Erom Pty Ltd v Croft

[2005] WADC 106

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   EROM PTY LTD -v- CROFT [2005] WADC 106

CORAM:   COMMISSIONER KEEN

HEARD:   12 MAY 2005

DELIVERED          :   8 JUNE 2005

FILE NO/S:   CIV 1225 of 2003

BETWEEN:   EROM PTY LTD (ACN 008 918 876)

Plaintiff

AND

JOHN CROFT
Defendant

LAURENCE LAMBRO ANTHONY ZIATAS
Third Party

ON APPEAL FROM:

For File No              :  CIV 1225 of 2003

Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA

Coram  :DEPUTY REGISTRAR HEWITT

Citation  :EROM PTY LTD -v- CROFT [2004] WADC 251

File No  :CIV 1225 of 2003

Result  :Time extended, Default judgment set aside

Catchwords:

Practice and procedure - Springing orders - Enlargement of time - Consideration of possible defences to all pleaded causes of action

Legislation:

Fair Trading Act 1987

Trade Practices Act 1974

Result:

Appeal dismissed

Representation:

Counsel:

Plaintiff:     Mr M A Blundell

Defendant:     Mr P Robinson

Third Party  :     Not applicable

Solicitors:

Plaintiff:     Solomon Brothers

Defendant:     Williams & Hughes

Third Party  :     Pynt & Partners

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

Bank of Credit and Commerce International (Overseas) Ltd (in liq) v Habib Bank Ltd [1998] 4 All ER 753

Chitty v Mason [1926] VLR 419

Croft v Erom Pty Ltd [2005] FMCA 114

Currie v May [1914] VLR 17

Eng Mee Yong & Ors v Letchumanan [1979] 3 WLR 373

FAI General Insurance Co Ltd & Ors v Southern Cross Exploration NL & Ors (1988) 165 CLR 268

Freeman v Rabinov [1981] VR 539

Gamble v Killingsworth & McLean [1970] VR 161

Hazart Pty Ltd v Rademaker (1993) 11 WAR 26

Marks v GIO Australia Holding Ltd (1998) 158 ALR 333

Marzo v Marzo, unreported; BC9503492; SCt of WA; 14 March 1995

Palmer v Prince [1980] WAR 61

Parker v Transfield Pty Ltd [2000] WASCA 382

Patten v Burke Publishing Co Ltd [1991] 2 All ER 821

Re Jokai Tea Holdings Ltd [1993] 1 All ER 630

State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146

Technology Partnership v Afro‑Asian Satellite Communications (UK) Ltd & Ors [1998] EWCA Civ 1520

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 211 ALR 342

Wallersteiner v Moir [1974] 1 WLR 991

Zangel Pty Ltd v Orica Australia Pty Ltd [2002] WADC 214

Case(s) also cited:

A Roberts & Co Ltd v Leicestershire County Council [1961] 1 Ch 555

ACN 076 676 438 Pty Ltd (in liq) v A-Comms Teledata Pty Ltd [2000] WASC 214

ANZ Banking Group Ltd v Simpson, unreported; SCt of NSW; BC 9501720; 18 October 1995

Askew v Morris & Ors [2004] WASC 117

Austodata Products Ltd (UK) v Gibbons [2000] NSWSC 666

Australian Competition and Consumer Commission v News Corporation Ltd (1997) 79 FCR 117

Australian Gypsum Ltd and Australian Plaster Co Ltd v Hume Steel Ltd (1930) 45 CLR 54

Birch Investments Pty Ltd v Kiap Khee Lim, unreported; SCt of WA; Library No 7396; 12 July 1988

Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) (1939) 62 CLR 464

Bosaid v Andry [1963] VR 465

Bridgestone Australia Ltd v GAH Engineering Pty Ltd & Ors [1997] 2 QD R 145

Brueckner v Carroll & Anor [1995] ATPR 41-379

C & M Partnership v Van der Kuyl [2000] WADC 123

Cheeson v Green [2002] WASCA 67

Cohen v McWilliam & Anor (1995) 38 NSWLR 476

Collins Book Depot Pty Ltd v Bretherton [1938] VLR 40

Dean v City Bank of Sydney (1904) 2 CLR 198

Dibeek Holdings Pty Ltd v Notarus & Anor (19980 143 FLR 132

Dowling & HG Hamilton Pty Ltd & Kelly v Rae (1927) 39 CLR 363

Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385

Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196

Farrow Mortgage Services Pty Ltd (in liq) v Williams, unreported; SCt of NSW; BC 9301950; 5 April 1993

Gallie v Lee [1969] 2 Ch 17

Gemini Property Investments Pty Ltd v Woodards Investments Pty Ltd [2000] SASC 210

Hancock v Williams & Anor (1942) SR (NSW) 252

Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302

Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378

Huges v Justin [1894] 1 QB 667

Israel v Foreshore v Foreshore Properties Pty Ltd (in liq) [1980] 54 ALJR 421

Janseen Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526

JB & BL Nominees Pty Ltd v McCormick [1982] WAR 258

JJ Leonard Properties Pty ltd v Leonard (WA) Pty Ltd (N0 2) (1987) 13 ACLR 77

Johnson v Poseidon Bow River Diamond Mine Ltd, unreported; SCt of WA; BC 960112; 8 March 1996

Joscelyne v Nissen [1970] 2 QB 86

Kostokanellis v Allen [1974] VR 596

Kuligowski v Metrobus [2004] HCA 34; 208 ALR 1

Lysnar v Burnard [1927] NZLR 757

Macquarie Bank Ltd v Beaconsfied [1992] 2 VR 461

Markwell Bros v Bennett (1904) QWN 13

Matton v Lipscomb (1985) 16 LR (NSW) Eq 142

Miller v M (Murray Franconi & Associates [2000] WASC 175

Mincode Pty Ltd v Isa Pty Ltd (1966) 17 WAR 245

Monschi v Lep Air Services Ltd [1973] AC 331

Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573

Newmarket Court Pty td v Andriani [2001] WASC 292

News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410

Nicholls v Davis (1889) 15 VLR 184

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35, 208 ALR 231

Payton v S G Brookes & Sons Pty Ltd [1977] WAR 91

Petelin v Cullen (1975) 132 CLR 355

Phonographic Performance Ltd v Maitra & Ors [1998] 2 All ER 638

Polak v Everett [1876] 1 QBD 669

Pukallus v Cameron (1982) 180 CLR 447

Queensland Independent Wholesalers v Coutts Townsville Pty Ltd (1989) 2 QdR 40

Re Citic Commodity Trading Pty Ltd, JBL Enterprises (WA) Pty Ltd, ureported; FCA; BC 9800781; 16 March 1998

Re Waldcourt Investment Co Pty Ltd (1986) 4 ACLC 589

Reade v Lowndes [1857] 53 ER 142

Rember Pty Ltd v TVT Media Pty Ltd, unreported; SCt of WA; Library No 980161; 2 April 1998

