Cossack Holdings Pty Ltd v Wagner Development Consulting Pty Ltd

[2006] QDC 157

[2006] QDC 157

DISTRICT COURT

CIVIL JURISDICTION

JUDGE RACKEMANN  

No 725 of 2006
No 144 of 2006

COSSACK HOLDINGS PTY LTD	Applicant
and
WAGNER DEVELOPMENT CONSULTING PTY LTD	Respondent

BRISBANE

..DATE 16/05/2006

JUDGMENT

HIS HONOUR:  This application is made pursuant to Rule 290 to set aside a default judgment.  The matter was heard on the 3rd and the 7th of April and further submissions were received up until the 13th of April 2006. 

The issues included whether the judgment was regularly entered and, if so, whether the discretion under Rule 290 should be exercised in the applicant's favour.  The circumstances are unusual.

The judgment which is sought to be set aside was that the applicant/defendant, Cossack, pay to the respondent/plaintiff, Wagner, the amount of $180,583.05 including $13,714.78 interest and $1,638 costs.  Wagner's action was for a debt or liquidated claim comprising fees said to be owed to it, as development consultants, in relation to services said to have been rendered to Cossack, a property developer, in connection with a series of developments at Coomera and other places.

Judgment Irregularly Entered:
The proceedings were commenced by a claim and statement of claim filed on 14 December 2005 and served the following day.  An amended statement of claim was filed on 20 January 2006 and served on 7 February.  On Friday, 24 February 2006, no notice of intention to defend or defence having been filed Wagner filed a request for a default judgment. 

The judgment is, on its face, dated the same day.  A default judgment granted that day would have been regularly entered.  Counsel for Cossack attempted to make something of the fact that documents in draft form had been provided to Wagner's solicitors but that would not have rendered a default judgment granted that day irregular.  The judgment was not, however, entered on that day, notwithstanding what appears on the face of the Court record.

On Monday, 27 February 2006, the solicitor for Cossack, having learned of the request for default judgment, made inquiries of the Southport District Court Registry and was told, amongst other things, that if she faxed the defence which was intended to be filed that it would be placed on the file while arrangements were made for the solicitor's clerk to attend the Registry to file the original.

A copy of the notice of intention to defend and defence intended to be filed, was sent by facsimile transmission to the Registry with a request that the Registrar refrain from entering default judgment on the solicitor's undertaking to file the enclosed documents.  When the filing clerk from the solicitors for Cossack attended on the Registry on 28 February the notice of intention to defend and defence was not accepted.  Upon being informed of this the solicitor for Cossack immediately rang the Registry and spoke with Mr Bruce McLeod.  Mr McLeod said that he would be required to 'process' the request for a default judgment unless Wagner withdrew the request but agreed to delay entering judgment for one hour to permit discussions between the parties.

Following discussion the solicitor for Cossack again telephoned Mr McLeod and informed him that Wagner would not withdraw its request.  Judgment was then entered on 28 February 2006 but backdated to 24 February 2006, being the date the request for judgment was made.  The judgment was, on its face, signed by Mr Swan rather than Mr McLeod.

The time within which a defendant may file a notice of intention to defend is governed by Rules 137 and 138 of the UCPRs which relevantly provide as follows: 

"Rule 137 - Time for Notice of Intention to Defend

Rule 137(1) In a proceeding started by a claim a notice of intention to defend must be filed within 28 days after the day the claim is served.

...

Rule 138 - Late Filing of Notice of Intention to Defend

Rule 138(1) A defendant may file and serve a notice of intention to defend at any time before judgment even if the defendant is in default of Rule 137."

In the present circumstances Cossack may have been in default of Rule 137 but had the right, pursuant to Rule 138, to file and serve a notice of intention to defend at any time before judgment.  I was not referred to any rule or authority which either deprives a defendant of the right to file and serve a notice of intention to defend after request for judgment has been made, but prior to judgment being given, or which would justify the backdating of a judgment or treating the judgment as having been given on the day the request was made.

It was contrary to the rules, in particular rule 138, to prevent the solicitors for the applicant from filing the notice of intention to defend and defence before judgment as they sought to do.

