aside
Order 34 r 3 of the RSC gives the court the power to set aside a judgment obtained where one party does not appear at the 'trial'. An application under this order is to be made within 14 days.
After some initial debate as to the availability of this power to the present case, the Bank did not contend that I did not have the power to set aside the judgment. Rather, the Bank contended that I should decline to exercise my discretion to do so.
I am satisfied that I have the power under O 34 r 3 to set aside the judgment. 'Trial' is defined to include a hearing under O 1 r 4. There is no doubt that O 34 r 3 is not limited to a judgment or order made after a trial in a narrow sense. It has been recognised to be available to set aside judgments or orders that were made in hearings in which no witnesses were called or cross‑examined, including where a judgment was given at a directions hearing after the failure of a party to appear.[4]
[4] Bevan v Bevan [2016] WASC 7. See also Koushappis v The State of Western Australia [No 2] [2012] WASCA 194, Koushappis v The State of Western Australia [2015] WASC 64. Cf Cox v Mann [2006] WASC 125.
Factors to consider
The parties agreed that the relevant factors when considering an application under O 34 r 3 were as set out by Acting Master Gething, as his Honour then was, in Bevan v Bevan (citations omitted):[5]
[5] Bevan [24] ‑ [25].
The power in RSC O 34 r 3 is a discretionary one, with the key consideration being whether in all the circumstances it would be unjust for the judgment to stand. Specific factors which the court should consider in the exercise of its discretion are:
•The reason why the party did not attend.
•Any delays in bringing the application.
•Whether some useful purpose would be served by setting aside the judgment, requiring an analysis of the merits of the case.
•The injustice to the applicant if the judgment is not set aside.
•The injustice to the respondent if the judgment is set aside, including whether orders can be made to minimise the possibility of any such injustice.
The general case management considerations in RSC O 1 r 4B are also applicable.
Reason why Ms Dinh did not attend
I note that Ms Dinh's previous solicitors have not had the opportunity to be heard in relation to their conduct of the matter. Therefore, what I say now is solely for the purposes of evaluating Ms Dinh's application on the available evidence. These are not findings that could be relied upon in any action taken against her former solicitors.
I do not accept that it is necessary to hear from her former solicitors before reaching a view on the issue for the purposes of this application. There is sufficient evidence to satisfy me that Ms Dinh's failure to attend the hearing on 5 September 2018 (the September Hearing) was not her fault.
The evidence indicates that Ms Dinh's previous solicitors did not act promptly (or at all in some respects), did not keep her informed, and did not advise her of the September Hearing.
This evidence does not come only from Ms Dinh.
There is evidence in the affidavit of the Bank's solicitor, Mr Calalesina,[6] to the effect that an affidavit of discovery and a witness statement was served by Ms Dinh's former solicitors but not filed.
[6] Calalesina March 2019 Affidavit [29], [33].
There is evidence in the affidavits of Ms Dinh's current solicitor, Mr Vu. In the second of those affidavits, Mr Vu attaches correspondence between a barrister and Ms Dinh's former solicitors. The correspondence shows the barrister repeatedly seeking proper instructions and a proper brief, warning of the need to undertake various pre‑trial steps, advising that the case had not been properly prepared, and advising that, if the solicitors were unable to attend to their obligations, they were required to hand the matter to another solicitor who could. Ultimately - and not surprisingly - the barrister declined to accept the brief as a result of the solicitor's failure to comply with her requests and action her advice, under r 99(f) and r 99(g) of the Western Australian Barristers' Rules.
The conduct of the proceedings also corroborates Ms Dinh's claims about her former solicitors. A small, but concrete example, is the minute of proposed orders filed for the hearing on 14 March 2018 by Ms Dinh's former solicitors (the defendant's minute). The defendant's minute was an amended version of the Bank's minute. The amendments were not tracked and it was filed after the date I had asked it to be filed. Despite being filed by Ms Dinh's former solicitors, no changes were made to alter the parties said to be filing the minute or the solicitors said to have prepared the minute. On its face, it appeared to have been prepared and filed by the Bank.