Resource Equities Limited v Western Ventures Pty Ltd & Ors [2004] WASCA 242

Rolland & Anor v Bank of Western Australia Ltd, unreported; SCt of WA, Library No 980498; 3 September 1998

Sanders v Anglia Building Society [1971] AC 1004

Sargent v ASL Developments Ltd; Turnbull v ASL Developments Ltd (1974) 131 CLR 634

Scott v Bridge Street Clinic (a firm) & Anor [1988] VSC 160

Servcom Australia Pty Ltd & Ors v Shenton [2000] WASC 187

Shanemist Pty Ltd v Denmac Nominees Pty Ltd [2003] QSC 373

Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASC 32

Smith v Jones [1954] 1 WLR 1089

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 160 ALR 588

Strange v Fooks (1863) 66 ER 765

Taylor v Ansett Transport Industries (1987) 18 FCR 342

Templeton v Leviathan Pty Ltd (1921) 30 CLR 34

The City Mutual Life Assurance Society Ltd v Giannerelli [1977] VR 463

The General Steam-Navigation Co v Rolt (1858) 141 ER 572

Weir v Perpetual Trustee of WA Limited, unreported; SCt of WA; Library No 6664; 10 April 1987

Williams v Frayne (1937) 58 CLR 710

Williams v Frayne (1937) 58 CLR 710

Worrell v Holland (1996) 17 QLD Lawyer Rep 45

Yorke v Lucas (1985) 158 CLR 661

Young v Queensland Trustee Limited (1956) 99 CLR 560

Zangel Pty Ltd v Orica Australia Pty Ltd (2002) SR (WA) 225

COMMISSIONER KEEN: 

Introduction

1. This is an appeal against the decision of the Deputy Registrar on 14 December 2004 wherein the Deputy Registrar extended the time for compliance by the defendant with a springing order and set aside the judgment against the defendant arising from that springing order.

2. The conditional order for judgment was made by a Deputy Registrar on 24 May 2004 and followed on from orders made by a Deputy Registrar on 25 March 2004 in relation to the discovery of certain documents to be given by the defendant.  The springing order was in the following terms:

   "1.Unless within 10 days the defendant do comply with paragraph 1 of the order of Deputy Registrar Hewitt made in Chambers on 25 March 2004:

   1.1the defendant's defence be struck out and judgment be entered for the plaintiff; and

   1.2the defendant do pay the plaintiff the costs of the action to be taxed.

   2.The defendant do pay the plaintiff's costs of the application in any event."

3. By his order made 14 December 2004 the Deputy Registrar ordered:

   "1.The time for compliance with the orders of Deputy Registrar Harman dated 24 May 2004 be extended to 31 August 2004 and the judgment entered herein be set aside."

   The Deputy Registrar also made orders as to costs which are not relevant for the purposes of this appeal.

4. This appeal was hard fought by the parties and extended over one and a half days.  Numerous affidavits were filed dealing with various aspects of the claim and the authorities cited were legion.

Background

The facts

1. In or about 7 October 1996 the plaintiff advanced the sum of $100,000 to a company Jadetex Minerals Pty Ltd (Jadetex).  It appears that the loan was a short term loan to be for three months at an interest rate of 20 per cent per annum.

2. The loan had been organised on behalf of the plaintiff by a Mr Martino of Deloitte Touche Tohmatsu with Mr Ziatas of Bannerman Ziatas & Russell.  It appears that the proposal for the loan was responded to by a letter from Mr Ziatas dated 4 October 1996 which appears as part of Annexure FRJ1 to an affidavit sworn by Frank Raymond Jasper on 8 July 2003.  That letter is in terms:

   "$100,000 LOAN FACILITY

   EROM PTY LTD TO JADETEX MINERALS PTY LTD

   I confirm your advice that your client Erom Pty Ltd is prepared to advance to my client Jadetex Minerals Pty Ltd the sum of $100,00 for three months at an interest rate of 20% annum.

   I am in the process of preparing a Charge over Jadetex Minerals Pty Ltd whose assets include various mining tenements containing nickel and chrysoprase, substantial interests in various goldmining tenements and soon the Laverton Battery.

   Mr John Croft of Jadetex Minerals Pty Ltd is prepared to provide a personal guarantee and I will incorporate this into the Charge.

   The funds are required as a matter of urgency, therefore I would be grateful if, subject to my having the charge signed today, you would forward a cheque for the $100,000 to my office by not later than 3.00 pm.

   Should you have any difficulties in doing this or have any queries, please do not hesitate to telephone me."

3. Also as part of Annexure FRJ1 there was a letter from Frank Jasper Pty Ltd to Deloitte Touche Tohmatsu authorising them to draw down from funds held at Challenge Bank the sum of $100,000 payable to Jadetex Minerals Pty Ltd.  Annexure FRJ4 to the said affidavit was a letter from Bannerman Ziatas & Russell to Mr Martino at Deloitte Touche Tohmatsu in the following terms:

   "$100,000 LOAN FACILITY –

   EROM PTY LTD (THE JASPER SUPERANNUATION FUND TO REGALBIRD PTY LTD FORMERLY JADETEX MINERALS PTY LTD).

   Further to our recent discussion, we enclose herewith our trust cheque in the sum of $1,666.67 being our clients first month interest due on the 7^th instant.

   We also enclose herewith Debenture Charge in duplicate for execution by your client and return to us for stamping and registration."

4. Annexure FRJ7 to the said affidavit was a copy of a cheque drawn by the plaintiff on Challenge Bank dated 7 October 1996 in favour of Jadetex Minerals Pty Ltd for the sum of $100,000.

5. The Debenture Charge became Annexure FJ1 to an affidavit sworn by Mr Francis Jasper on 14 August 2003 in support of an application for summary judgment .  That Debenture Charge was dated 7 October 1996 and stamped on 24 March 1999.  The mortgagor was said to be Regalbird Pty Ltd and the mortgagee Erom Pty Ltd (Erom).  The defendant, John Croft, was a party by way of guarantor.  It is not necessary to set out all of its terms.  Suffice it to say Regalbird charged all of its undertaking and its property with payment to Erom of the whole of the moneys secured.  The moneys secured were expressed to be the principal sum of $100,000.  The Debenture Charge noted the interest at 20 per cent per annum calculated from 7 October 1996 with instalment interest of $1,666.67 per month payable in arrears and commencing on 7 November 1996.  The date for repayment of the principal sum was said to be three months from the date of the advance.

6. Section VII of the Debenture Charge contained a guarantee by the defendant in respect of the principal, interest and other moneys becoming owing by Regalbird to Erom "hereunder".

7. Page 35 of the Debenture Charge concluded with the words "IN WITNESS whereof the parties have executed this deed the day and year first hereinbefore written."  Those words appear approximately half way down the page and the balance of the page is blank.  The following page (p 36) is the execution page which commences with the Common Seal of Regalbird being affixed with what appears to be the signature of the defendant, followed by the Common Seal of Erom in the presence of a director and the director/secretary.  Thereafter comes the signature of the defendant, Mr Croft, which appears to have been witnessed by Mr Ziatas.