It was submitted by counsel for Wagner that the wrongful rejection of the notice of intention to defend and defence did not have the consequence that the default judgment was irregularly entered.  It was pointed out that by reason of rule 281(1) division 2 of part 1 of chapter 9 applies if a defendant is in default under rule 137.

It was submitted that, provided a notice of intention to defend is not filed within time, the defendant has a right to file a request for judgment pursuant to rule 283(1)(2) and the Registrar has power to give judgment pursuant to rule 283(3).  It was submitted that it is no bar to the giving of judgment that the defendant may have filed or attempted to file a notice of intention to defend out of time.

The result, it was submitted, was that a Registrar retains a discretion which, in this case, was exercised in the knowledge of Cossack's notice of intention to defend.  I do not consider that is the proper interpretation or application of the rules.  If the submission by counsel for Wagner were correct then a defendant who failed to file a notice of intention to defend within the time specified in rule 137 would remain at risk of having judgment entered by default even where that default had been remedied by the late filing of such a notice pursuant to rule 138.  I do not consider that the purpose or effect of the rules is to expose a defendant to that risk subject to the exercise of a broad discretion by the Registrar. 

The entry of judgment consequent upon default has been said to be more of a ministerial than a judicial act (See annotations to rule 190.5 in Civil Procedure Queensland).  While the rules could be more explicit in this regard, it seems to me that the default of which they speak is a continuing default.  That is, a default under rule 137 which has not been remedied pursuant to rule 138.

As counsel for Cossack pointed out, the judgment is required to be in a form (Form 26) which recites:  "The defendant not having filed a notice of intention to defend."  It seems to me that the filing of a notice of intention to defend prior to judgment, albeit later than the time provided for in rule 137, is sufficient to avoid judgment by default under rule 283.  In short, I do not consider that the rules invest a Registrar with a broad discretion to give default judgment in the face of a notice of intention to defend filed pursuant to rule 138. 

Similar questions arose in Royds v. Sumner Potts [2004] QSC 317 to which I was not referred by either counsel. There a request for default judgment was made at 3.35 p.m. on 5 August 2004. Subsequently, on the same day but before default judgment had been granted, the first defendant made a request of the Registry to remain open after usual hours in order to permit the filing of a notice of intention to defend and defence. The Registrar referred the matter to the Court for directions.

Jones J said:

"The Registry is, of course, entitled to open at whatever hours may be advised.  See rule 976.  The rule which the Registrar was required to apply in response to the request for judgment are rules 281 and 284.  Rule 137 is the rule that provides for the filing of the notice of intention to defend within 28 days.  Rule 138 of the UCPR provides that a defendant, however, may file and serve a notice of intention to defend at any time before judgment, even if the defendant is in default of rule 137.  The Registrar was, therefore, authorised to receive the notice of intention to defend on the one day past the period prescribed by rule 137, and he was entitled to receive that document after the normal closing hours of the Registry.  Having done so, the Registrar could not consider a request for default judgment.

Even if the Registrar had a discretion in determining whether to proceed with the request in circumstances where a notice of intention to defend, and defence, has now been received, that discretion would have to be exercised judicially.  The most significant consideration in the exercise of such discretion, in my view, is in the pursuit of justice for the parties to have an opportunity to litigate the disputes that have arisen between them.

The shutting off of a litigant who raises, on its face, a valid defence could not be undertaken in circumstances where the filing of that defence has been received in advance of the request for default judgment being dealt with.  There is no basis, in my view, for the Registrar to deal with the request for default judgment in those circumstances.

In those circumstances, I direct the Registrar not to proceed with the request for default judgment."

In this case there is no issue of the Registry being asked to exercise a discretion to open late in order to accommodate the filing of a notice of intention to defend and defence.  The clerk from McCullough Robertson attended the Registry within normal hours prior to judgment having been entered and was entitled to file the documents which were rejected.  Had that been done then, to adopt the words of Jones J, "The Registrar could not consider a request for default judgment."

I do not read those parts of the judgment of Jones J introduced by the words, "Even if the Registrar had a discretion", as holding that such a discretion does exist.  In my view, it does not.  Further, as Jones J indicated, even if such a discretion were to exist, it would have to be exercised "judicially.".  There is no suggestion of the exercise of any discretion on a judicial basis in this case.  It would appear from the affidavit material that the matter was dealt with within the Registry on the basis that there was no right to file the notice of intention to defend and defence and that, as Mr McLeod told Ms Hill, "He would require the respondent to withdraw the request, or he would be required to process the application."