Ms Dinh deposes that she was not aware that her defence had fallen into default, and was not told about the springing orders and did not know they had not been complied with. Ms Dinh's affidavit did not expressly state that she was not told about the September Hearing. This was one of the deficiencies sought to be addressed by the second affidavit of Mr Vu. He deposes that Ms Dinh told him, when she met with him on 20 September 2018, that she had not been aware there was to be a hearing on 5 September 2018. While this is hearsay, the proceedings are interlocutory and the additional evidence has been compiled under a tight timeframe. The evidence as a whole, in particular as to Ms Dinh's conduct following the judgment (which I will discuss later), suggests Ms Dinh did not know about the September Hearing.
I am satisfied that Ms Dinh's failure to attend the September Hearing was not her fault. It was the fault of her former solicitors.
Delays in bringing the application
Regrettably, Ms Dinh's new solicitors, the current solicitors, failed to properly progress her application to set aside the judgment.
The current solicitors met with her on 20 September 2018. The application to set aside the judgment was not filed until 1 February 2019, over four months later. The application that was filed was misconceived, and this was only acknowledged the day before the date upon which the application was to be heard.
Some of the delay is excusable, or at least partly so.
First, the period from 20 September 2018 to 15 October 2018. This period was required to obtain the materials from Ms Dinh's former solicitors and have a preliminary conference with a barrister.
Second, the period from 15 October 2018 to 7 November 2018. Ms Dinh deposes that, after advice had been received from the original barrister, she was unable to meet with her current solicitors until 8 November 2018, as she lives in Carnarvon. The length of this period is inadequately explained by her residential location. Nevertheless, it is a relatively short period.
Third, the period from 7 November 2018 to 19 December 2018. Ms Dinh deposes that she needed until 19 December 2018 to be able to obtain the necessary funds to enable counsel to be briefed. In all of the circumstances, I do not consider this to be surprising or deserving of criticism or concern.
There is less justification for some of the delay following the funds being received.
The current solicitor's office closed for the holiday period at lunchtime on 21 December 2018. Mr Vu explained that he had other matters requiring his attention between 19 and 21 December 2018. I would not criticise him for the failure to do anything on this matter in that very short period. Further, he said he went into the closed office on 23 and 24 December 2018 to work on the files.
However, Mr Vu then went on an overseas holiday from 29 December 2018 to 21 January 2019. During that time, nothing tangible was done other than to arrange an appointment with Ms Dinh on 22 January 2019. This delay is more likely to be a failure of supervision than a failure on the part of Mr Vu. He was admitted to practice in July 2018. He had been admitted for less than six months at that time. I will say more about this later.
Time was then spent preparing a brief for counsel, who was briefed on 1 February 2019. Three days later, Ms Dinh filed an application for a suspension order.
It was then decided, at least on behalf of Ms Dinh, that the matter should instead proceed by application to set aside the judgment.
An application was promptly filed, on 8 February 2019, but was misconceived, being based on the incorrect assertion that the judgment was a default judgment. The Bank's solicitors pointed this out to Ms Dinh's solicitor by letter dated 12 February 2019. However, it appears, regrettably and concerningly, that Ms Dinh's solicitors did not pass this on to counsel. Counsel only realised the error when reviewing the documents prior to the hearing. This led to the supplementary submissions which acknowledged the error being filed at 4.00 pm the day before the hearing.
Two other troubling matters arise on the evidence.
First, the affidavit material that was filed in support of the application was deficient.
Second, Ms Dinh's solicitors did not properly engage with the Bank's solicitors.[7]
[7] Calalesina March 2019 Affidavit [42] ‑ [48].
For example, they did not respond to an email from the Bank's solicitors of 6 November 2018.[8]
[8] Calalesina March 2019 Affidavit page 55.
Mr Vu explained that he was on sick leave as at that date and forwarded the Bank's solicitor's email to his principal. The email itself appears to have been copied to Mr Vu's principal. Despite this, Ms Dinh's solicitors did not respond to the Bank's email. Mr Vu blames it on his own administrative error in not responding when he returned to work. It may be, however, that the blame more fairly lies with his principal. I appreciate that his principal has not had an opportunity to be heard on the matter. I am not making findings of inadequate supervision. Rather, I am saying that I would not conclude that the troubling aspects of the conduct of Ms Dinh's current solicitors is the fault of Mr Vu.