The proceedings

1. On 5 June 2003 a writ was issued by the plaintiff against the defendant indorsed with a claim based upon the guarantee given by the defendant.  A statement of claim was issued on the same day which relevantly contained the following allegations:

   "3.By an agreement made between the parties in October 1996:‑

   3.1the plaintiff agreed to loan $100,000 to Jadetex; and

   3.2Croft agreed to guarantee the loan.

   PARTICULARS

   A.The application for the loan and offer of the guarantee was made by Jadetex and Croft respectively by their agent, Mr Laurie Ziatas ("Ziatas"), in a letter dated 4^th October 1996 to the plaintiff's agent, Mr Dominic Vincent Martino ("Martino").

   B.The application for loan by Jadetex and offer of guarantee by Croft were both accepted by Martino as agent for the plaintiff on or about 7^th October 1996.

   4.On 7 October 1996 the plaintiff advanced $100,000 to Jadetex pursuant to the agreement pleaded in paragraph 3 and on the security of the guarantee by Croft pleaded in paragraph 3.

   5.Jadetex has failed to repay the $100,000 to the plaintiff.

   6.Despite demand, Croft has failed to repay $100,000 to the plaintiff."

2. The statement of claim then went on to plead:

   "Further or alternatively to paragraphs 3‑6; ‑

   7.There were terms of the agreement pleaded in paragraph 3 that:-

   7.1Jadetex would grant a charge over all of the assets of Jadetex to secure the $100,000 loan by the plaintiff (the "Loan"); and

   7.2A comprehensive guarantee of the Loan by Croft would be incorporated in the Charge.

   PARTICULARS

   The terms are included in the letter of 4^th October 1996 referred to in Particular A to paragraph 3 above. 

   8.On 7^th October 1996, the plaintiff advanced the Loan to Jadetex pursuant to the agreement as pleaded in paragraphs 3 and 7.1 and 7.2 prior to receipt of the charge."

3. The statement of claim then goes on to set up that the Charge was executed by the plaintiff in reliance on the representations contained in the letter of 20 November 1996 from Ziatas.  It was said that the representation that Regalbird was formerly Jadetex was wrong and they were at all material times different companies.  It was said that had the Charge correctly named Jadetex as the borrower the defendant would have executed the Charge as guarantor for the loan (to that company).

4. It was further set up in the statement of claim that the conduct comprised in the letter of 20 November 1006 was conduct in trade or commerce which was misleading or deceptive contrary to s 52 of the Trade Practices Act 1974 or s 10 of the Fair Trading Act 1967.

5. The prayer for relief firstly set up a claim under the agreement pleaded in pars 3‑6 for the sum of $100,000 and interest thereon at the contractual rate of 20 per cent.  The prayer for relief then set up set up by way of an alternative the claim to a declaration that on its proper construction the borrower referred to in the guarantee and indemnity incorporated in the Charge was Jadetex.  In the alternative to that rectification of the guarantee was sought so as to refer to the borrower as Jadetex in lieu of Regalbird and a claim to the guaranteed moneys again being the $100,000 and interest at the contractual rate.

6. A further prayer for relief was made in the alternative to the first two alternatives being a claim for damages pursuant to s 82 of the Trade Practices Act or s 79 of the Fair Trading Act in the amount of the guaranteed moneys, that is to say the $100,000 and interest thereon.

7. I have set out in some detail the way in which the statement of claim was constructed because it does have some relevance to the way in which the matter progressed.

8. The defendant filed a memorandum of appearance and defence. The defence did not condescend to particulars but was in essence a denial to virtually all of the allegations contained in the statement of claim. The plaintiff by summons dated 8 July 2003 applied for judgment pursuant to O 14 of the Rules of the Supreme Court.

9. Affidavits were filed in support of and in opposition to that summary judgment which came on for hearing on 14 October 2003.  The application was dismissed.

10. The defendant joined Mr Ziatas into the proceedings as a third party.

11. On 25 March 2004 Deputy Registrar Hewitt made orders for specific discovery which were not complied with and on 24 May 2004 Deputy Registrar Harman made the conditional order for judgment as noted above.  The defendant failed, due to the default on the part of his then solicitor, to comply with that conditional order for judgment resulting in judgment being entered on 17 June 2004 for the sum of $254,941.98, the defence having been struck out.  That judgment was amended on 24 November 2004 to the sum of $231,607.38.  As I have noted above, by summons dated 31 August 2004 the defendant applied to extend the time for complying with the conditional order as to judgment which was allowed with judgment being set aside on 14 December 2004.

The Deputy Registrar's reasons

1. The Deputy Registrar took the view that the letter of 4 October 1996 referred to in par 3 of the statement of claim was incapable of constituting a guarantee by the defendant it simply indicating that the defendant was prepared to execute a personal guarantee to be included in a charge.  The Registrar took the view that the cause of action upon which judgment had been entered was that cause of action and was not sustainable.

2. However, the Deputy Registrar, whilst considering that the defendant was entitled to have that judgment set aside went on to consider whether that would be a pointless exercise in the event that the plaintiff had a clear case in other respects.  He then went on to consider the claim to rectification of the charge and thought that there were significant problems in that regard not least of which was that it was essential for all parties to the deed to be before the Court before the deed could be rectified; that is to say Regalbird and Jadetex  As a corollary to that joinder was necessary because of the guarantor's right to seek indemnity from the mortgagor.

3. The Deputy Registrar also considered whether or not there had been a discharge of the guarantee by reason of variation of the terms of the contractual arrangements between the plaintiff and the debtor and in particular by way of indulgence granted to the debtor.

4. With respect to the Deputy Registrar his reasons do not disclose that he considered the claim made under the Trade Practices Act or the Fair Trading Act.  Nevertheless, the Deputy Registrar's conclusion was that the defendant did have defences to the plaintiff's claim of sufficient merit to enable him to defend the action.  In those circumstances the time for compliance with the conditional order was extended and judgment set aside as noted above.

The nature of the appeal

1. An appeal from a registrar is a review de novo by way of a re‑hearing of the application which led to the order under appeal; Hazart Pty Ltd v Rademaker (1993) 11 WAR 26.

2. Admission of further evidence is a matter of discretion for the Court which is described more as a discretion to exclude than a discretion to admit additional evidence; Hazart Pty Ltd v Rademaker (supra).  In this case during the course of the appeal numerous affidavits were received by me from the parties.

The legal principles applicable to setting aside judgment

1. In this case judgment was obtained pursuant to the conditional order for judgment whereby the defence was struck out and judgment was entered for the plaintiff.  In that respect it may be said the judgment that is entered is a judgment in default of a defence.