In this case, the notice of intention to defend and defence, which were sought to be filed, were valid in the sense that they were documents responding to the claim in a form which was appropriate for filing and there seems to be, in my view, no basis for the Registry to reject those documents or to proceed to deal with the request for default judgment and there would have been no basis for the Registrar to continue to deal with the request for default judgment had those documents been filed.

In this case, the solicitors for Cossack ought to have been allowed to file their client's notice of intention to defend and defence prior to judgment as they sought to do.  Had they been permitted so, then judgment ought not have been given.  The back-dated draft judgment ought to be set aside as having been irregularly entered or, at least, as if it had been irregularly entered. 

That is sufficient to determine the application pursuant to rule 290.  The matter was, however, fully argued and so I will indicate what my conclusion would have been had the judgment been treated as one regularly entered.

Discretion.  The discretion under rule 290 to set aside a default judgment is expressed in general terms.  In exercising that discretion, the Court ordinarily has regard to the explanation for the default, any delay in making the application to set aside the judgment and whether or not the defendant has a prima facie defence on the merits.

Explanation for Default.  At all times material to Wagner's claim, Mr Baillie was the sole director and secretary of Cossack.  It was he who, for and on behalf of Cossack, entered into written agreements with Wagner and, it is asserted by Wagner, oral agreements as well.  Mr Baillie died on 25 July 2005.  On 1 November 2005, Mr Boyce, a solicitor, and Ms Taylor were granted probate of Baillie's estate.  On 14 November 2005, they became secretaries of Cossack and, together with Mrs Baiillie, directors as well.  Mr Boyce has had responsibility for the matter on behalf of Cossack.

Upon service of the claim and statement of claim, Mr Boyce caused McCullough Robertson to be retained to represent Cossack.  On 22 December, those solicitors forwarded a facsimile to the solicitors for Wagner enclosing a request for particulars and copies of documents referred to in the pleading.  Following the filing of the amended statement of claim on 20 January 2006, the solicitors for Wagner sent an e-mail on 25 January 2006 attaching a copy of the amended pleading together with a response to the earlier request.

On 7 February 2006, Mr Humble of McCullough Robertson telephone Mr Dart of Minter Ellison to request a moratorium, until Friday, 10 February 2006, to enable him to assess his client's position and advise accordingly.  This was followed up by a further telephone call on 16 February 2006 seeking an extension of time until 22 February 2006 to file a notice of intention to defend and defence.

The following day Mr Dart telephoned Ms Hill, a solicitor who had then taken over carriage of the matter within McCullough Robertson, to advise that an extension would be granted until 20 February 2006, but that no further extension would be granted.

On 21 February 2006, Mr Dart received a facsimile from McCullough Robertson dated 20 February 2006, enclosing a copy of a draft notice of intention to defend and defence which, it was stated, would be filed on Tuesday, 21 February, 2006 "subject to any further instructions from our client".  In view of that letter, Mr Dart refrained from requesting default judgment and did no more until Thursday, 23 February. 

The notice of intention to defend and defence were not, however, filed on 21 February.  That is because Mr Boyce gave further instructions in regard to the draft defence, which was then amended to take account of those instructions.  A revised defence was emailed to Mr Boyce at 4.55 p.m. on Tuesday, 21 February.

At about lunchtime on the following day, the communications room of AAPT, the telecommunications provider to McCullough Robertson, was flooded, resulting in damage to the telephone exchange.  This, in turn, resulted in all telephone and internet services at McCullough Robertson ceasing to function.  Services were not returned to normal until 27 February 2006.

The effect of the stoppages was that the firm had no telephone lines from about midday on 22 February 2006 until a limited number of lines were established on Friday, 24 February, which were then congested because of volume.  No email lines were available from around lunchtime on 22 February 2006 until intermittently on Friday, 24 February, at which time they were unreliable.  There were no facsimile lines from around lunchtime on 22 February 2006 until a single line was established on 24 February. 