Useful purpose
This is obviously not the time for a contested hearing on the merits of Ms Dinh's defence. However, her affidavit establishes an arguable basis upon which she could have defended the Bank's claims. Although the Bank will likely seek restitution should Ms Dinh establish her defences, it is not inevitable that Ms Dinh would be no better off than if a judgment was not set aside.
Injustice to Ms Dinh
The injustice is obvious. Ms Dinh has not had the opportunity to ventilate her complaint and her claims. In the circumstances, this is not valueless.
Prejudice to the Bank
Mr Calalesina's March 2019 Affidavit at [49] ‑ [58] sets out the prejudice to the Bank.
In short, any further delay in the resolution of these proceedings is likely to substantially increase the unsecured shortfall of the amount owed and the Bank's loss. Ms Thompson also pointed out the considerable cost that would be required to conduct what is likely to be a lengthy trial, although these costs would still have been incurred had the Motion not been granted.
The prejudice to the Bank will be greater the longer it takes the matter to be resolved. Accordingly, to assess the extent of the delay, and the prejudice to the Bank if the matter was set aside, I asked the parties to propose programming orders and advise of their available dates for trial, in the hopes that the matter could be listed before early August, 2019.
However, it emerged from Mr Vu's second affidavit that Ms Dinh was sentenced to 2 years imprisonment on 14 February 2019. She will not be eligible for release until February 2020. One of her sons, a likely witness in these proceedings if the judgment is set aside, was also imprisoned. This is likely to increase the length of any trial. Counsel for the Bank estimates the trial could take up to 10 days.
It is too early to evaluate the length of the trial. It is not yet known whether the Bank will dispute the factual allegations made by Ms Dinh in relation to the conduct of its employee, Mr Pollard. It is not known how many witnesses Ms Dinh will call on that topic or how many will require interpreters. If this is a contentious topic, as it is likely to be, the cross‑examination of each witness who gives evidence on this topic is likely to be extensive.
It may be possible to conduct the trial in July, subject to no unexpected developments in the matter. However, I consider I should assess the prejudice to the Bank on the basis that it is more likely the hearing will not be until later in the year, and there would then be a period of time before judgment could be delivered.
I have also considered the risk that Ms Dinh could terminate her legal representation and represent herself. A self‑represented litigant, for whom English is not her first language, and who is in custody, may make early trial dates impossible. However, I consider I should disregard this risk. It was not raised by the Bank and I expect that was because it is entirely speculative. To this point, Ms Dinh has shown a consistent desire for representation.
Conclusion
In summary, the factors in favour of setting aside the judgment are:
(1)Ms Dinh failed to appear at the September Hearing through no fault of her own.
(2)She has an arguable basis upon which she could defend the Bank's claims. Setting aside the judgment would serve a useful purpose.
(3)She will suffer significant injustice if the judgment is not set aside.
The factors against setting aside the judgment are:
(1)The prejudice to the Bank, in particular the increase in the unsecured shortfall that would arise from any further delay.
(2)The delay in bringing the application, the failure of Ms Dinh's current solicitors to properly engage with the Bank's solicitors, the very late recognition of the defective nature of the application, and the need to give Ms Dinh's solicitors a further opportunity to remedy the deficiencies in the affidavit material.
This second consideration brought me very close to deciding I should decline to exercise my discretion to set aside the judgment. Ms Thompson's points were well made. However, as Mr Shepherd said, it ultimately comes down to justice. Weighing up all of the factors, I consider that it would be unjust to allow the judgment to stand. I have concluded I should set it aside, but on such terms as to minimise the prejudice to the Bank by requiring tight pre‑trial programming and securing the earliest trial dates possible.
It should go without saying, but in the light of the history of this matter I will say it. In order to give effect to this decision, strict and proper compliance with the parties' obligations is required. Otherwise the prejudice to the Bank will not be minimised in the way that I require it to be in order to be satisfied I should set aside the judgment. This means proper pleadings, proper witness summaries, proper conferral, responding to correspondence from the other side's solicitors, and meeting all deadlines. The conduct of this matter cannot be left to a solicitor who has been admitted for less than a year. The matter is complex and of significant importance to the parties. Close and meaningful supervision is required, and some tasks simply cannot sensibly be done by such a junior practitioner. I will view very seriously any departure from these obligations.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JS
Associate to the Honourable Justice Archer15 MAY 2019
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