2. There appears to be little doubt these days that an application may be made to set aside such a judgment such application being coupled with an application to extend the time for compliance with the original orders which gave rise to the conditional order for judgment; FAI General Insurance Co Ltd & Ors v Southern Cross Exploration NL & Ors (1988) 165 CLR 268 in which Wilson J at 283 noted that the similar provision in the New South Wales Rules of the Supreme Court was:

   "a remedial provision which confers on a court a broad power to relieve against injustice.  The discretion so conferred is not readily to be limited by judicial fiat.  The fact that it manifestly is a power to be exercised with caution and, in the case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case.  It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to the conditional order ought to be excused from non‑compliance." 

3. Earlier in the judgment his Honour referred at p 280 to the approach in England where the court has power to extend the time where a conditional order has been made but not complied with "but the power should only be exercised with caution and with due regard to the principle that orders are made to be observed."

4. gA springing order may be made not only in cases of contumacy but also where a party has been persistently dilatory in taking steps in an action or where it can be inferred that he or she will not or is unlikely to take them; Freeman v Rabinov [1981] VR 539 at 545. The power to make springing orders and the making of them is closely bound up with case management. However, it must be remembered that the aim of the Court is the attainment to justice and principles of case management cannot be allowed to supplant that aim; State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 154. Having regard to those case management principles as limited by the dicta in the Queensland case it may be the case that a party that has demonstrated that there was no intention to ignore or flout the order and that the failure was due to extraneous circumstances would not be disentitled to the rights which he or she would otherwise have enjoyed; Re Jokai Tea Holdings Ltd [1993] 1 All ER 630 at 637.

5. To the extent that a judgment stemming from the self executing order is a judgment in default of defence it seems quite clear that where a judgment is regularly obtained, on an application to set it aside there must be an affidavit of merits on which the Court can exercise its discretion whether or not to set aside the judgment.  In relation to those merits Malcolm CJ in Rollond v Bank of Western Australia, unreported; FCt SCt of WA; Library No 980498; 3 September 1998 at p 41 noted:

   "In my opinion, … for an application to set aside a default judgment to be successful, the defendant must present a credible defence demonstrating that, if the default judgment was set aside and the matter was argued on its merits, the defendant would have a real prospect of success."

6. His Honour the Chief Justice re‑stated the test in Parker v Transfield Pty Ltd [2000] WASCA 382 at 3 and noted that that was a reformulation of previous tests which was whether there was a reasonably arguable defence on the merits such that the default judgment should not be allowed to stand as in Palmer v Prince [1980] WAR 61.

The pleaded case

1. I have set out in some detail the case as pleaded in the statement of claim and noted that the original defence was, in essence, a denial of the various allegations.  Following on from the setting aside of the judgment the defendant has brought in a Minute of Amended Defence.  No application has been made to make that amendment given the appeal that is before the Court.  Nevertheless, it is appropriate for me to canvass some of the matters raised in that minute.

2. The minute is dated 3 May 2005 and relevantly sets out additional matters:

   1.The letter of the 4^th October 1996 did not and was not capable of constituting a guarantee.

   2.There was no sufficient memorandum in writing of the alleged guarantee contrary to section 4 of the Statute of Frauds 1677.

   3.A denial that Mr Ziatas was acting as the defendant's agent.

   4.That payments made by the defendant were not known by the defendant to be payments made in satisfaction of any obligations owed by Regalbird pursuant to the Charge on the basis that such payment was by a of a loan by the defendant to the third party, Ziatas.

   5.Such a payment was, alternatively, a payment by way of variation of the loan to extend the time for discharge of the loan and that any such variation discharged the defendant's obligations as guarantor.

   Alternatively such payment was made on behalf of Jadetex with the same consequences.

   6.That the plaintiff is not entitled to rectification as neither Jadetex nor Regalbird are parties to the action and the defendant did not and never intended to execute a guarantee on behalf of Jadetex or at all.

The notice of appeal

1. The grounds of appeal were comprised under nine heads.  The first three grounds of appeal were not pursued at the hearing of the appeal save for the ground that the defendant must show a defence that is credible, good and has real prospects of success.

2. The other grounds of appeal set up alleged errors of law and in some cases fact on the part of the Registrar in the following respects:

   1.That the defendant demonstrated a defence on the merits on the basis that the plaintiff's cause of action for rectification and judgment for the same could not be sustained because there was no motion for rectification.

   2.That the defendant demonstrated a defence on the merits on the basis that the plaintiff's cause of action for a declaration deriving from estoppel by convention could not be sustained because there was no motion for such declaration.

   3.That the plaintiff's judgment could not alternatively be based upon its cause of action for misleading or deceptive conduct pursuant to the Trade Practices Act or the Fair Trading Act.

   4.That the offer of guarantee constituted in the letter dated 4 October 1996 could not, upon acceptance by the plaintiff, constitute a guarantee enforceable at law against the defendant.

   5.That neither rectification nor a declaration claimed by the plaintiff could be ordered by the Court or sustained in the plaintiff's default judgment in the absence of joinder of Jadetex and Regalbird.

   6.That if the defendant was otherwise liable to the plaintiff as guarantor, such liability was discharged if the debtor and creditor varied the terms of the loan.

The evidence

1. Numerous affidavits were filed on behalf of each of the parties.  Given that this appeal is a hearing de novo of the original application to extend the time for compliance with the conditional order for judgment and the setting aside of the judgment, the defendant bore the onus of proving that there was a credible defence demonstrating that if the judgment was set aside and the matter argued on its merits the defendant would have a real prospect of success.  That being the case it is appropriate that I should first consider the defendant's evidence in this regard and pay particular attention to the same.  The volume of material itself does not cause me to deal with the evidence in a superficial way but it must be remembered that if there appears to be any conflict of evidence which is not on the face of it implausible, such a conflict ought not to be disposed of on affidavit evidence only.  It leaves a serious question to be tried;  Eng Mee Yong & Ors v Letchumanan [1979] 3 WLR 373 at 378.

Defendant's evidence

1. The defendant filed a number of affidavits.  I do not propose to canvass all of those affidavits for the purposes of these reasons but focus on the essential substance and thrust of some of them.

   1.Affidavit sworn 7 August 2003.  This is an affidavit that was sworn by the defendant in opposition to the application for summary judgment.  The defendant deposed that Mr Ziatas had no authority to act on behalf of himself and that the defendant did not execute the Deed of Charge and Guarantee.  He said that that was not his signature.  He further noted that Regalbird was not incorporated until 24 October 1996 whereas the deed was purported to be executed on 7 October 1996 and in that execution contained the Common Seal of Regalbird.  He further deposed that any moneys paid to Jadetex were paid without his authority.  He further said that his signature on an authority dated 7 October 1996 from Jadetex addressed to Bannerman Ziatas & Russell to disburse the sum of $100,000 held in their trust account "(being the proceeds of our borrowing from Erom Pty Ltd) to Abbeyville Pty Ltd as and by way of a short term loan," and appearing as Annexure FRJ13 to the affidavit of Frank Raymond Jasper sworn 8 July 2003, was a forgery and that he never authorised payments to Erom.