The effect this would have had on the efficient operation of a law firm is obvious.  This caused difficulties in communication between Mr Boyce and McCullough Robertson and between McCullough Robertson and Minter Ellison.  The electronic receipt of documents of relevance to the defence were delayed until Monday, 27 February 2006.

In the meantime, on 23 February 2006, following several unsuccessful attempts to transmit facsimiles to McCullough Robertson Lawyers, Mr Dart had forwarded an email advising that a request for default judgment would be made on 24 February unless a defence was filed.  That email was not, however, received by Ms Hill until the next day.  Upon its receipt she endeavoured to contact Mr Dart.  She left a message for him at 9.30 a.m. on Friday, 24 February, advising of the communications difficulties and asking him to call her on her mobile.  She did not get to speak with him until Monday, 27 February. 

The remainder of the chronology is noted earlier. 

Counsel for Warner took no particular with the failure to file a notice of intention to defend or defence within the extended time which had been granted by Warner.  That is understandable.  The material reveals that Mr Boyce, on behalf of Cossack, had the unenviable task of responding to a claim relating to a multitude of invoices concerning a variety of projects arising out of alleged agreements, of which he had no personal knowledge and in circumstances where the person who was the sole director and shareholder of the company and who had been involved in those dealings, had deceased.  He had, however, caused a reputable firm of solicitors to be engaged and undertook inquiries as referred to in his affidavit.  McCullough Robertson had also been obtaining and considering documents and particulars and had sought and obtained an appropriate extension of time within which to file the notice of intention to defend and defence.  That satisfactorily explains the period to 21 February. 

Thereafter I am satisfied that the receipt of further instructions on 21 February together with the breakdown in the communication system at McCullough Robertson provides a sufficient explanation for the further delay until the time that McCullough Robertson attempted unsuccessfully to file the notice of intention to defend and defence.

In their written outline of submissions, counsel for Warner suggested that McCullough Robertson ought to have filed a notice of intention to defend and defence in terms of the draft, even if that made it necessary to later amend the defence based on instructions.  I do not, however, think it unreasonable for McCullough Robertson to have delayed attempting to file the documents until they were in a form which properly reflected their instructions. 

It was also suggested that Mr Boyce, being a solicitor, could have attempted to file a notice of intention to defend and defence.  I do not think it unreasonable for him to have caused McCullough Robertson to be engaged to represent Cossack or for him to have left the settling of the documents in accordance with instructions and their filing to those solicitors.

Some criticism was made of Ms Hill's diligence, or lack thereof, in the period from 21 February.  Her endeavours, in particular her endeavours to contact Mr Dart about the failure to file documents on 21 February as foreshadowed at a time when her client was exposed to the risk of default judgment being entered, could have been much better.  Indeed, there appears to have been a lack of endeavour to do so in a timely way.  The circumstances were, however, no doubt, trying in light of the communications failure.  Further, the material does not warrant a conclusion that Cossack via Mr Boyce was dilatory in that period. 

Having regard to all of the circumstances, I am satisfied that a satisfactory explanation has been given for the default.

Delay in bringing application.  I do not consider that there was any undue delay in bringing the application to set aside the default judgment.  The prospect of such an application was, indeed, foreshadowed by Ms Hill during her discussions prior to judgment with Mr Dart concerning his client's attitude to withdrawing the request for default judgment.

The default judgment was received by McCullough Robertson on 2 March 2006.  The firm responded on 15 March 2006, seeking confirmation that Minter Ellison had instructions to accept service and an application to set aside the default judgment.  Minter Ellison confirmed those instructions on 20 March 2006.  The application to set aside judgment was filed the next day.

While, as counsel for Warner pointed out, Cossack's solicitors could have moved more quickly, I do not consider that the delay in making the application was undue.

Prima Facie Defence.  Wagner's amended statement of claim, which contains some 85 paragraphs together with a prayer for relief and two pages of annexures, relates to a multitude of alleged outstanding invoices pursuant to a number of agreements with respect to a number of different projects.  For present purposes those claims fall into a number of groups.