   2.Affidavit sworn 19 August 2003.  In this affidavit Mr Croft referred to an annexure JC5 (sic JC4) to the affidavit sworn by him on 7 August 2003 and being a letter from Deloitte Touche Tohmatsu to Mr Ziatas and dated 2 December 1998.  That letter is a letter which dealt with interest payments under the loan and proposals for repayment of capital by instalments of $50,000 the first of which to be on 15 May 1999 and the second on 15 June 1999. There is endorsed upon the foot of that letter the words "I agree to the terms of this letter 8.12.98" followed by what  appears to be the signature Mr Croft said to be a director for and on behalf of Regalbird.  In his affidavit of 19 August 2003 Mr Croft said that he had no knowledge of the loan made by the plaintiff to Regalbird or any other entity of which he was a director.  He said that he was asked by Mr Ziatas, a friend and confidante, to sign at the foot of the page.  His understanding from Mr Ziatas was that the loan was one that he (Mr Ziatas) had sought from Jasper to float a company called Greenstone Pty Ltd and that he (Mr Ziatas) was being pressured by Mr Martino to repay the loan and that he would "sort it out with Mr Martino within three months".  He did not believe that he was personally binding himself with respect to the repayment of the debt to Mr Jasper or any other entity.

   3.Affidavit sworn 18 September 2003.  In this affidavit the defendant deposed in some detail to his relationship with Mr Ziatas.  It is sufficient to express that relationship in the terms of par 9 of that affidavit in which the defendant said "He knew that I trusted him completely.  I say this because he had said to me that 'You are not to invest in anything or move until you have my okay' a clear reference to my various investment activities."

   In that affidavit the defendant also dealt with the signatures to be found at p 36 on the Debenture Charge.  He said that he did not ever execute the deed nor was the Common Seal of Regalbird attached in his presence.  He proffered an explanation that the document was a composite document assembled from two or more sources and that he did not cause or authorise Ziatas to assemble the ultimate composite document.  He said that he was "totally certain that I did not execute the deed in that form".  He speculated that his original signature on the deed was simply extracted from another document that Ziatas had procured him to sign.

   4.Affidavit sworn 31 August 2004.  This was an affidavit sworn in support of the defendant's application to set aside judgment under the conditional order.  In this affidavit Mr Croft again stated that he was not a party to the loan or charge, the charge was not prepared with his knowledge or authorisation, the charge was a composite document assembled from multiple sources and that he never signed the document now expressed to be the Charge.  In this affidavit, consistent with earlier affidavits, he indicated that he would produce evidence from a handwriting expert, Mr Horton, who has indeed sworn a number of affidavits in this matter.

   5.Affidavit sworn 29 March 2005.  In this affidavit the defendant raised the possibility that the judgment entered was irregular on the basis that it was for the wrong amount.  It will be remembered that the judgment that was originally entered pursuant to the conditional order was for $254,941.98 and that was amended on 24 November 2004 to $231,607.38.  The defendant now contends that since judgment was set aside he has had the opportunity to consider further documents which have been provided by Deloitte Touche Tohmatsu which shows that a sum of $45,526.78 has been paid to the Erom loan.  He produced a number of extracts from the plaintiff's annual trial balance sheets for the financial years ended 30 June 1998 and 30 June 1999 to demonstrate these various payments.

   In addition, the defendant by this affidavit also seeks to evidence variations to the loan.  The first variation is said to be in March 1998 whereby Ziatas agreed with Deloittes to vary the loan by extending the term until July 1998 and the second variation in December 1998 by extending the term to 30 June 1999.  He produced various correspondence in support of those allegations.  In relation to the December 1998 variation he produced a letter from Deloitte Touche Tohmatsu to Ziatas dated 2 December 1998 which is the same document as Annexure JC5 to his affidavit of 19 August 2003.  On this occasion he said that his recollection of the handwriting at the bottom of the letter is that he wrote what was dictated to him by Mr Ziatas and that he did not know the letter referred to a loan he was said to have guaranteed.  He said that he trusted Mr Ziatas and so did not make further enquiries.

   6.Affidavit sworn 28 April 2005.  In this affidavit the defendant now accepts that the signature on p 36 of the Debenture Deed was in fact his.  He set out in that affidavit his reasons for his former belief that the signature had been forged but he still remained of the view that the deed was not in its current form when he signed it, that is to say a composite document and was not signed on or about 7 October 1996 (Regalbird not having been incorporated until about 24 October 1996).

   Also under this affidavit he dealt with a payment made by him in October 1998 in the sum of $10,000.  He said that in about October 1998 Mr Ziatas asked him for a short term loan of approximately $10,000 and suggested that he could sell his shares in the Collins Motor Co Pty Ltd to raise the money.  The defendant was reluctant to sell the shares but obviously did so and in early November 1998 Ziatas told him that a cheque from the sale of the shares had arrived and requested him to endorse the back of the cheque "Pay Erom" which he did.  He said that Mr Ziatas told him he would repay him soon after which again he says he did.

   7.Affidavit 2 May 2005.  In this affidavit the defendant again confronts the authority from Jadetex Minerals to disburse the $100,000 loan from Erom Pty Ltd to Abbeyville Pty Ltd dated 7 October 1996 on the basis that he believed the signature was a forgery.  He produced affidavit evidence from Mr Horton in an attempt to support that proposition.  In his affidavit the defendant also referred to a further authority to Bannerman Ziatas & Russell date 19 November 1996 in relation to the payment of interest to the plaintiff which bears his signature as a director of Regalbird.  Again, he deposes that the signature is not his and again produces affidavit evidence from Mr Horton in an attempt to support that position.

2. As I have noted above in addition to those affidavits there are affidavits from Mr John Harry Horton as to the defendant's handwriting.  There are also affidavits from other deponents dealing with company structures and the like details of which I need not go into for the purposes of these reasons.

Plaintiff's evidence

1. Again, numerous affidavits were filed on behalf of the plaintiff and used at the hearing of this appeal.  Those affidavits were affidavits prepared for the purposes of the summary judgment application and for the purposes of resisting the defendant's application to set aside judgment under the conditional order.  Those affidavits are designed to evidence the loan that was made by the plaintiff and the fact that payments were made under the loan.  It is not necessary for me to canvass all that is said in those affidavits given that the defendant bears the burden of showing a credible defence.  The affidavits do however show that the evidence of the defendant needs to be looked at critically in the light of all of the circumstances.

Evaluation of the evidence

1. It is significant to note that the defendant, for a long time, denied that the signature on the debenture charge was his own.  He has set up serious allegations of forgery both in relation to that document and other documents.  He has now recanted in relation to the debenture charge but not in relation to the other documents.  His evidence is still unclear as to the circumstances of the signing of p 36 of the debenture charge.  It begs the question as to what the defendant thought he was doing in executing that page.  It is a page that is executed by him by attesting the seal of Regalbird and executed by him in his personal capacity.  Between those two executions there is the affixing of the Common Seal of Erom.  He makes no explanation as to this as against his avowed position that he never had any dealings with Erom at all.