Some of the claims relate to projects which have yet to receive development approval.  In that regard Cossack's proposed defence pleads, amongst other things, an agreement, recorded in the letter dated 8 April 2005, that invoices would not be issued in respect of those properties until development approval.  Wagner says it has an answer to those allegations but does not press for default judgment to be retained in respect of those properties, at least not on the basis of an absence of a prima facie defence on the merits.
There are other developments in respect of which development approval was obtained and fees claimed for services alleged to have been rendered pursuant to oral agreements between Mr Varley and Mr Wagner.  There is one development in respect of which both written and oral agreements are alleged.  The balance of the claim relates to properties which have development approval and in respect of which fees are claimed for services said to have been rendered pursuant to written agreements.

In so far as Wagner's claim depends on oral agreements, Cossack's proposed defence does not admit those agreements on the basis that it remains uncertain of the truth or otherwise of the allegations.

In so far as written agreements are relied upon the proposed defence admits that Wagner was engaged to provide the services specified in the written agreements, but says the scope of these services was limited to those described in particular clauses.  The amended statement of claim on the other hand refers to services "including" those in the specified clauses.

In so far as the outstanding invoices are concerned, whether related to the written or alleged oral agreements, the proposed defence admits non-payment despite demand, but does not admit Wagner's right to recover those amounts.

The non-admissions are made on the basis that the defendant is still making reasonable inquiries in relation to the matter and on the basis that the plaintiff has failed to supply copies of invoices referred to in its pleading.

The proposed defence also pleads that the agreement, recorded in the letter of 8 April 2005, entitles Cossack to certain credits with respect to the Thomson Road agreement, the Courtney Road agreement, and in respect of the sale of a site at Kopps Road.

Further, in so far as the Thomson Road properties and one of the Finnegan Way properties are concerned, the proposed defence alleges that Wagner failed to perform its duties with due care and skill, with the represented level of expertise and in a manner that was cost and time efficient in the development application process.  In that regard it pleads parts of the written agreements relating to the standard of service which would be provided.

In the case of Finnegan Way, the pleading points to council's information request which requested amended proposal plans.  In the case of Thomsons Road, the pleading points to the fact that a changed application was required to be made to reduce development yield from that sought in the initial application.

As counsel for Wagner pointed out, the allegations against Wagner in this respect are not well particularised, do not say what, if any, loss resulted or deny liability on account of the facts pleaded.  Presently it appears to be put on the basis of supporting the non-admission of liability on the basis, in part, of inquiries being undertaken to determine whether Wagner breached the terms of its agreement by not providing the services to a requisite level, breached the terms of the agreement by overcharging or breached section 52 of the Trade Practices Act.

As counsel for Wagner pointed out, the proposed defence consisted mainly of admissions and non-admissions.  It was submitted that the current version of the proposed defence "remains little more than a holding of defence", justifying a conclusion that the defendant's prospects are weak.  It is, however, legitimate to respond to a pleading by non-admission.

By virtue of rule 165 a party may, in response to a pleading, plead a non-admission.  The consequence is that the party may not give or call evidence in relation to the fact that is not admitted unless the evidence relates to another part of the party's pleadings (See rule 165(2)).

Rule 166 contains the following requirements with respect to non-admissions:

"(3) A party may plead a non-admission only if -

(a)  the party has made inquiries to find out

whether the allegation is true or untrue; and

(b)  the inquiries for an allegation are reasonable

having regard to the time limited for filing and serving the defence or other pleading which the denial or non-admission of the allegations are contained; and

(c)  the party remains uncertain as to the truth

or falsity of the allegation;

(4)  A party's denial or non-admission of an allegation

of fact must be accompanied by a direct explanation of the party's belief that the allegation is untrue or cannot be admitted;

(5)  If a party's denial or non-admission of an

allegation does not comply with subrule (4) the party is taken to have admitted the allegation; and

(6)  A party making a non-admission remains obliged to

make any further inquiries that may become reasonable and if the results of the inquiries make possible the admission or denial of an allegation to a member pleading appropriately."

In his affidavits Mr Boyce has deposed that -

• Following his appointment he commenced inquiring into the business conducted by Cossack and other development companies of which Mr Baillie was the sole director and shareholder to determine the financial and development status of each company and project site.

• Not only had Mr Baillie passed away but his widow, Mrs Baillie, had been separated from her husband for some years and had no involvement with the company or the relevant developments.