2. Whilst the defendant now accepts that this is his signature he still advances an argument that this is a document that has been cobbled together later.  Whether that be the case one is unable to discern at this level and may it only become apparent on the trial of the third party issues between the defendant and Mr Ziatas.  However, one would have expected there to have been some explanation from the plaintiff as to why he executed that document in that form and with those parties named given all the circumstances.  In saying this I am conscious of his evidence that he trusted Mr Ziatas and left a good deal of his affairs in Mr Ziatas' hands.

3. There are obviously a number of discrepancies in the evidence which are difficult, if not impossible to determine without a trial.  However, I am left in the position where I find that the absence of a satisfactory explanation as to why p 36 of the debenture was signed in that form leads me to be very critical and suspicious of the defendant and his level of knowledge of these transactions at the material time.  However, my suspicion is not of such a level that I can reject all of his evidence and it does seem to me that there a large number of factual matters which will need to be tested at trial not least of which is the role of Mr Ziatas in this matter.

4. Notwithstanding my comments about the evidence it is still necessary for me to consider whether or not on utilising such parts of the evidence as I can, the defendant has demonstrated a credible defence.

Common ground

1. It appears to be common ground that the circumstances leading to the conditional order for judgment taking effect were matters that were the responsibility of the defendant's solicitor and not the defendant himself.  It seemed to be accepted by both parties that the defendant should not be held responsible for that default.  That being the case it could not be said that there was an intention on the part of the defendant to ignore or flout the order that had been made nor was it contumelious.  In those circumstances, generally speaking and subject to the Court's discretion, the defendant is not disentitled to the rights which he or she would otherwise have enjoyed; Re Jokai Tea Holdings Ltd (supra).

1. It was also common ground, in the sense that the plaintiff accepted it to be the case and the defendant did not argue against it, that the debenture charge on its own as it stands at present would not be adequate to support a judgment.  That is because the debenture charge refers to the mortgagor as Regalbird whereas it is quite clear that the loan was to be to Jadetex.

The plaintiff's argument

1. The plaintiff's position on the deed is that now that the defendant has admitted that it is his signature at p 36 of the deed he cannot be heard to say that he is not responsible for the document.  The position taken by the learned Registrar appears to support that contention.  It seems to me that, absent any explanation from the defendant as to why he signed that page in that form and, at this stage, any proof that this page was subsequently inserted in the deed, he would be bound by the consequences of signing that document.  Clearly, the defendant has armed his solicitor with this execution page and as between the defendant and the plaintiff the defendant could not be heard to argue that he should not be responsible for the consequences of that page finding its way into the debenture charge.  In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 211 ALR 342 the question that arose before the Court was whether an exclusion clause or alternatively a clause providing for indemnity formed part of the contract. The Court noted the attention that had been given to the subjective understanding of the individual participants in the dealings between the parties [35] and affirmed the principle of objectivity by which the rights and liabilities of parties to a contract are determined rather than by the subjective beliefs or understandings about their rights and liabilities. It was said that references to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement [40]. The Court noted that signing a document knowing and intending it to effect legal relations ordinarily conveys a representation to a reasonable reader of the document that the person who signs has either read or approved the contents of the document or is willing to take the chance of being bound by those contents [45].

2. In the circumstances, absent any satisfactory explanation as to the signing of p 36 and absent any evidence of the document being put together without authority at some later stage, I accept that the defendant cannot now say that he is not bound by that deed.

3. However, as is noted above the deed on its own as it stands cannot support the present judgment for the reasons expressed above.  Indeed the plaintiff seeks to make out its claim to the guarantee upon the correspondence that has taken place.  This is the claim as expressed in pars 3‑6 of the statement of claim.

4. The plaintiff puts this case as being one whereby the letter of 4 October 1996 constituted an application for the loan and an offer of guarantee.  It is pleaded that this was an offer that was made by the defendant's agent Mr Ziatas and the defendant is bound by it.

5. It is necessary to consider the letter to see whether there is any substance in that allegation of agency.  The letter refers to a loan from the plaintiff to Jadetex.  The first paragraph refers to an advance "to my client Jadetex Minerals Pty Ltd".  The second paragraph refers to Mr Ziatas being in the process of preparing a charge over Jadetex Minerals Pty Ltd.  The third paragraph says "Mr John Croft of Jadetex Minerals Pty Ltd is prepared to provide a personal guarantee and I will incorporate this into the charge."

6. The letter then proceeds:

   "The funds are required as a matter of urgency, therefore I would be grateful if, subject to my having the charge signed today, you will forward a cheque for the $100,000 to my office by not later than 3.00 pm."

7. The first thing to be noted from that letter is that Mr Ziatas purports to act on behalf of his client Jadetex.  Nowhere does he purport to be acting on behalf of Mr Croft.  Whilst all of the evidence clearly shows that Mr Ziatas acted for Mr Croft in numerous matters and was a close adviser and confidante there was nothing to show that he was acting on behalf of Mr Croft in this matter.  Further, there is no evidence from the plaintiff to show that that was the plaintiff's belief, that is to say, that there was some representation made to the plaintiff that Mr Croft was the client of Mr Ziatas and Mr Ziatas was his agent for the purpose of this transaction.  Further, even if Mr Croft was the client of Mr Ziatas it would not appear to me to be within the ordinary authority of a solicitor to act as the agent of his client so as to bind the client by way of a contract of guarantee without more.  Whilst solicitors may have wide authority whether apparent or ostensible to act on behalf of their client it does not extend this far.

8. Notwithstanding those matters the letter is clearly intended to be prospective in its effect.  It talks in terms of an advance to be made to Jadetex.  It talks in terms of a charge being prepared over the assets of Jadetex and that Mr Croft would be prepared to provide a personal guarantee to be incorporated in the charge.  To further support that the money was requested "subject to my having the charge signed today".  That being the case the charge and the guarantee were always dependent upon those documents being completed.  Alternatively, a credible argument may be maintained for the purposes of a trial to that effect.

9. It is pleaded that on 7 October 1996 the plaintiff advanced the sum of $100,000 to Jadetex pursuant to the agreement and "on the security of the guarantee by Croft".  The money was advanced some six weeks before the debenture charge was provided by Ziatas to the plaintiff's agent under cover of his letter of 20 November 1998.

10. The defendant's defence in its original form denied that he had agreed to guarantee the loan and denied that Ziatas acted or had authority to act as his agent.  In the Minute of Amended Defence which the defendant intends to rely upon the defendant also argues that there is no sufficient memorandum in writing of the alleged guarantee and relies upon s 4 of the Statute of Frauds  1677.  The appropriate note or memorandum under the Statute to evidence a guarantee is one that has to be signed by the party to be charged or his agent thereunto lawfully authorised.  Apart from the letter of 4 October 1996, while made by Mr Ziatas there is an issue as to whether or not he was the agent for the defendant and, merely considering the guarantee from the point of view of the pleading in pars 3‑6, there is no evidence to support the agency alleged.

11. In my view, for the reasons expressed above, the matters relied upon by the plaintiff set out in pars 3‑6 of the statement of claim give rise to some difficulties for the plaintiff.  In those circumstances I find that the defendant does have a credible defence which if argued on its merits would have a real prospect of success.

12. To the extent that that correspondence may not have amounted to a sufficient memorandum the plaintiff sought also to rely upon the letter of 20 November 1996 which in its heading refers to Regalbird Pty Ltd (formerly Jadetex Minerals Pty Ltd) and the Debenture Charge which is signed by the defendant.  It was said that those documents together constituted a sufficient memorandum to support the guarantee.  In Technology Partnership v Afro‑Asian Satellite Communications (UK) Ltd & Ors [1998] EWCA Civ 1520 the Court of Appeal in dealing with s 4 of the Statute of Frauds noted:

    "It is not disputed that that section applies not only to those cases in which the defendant promises to perform himself if the other person fails to do so but also to the case of a promise to procure that the other person will perform his obligations.  It is well established that the note or memorandum must contain a recognition of the existence of the prior contract and that it must state its terms."

13. Also as far as more than one document comprising the memorandum is concerned Hodges J in Nicholls v Davis [1889] 15 VLR 184 stated:

    "Now, it has been over and over again decided that if parole evidence is necessary to connect two or more documents together, then the Statute is not complied with…"

14. The problem with the plaintiff's contention that a memorandum can be found in the various documents is that the memorandum does not contain a recognition of the existence of the prior contract, that is to say the contract between the plaintiff and Jadetex and some other evidence would be required to bring all of those documents together to form a memorandum.  This can be further seen by the plaintiff's own argument that the debenture charge cannot stand on its own and requires rectification.  In those circumstances I find that there is a credible defence that there is insufficient memorandum to support the guarantee as required by the Statute of Frauds.

15. Notwithstanding the finding of the Deputy Registrar concerning the guarantee the learned Deputy Registrar went on to consider whether or not the defendant could be defeated by any of the other claims.  One of those claims was that if the debenture charge could be rectified so as to show the principal debtor as being Jadetex then the defendant would have some considerable difficulty in defending a claim based upon it.  The learned Deputy Registrar came to the view that judgment could not stand on the current pleadings because there had been no motion for judgment based upon the prayer for relief for a declaration that the borrower referred to in the guarantee was Jadetex, or in the alternative for rectification of the guarantee to refer to the borrower as Jadetex.

16. Before considering that aspect further it is worth noting that the prayer for relief in the statement of claim was clearly expressed in alternatives.  The first claim was a claim made under pars 3‑6 of the statement of claim which is the claim based upon the 4 October 1996 letter.  The second claim is the claim for declaration alternatively rectification and the moneys under the charge.  The third claim, as an alternative to the first two claims, was a claim for damages.  The statement of claim set up the original alleged agreement arising in October 1996 and arising out of the letter of 4 October 1996.  After par 6 there appeared the words "further or alternatively to pars 3‑6.  Thereafter in par 7 terms of the agreement as set out in par 3 were set up that Jadetex would grant a charge over all of the assets of Jadetex to secure the loan and a comprehensive guarantee would be incorporated in the charge.  The allegations that then follow are allegations which deal with the way in which the charge was structured in the name of Regalbird rather than Jadetex.

17. It was argued on behalf of the defendant that these claims were all mutually exclusive.  The plaintiff disagreed.  The plaintiff argued that looking at the matter purely in the light of the prayer for relief would be to confuse election between rights and remedies.  The plaintiff argued that all of the causes of action have merged in the judgment.  That may well be so but one still needs to consider the judgment that has been obtained.  This was a money sum which, on the current pleadings, can only be referable to the claim as pleaded between pars 3 and 6 of the statement of claim.  It was not the claim under the prayer for relief at the alternative B even for the guaranteed moneys because that could only be achieved following those alternative remedies of declaration or rectification of the deed sought in alternative B. 

18. The judgment would not appear to be a judgment for damages under the Trade Practices Act or the Fair Trading Act.  Those damages whilst expressed to be equal to the guaranteed sum would nevertheless be damages to be assessed on any default judgment.  To illustrate this one only needs to consider what the position would have been had the plaintiff taken judgment for the declaration only.  In the event of that being set aside could it be said that that judgment would also support the money claimed under the first section of the prayer for relief?

19. The parties cited a number of authorities both in support of and against the proposition that a motion would be required before judgment could be entered on a claim for a declaration or rectification.  Marzo v Marzo, unreported; BC9503492; SCt of WA; 14 March 1995, Adams M was a case in which a springing order was made which was not complied with and under the terms of the judgment there was a declaration that certain property was held by the defendant upon a constructive trust for sale.  Part of the argument was that the declaration should not have been made without hearing argument.  The learned Master referred to this as a rule of practice only so that judgment entered in default was not irregular.

20. Patten v Burke Publishing Co Ltd [1991] 2 All ER 821 was also referred to. In that case Millett J in dealing with a notice of motion for judgment seeking injunctions quoted Buckley LJ in Wallersteiner v Moir [1974] 1 WLR 991 who, after noting that a declaration by the Court was a judicial act and ought not to be made on admissions of the parties or on consent but only if the Court was satisfied by evidence, went on to say:

    "If declarations ought not to be made on admissions or by consent, a fortiori they should not be made in default of defence and a fortissimo, if I may be allowed the expression, not where the declaration is that the defendant in default of defence is acting fraudulently.  Where relief is to be granted without trial, whether on admissions or by agreement or in default of pleading, and it is necessary to make clear on what footing the relief is to be granted, the right course, in my opinion, is not to make a declaration but to state that the relief shall be on such and such a footing without any declaration to the effect that that footing in fact reflects the legal situation."

21. In Gamble v Killingsworth & McLean [1970] VR 161 at 170 McInerney J noted the distinction between equitable causes of action where it was necessary to move for judgment on the statement of claim and common law actions in which the defendant's default empowers the plaintiff to sign judgment.

22. In Currie v May [1914] VLR 17 Hodges J was faced with an argument that the plaintiff should abandon a claim before entering judgment. That was a claim where there were alternative claims for the return of a horse or an injunction to restrain the defendant from racing the horse. His Honour found that the judgment was regular on the basis the plaintiffs entered no judgment except one to which they were entitled and by the very act of entering judgment a claim which would arise only if they had failed to get judgment on the other claim had gone.

23. In this Court in Zangel Pty Ltd v Orica Australia Pty Ltd [2002] WADC 214 Williams DCJ noted that if alternative claims are made against the defendant the defendant must elect upon which he will take judgment and abandon the other citing Currie v May.  He went on to find that the plaintiff was required to identify the cause of action on which judgment is to be entered and if it has not done so in his view the judgment was irregular.  In that case the indorsement of writ had two alternative mutually exclusive causes of action and the default judgment had not differentiated between them when it was entered. 