• He has had conferences with Mr Hewaarde, Mr Baillie's former accountant at KPMG, a solicitor, Mr Wagner, consultants and subcontractors to each of the property development sites as well as prospective purchasers and real estate agents in relation to some of the property development sites.

• He has reviewed development documentation, financial paperwork for each of the companies and reconciliation of invoices to quotes and forecast budgets in conjunction with KPMG.

• He has undertaken inquiries of specialist sub-consultants which have resulted in payments to those who have verified their claims and has instigated further inquiries to be undertaken.

• Despite meeting with Mr Wagner, together with Mr Hewaarde of KPMG to discuss the amounts in issue in the subject proceedings he is yet to be convinced on the validity of Wagner's claims.

• He is not satisfied that the extent of services complied with the scope of written agreements.

• He is not satisfied that the oral agreements relied upon by Wagner were made.

• He is not satisfied that the services provided by Wagner were to a standard which accords with representations in the written documents.

• He is not satisfied in relation to what each or any of the expenses, alleged to have been incurred and invoiced in accordance with the agreements, are.

• Copies of the invoices relied upon by Wagner have not been provided.  In this respect the plaintiff has only been able to provide re-issued invoices in respect of some of the amounts of the claims.  These have different invoice numbers to those referred to in his pleading.  It asserts they have the same content as the original invoices and it says that copies of the original invoices if they exist are "within the possession and control of a third party with whom the respondent is in dispute".

• He has not been able to verify the amounts claimed by cross-referencing the work invoice against the retainer agreements.  In this regard I note that invoices, copies of which are exhibited to the affidavit of Miss Hill, often contain little description of the work carried out in respect of the amount invoiced.  A number of the re-issued invoices simply give details of the development location and claim an amount of money for what is described as "project management".

• In relation to the matters pleaded with respect to the standard of services provided for Thomsons Road and Finnegan Way, Mr Baillie deposes that representations were made concerning lot yield which Wagner ought to have known were not able to be achieved and that significant time was invested in preparation of applications which had to be reformulated with "double consulting by subcontracted specialist consultants".

Mr Boyce deposed that those matters which have not been admitted in the proposed defence are not within his knowledge but are the subject of further inquiries being made with others who worked with the deceased on the various projects.  He anticipates an amended defence will need to be filed and served upon the conclusion of his inquiries.

It was submitted by counsel for Wagner that Mr Boyce had effective control of Cossack since late July 2005 and has already had sufficient time to make reasonable inquiries.  She pointed out that Mr Boyce's description of his inquiries are in relatively general terms and that, while he may not have the original invoices, he does not say what use he has made of the re-issued invoices.

It was submitted that the proposed non-admissions do not comply with rule 166.  I do not accept that submission.  As I have already noted, Mr Boyce found himself in what must have been an unenviable position.  He was faced with responding to a claim for fees concerning a multitude of invoices relating to a number of agreements with respect to various developments.

The person who was the sole director and shareholder of the company at the time and personally involved with the matter on behalf of Cossack, is deceased and his widow has no knowledge or involvement in the matters at issue.  Some of the agreements pursuant to which the invoices were raised were in writing but other alleged agreements were oral and the person who allegedly made those agreements on behalf of Cossack is now deceased.  He has been unable to examine copies of the usual invoices upon which action is taken.  He only has Wagner's word that re-issued invoices are of the same content.  Even so, those invoices, in many cases, contain little description of the work undertaken in respect of the amount claimed. 
Mr Boyce's affidavit material discloses that he has been making inquiries and continues to do so.  While his description of those inquiries could have been more detailed I am not persuaded that the inquiries are unreasonable or that pleading non-admissions at this stage would offend rule 166.

It was submitted that non-admissions, even properly made, do not answer the description used in the cases such as "a prima facie defence on the merits", a "substantial ground of defence", a "real dispute" or a "quite plausible defence".

I accept, consistently with authority, that a bare general denial, which does not descend to particularity, or mere statements that an applicant might or does have a particular defence, unsupported by reference to evidence that the defence is plausible, is insufficient to attract the favourable exercise of judicial discretion, but the circumstances here are different.

As I have already noted, the rules permit a party to respond to a pleading by making non-admissions.  Inquiries have and continue to be made and the basis for the non-admissions has been explained.  I am satisfied that the non-admissions would be a reasonable response in this case at this time.

I am satisfied that, in the circumstances, there is, at this point, at least a real case to be investigated and I would have been prepared to set aside the default judgment even if I had treated it as one regularly entered.  Accordingly I set aside the default judgment.
...

HIS HONOUR:  In relation to costs, there are a number of issues to consider in the exercise of the discretion.  Firstly, as counsel for Cossack concedes, no criticism can really be made of the plaintiff for having made a request for judgment at the time it did.  That flowed from Cossack's failure to file and serve a defence within the extended time which had been allowed.  Accordingly, I order that the applicant, Cossack, pay the respondent's costs of and incidental to the request for default judgment.

In relation to this application, the applicant sought indemnity costs on the basis that, prior to judgment being entered, the solicitors for the respondent were contacted and asked about their attitude to withdrawing the application for default judgment.  The circumstances were, as I commented in my reasons, unusual. 

Whilst one could perhaps say, with the benefit of hindsight, that the solicitors for the respondent ought to have realised that the Registry were acting contrary to the rules in refusing to accept the notice of intention to defend and defence and that any default judgment obtained would thereby be liable to being set aside, I do not think that one could, in the circumstances, be overly critical of the solicitors for the plaintiff in that regard.

The unusual situation in which they found themselves on the day that they were approached were not of their own making and, essentially, arise because of the conduct within the Registry.  I would not be prepared to make any order for costs on an indemnity basis against the plaintiff/respondent. 

In relation to the costs of the application, there were, of course, the costs of bringing the application.  There were then two hearings before the Court.  Further written submissions were then made, and there was a teleconference yesterday from my Chambers. 

The purpose of the teleconference yesterday was to draw to the attention of the solicitors for the applicant the errors in the affidavit material.  They were errors which ought to have been picked up beforehand. 

I do not think that the plaintiff should be out of pocket in relation to those costs.  I adopted the tele-conference process so as to reduce the costs involved in that process, but such costs as were generated ought be paid by the applicant and I order the applicant to pay the respondent's costs associated with that conference on an indemnity basis. 

As I have already mentioned, there was a need for further submissions to be provided after the last hearing before the Court.  The requirement for those submissions really arose out of the failure by counsel for the applicant to address each of the matters that had been raised in the outline of counsel for the respondent.  In the circumstance, I order the applicant to pay the respondent's costs of and incidental to those submissions on a standard basis. 

I was also asked to consider making a costs order in relation to the affidavits which were filed by the applicant between the first hearing and the second hearing before the Court.  When the matter came on before the Court for the first hearing, it was evident that more material was required and the matter was adjourned.  At that time, an order for costs was made against the applicant in relation to the adjournment. 

I do not consider that there ought be a further order for costs in relation to the affidavits that were subsequently filed.  It seems to me that those costs would substantially have been incurred had the affidavits been filed within time and the previous costs order compensated the respondent for the requirement for another appearance before the Court.

That leaves the costs of the application otherwise, being the costs of bringing the application and the costs of the second hearing and indeed the attendance today.  For the reasons that I have already expressed, I do not consider that costs ought to be awarded on an indemnity basis.  Ms Hindman argued that there ought be no order for costs in the somewhat unusual circumstances which prevailed in this case.  I gave some consideration to that submission.  I have also given consideration to whether the costs ought be reserved, given that the position with respect to the final shape of the applicant's pleading is still unknown.  On balance however, I have decided to make an order for costs on a standard basis. 

The applicant was successful primarily on the basis that the Judgment was irregularly entered, although that was not the fault of the plaintiff.  Nevertheless, the application was resisted on that ground.  I also note that in accordance with my Reasons, I have also determined the application against the respondent even had the Judgment been treated as one regularly entered.  In the circumstances then, save in respect of the matters which I have already made orders, I order that the respondent pay the plaintiff's costs of and incidental to the application on a standard basis.  Those costs will exclude the filing fee for the originating application, since that was the wrong procedure, and will exclude any costs which the applicant incurred in relation to the last received set of submissions and the tele-conference. 

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