24. Order 13, r 4 of the Rules of the Supreme Court in relation to judgment in default of appearance also applies in relation to judgments in default of defence and as in the present case where there is no defence, it having been struck out, provides by r 8 that:

    "Where a plaintiff's claim against the defendant is of a description not mentioned in Rules 2, 3, 4, 5 and 7 (which is the case so far as the claim for declaration or rectification is concerned) then, if the defendant fails to enter an appearance, the plaintiff may … apply to the Court on motion for judgment."

25. Order 41 applies to motions for judgment and by r 1 it is provided:

    "Except where by any Act, or by these Rules it is provided that judgment may be obtained in any other manner, the judgment of the Court must be obtained by motion for judgment."

26. In the present case, having regard to the nature of the claim made under the second alternative and it being an equitable remedy, a motion for judgment would be necessary.  Whilst there are some cases which might suggest that this is merely a rule of procedure the cases generally, and specifically when read in relation to the Rules, do provide a mechanism whereby judgment on such claims can be signed.  It is particularly important that the Court should exercise some control over these claims particularly where the claim is of an equitable nature.  It is also worth noting in this case that judgment was signed on 17 June 2004 over seven years after the loan was originally due for repayment and in circumstances where both Regalbird and Jadetex had been deregistered.  In those circumstances a motion would be required so that the Court may be satisfied as to why such orders ought to be made after such a delay and to ensure that other rights are not affected thereby cf Marzo v Marzo (supra).

27. In the circumstances I am satisfied that the plaintiff's judgment cannot be justified on the basis that the plaintiff was entitled to a declaration or rectification of the debenture charge in the absence of a motion before the Court to that effect.

28. There is also the issue of whether or not rectification could have been granted in any event in the absence of Regalbird and Jadetex.  The pleading suggests rectification based upon common mistake as to the identity of the mortgagor under the debenture charge.  Apart from the letter of 20 November 1996 in which in its heading Mr Ziatas refers to Regalbird Pty Ltd as formally Jadetex Minerals Pty Ltd there was no other real evidence of any mistake on anybody's part.  There was no evidence of any mistake on the part of the plaintiff or its agent Mr Martino and the evidence of the defendant was that as a director of Jadetex he had not authorised this transaction.

29. In order to get to common intention such evidence would be important and that being the case the issue of whether or not to join Regalbird or Jadetex takes on some significance.  It appears to be the case that, in normal circumstances, the parties to the deed being sought to be rectified ought to be made parties to the action.  This would be another hurdle in the way of the plaintiff to have the alternative judgment that it claims it was entitled to.  The plaintiff argues that joinder is unnecessary and indeed reinstatement for the purposes of joinder would be unlikely.  Further, it was argued that necessity for joinder would not be met in this case.  Clearly, the Court may only determine issues or questions in dispute so far as they affect the rights and interests of persons who are parties to the cause or matter (O 18, r 6(1)).  Whilst it appears at this level that the defendant is unlikely to obtain relief by way of an indemnity from either Regalbird or Jadetex in respect of any sums that the defendant may have to pay under the guarantee that is not necessarily determinative.  Accordingly, unless those companies are made parties to the proceedings before rectification the defendant's rights are at least notionally affected by the non‑joinder.  It seems to me that even if there had been some difficulty in the question of joinder because of the necessity for reinstatement it is a matter that at least ought to be the subject of directions from the Court.

30. I am not satisfied that even if the plaintiff had brought on a motion for a declaration or rectification it would necessarily have succeeded in the absence of at least consideration of whether or not Regalbird or Jadetex ought to be joined.

1. The final area which was canvassed as to whether the defendant might still be liable was in relation to the claim under the Trade Practices Act or the Fair Trading Act.  Again, it seems to me that this was a claim that was put in the alternative and suffers the same problems as the claim for declaration or rectification.  The judgment was simply taken on the first alternative claims for relief in the prayer.

2. Further, the claim for damages is one whereby if judgment was to be entered in default it would only have been for a judgment with damages to be assessed (see O 13, r 7).

3. The claim for damages pursuant to a claim for misleading or deceptive conduct stems from the conduct of Mr Ziatas.  That being the case the question of the agency of Mr Ziatas again looms for determination.

4. Insofar as this is a claim for damages under either Act whilst the learned Registrar indicated that such damages are assessed on a tortious basis that is not necessarily the case as is demonstrated by Marks v GIO Australia Holding Ltd (1998) 158 ALR 333. However, whether they be damages on a tortious basis or described as expectation damages they are nevertheless damages which need to be assessed. The assessment might prove to be a simple restatement of the loan and interest thereunder but nevertheless such damages fall to be dealt with under O 13, r 7 of the Rules.

The defendant's position

1. I have dealt with the arguments of the defendant when dealing with those of the plaintiff.  In addition to those arguments the defendant argues that there is no prejudice demonstrated to the plaintiff.  Whilst prejudice is a matter that the Court should have regard to in the exercise of its discretion it cannot replace the need on the part of the plaintiff to show a credible defence.

2. In addition the defendant also argued that the judgment was irregular not just because the plaintiff had failed to elect from which cause of action it based its judgment but also because the wrong amount had been entered for judgment.

3. Whilst it was always the case that a defendant was entitled to have an irregular judgment set aside ex debito justitiae and without terms: Chitty v Mason [1926] VLR 419 the position now appears to be that much depends upon the significance and circumstances of the irregularity and if the Court knows what the correct amount is it can vary the judgment accordingly; Bank of Credit and Commerce International (Overseas) Ltd (in liq) v Habib Bank Ltd [1998] 4 All ER 753 at 757.

4. In this matter the judgment has been amended once to reflect an error in calculation.  The plaintiff argues that the defendant is estopped from arguing that that is the incorrect sum as it has passed into judgment and has also been accepted as being the judgment sum in subsequent proceedings between the parties in Croft v Erom Pty Ltd [2005] FMCA 114 at 23 and 24 being bankruptcy proceedings based upon the original judgment.

5. The plaintiff's argument would have some force and effect if it were not for the fact that as matters currently stand the judgment has been set aside by order of the Deputy Registrar on 14 December 2004.  Whilst this is a hearing de novo of that application I ought to be concerned to see that, if all else was against the defendant, I should not allow the appeal if the effect would be to restore a judgment which might be irregular.

6. Evidence has been produced by the defendant which has not been countered by the plaintiff which would appear to demonstrate that further sums have been paid in reduction of the amount due to the plaintiff.  The defendant says that it has been endeavouring to obtain full details of these payments but they have not been forthcoming.  It seems to me that there is a good argument on the evidence to suggest that the judgment is not for the correct amount.  Further, it seems to me that it would be dangerous for the Court, at this stage, to try to embark upon an exercise to re‑calculate what the judgment ought to be.  It seems to me that there can be no real certainty as to what the correct amount would be in order to vary that judgment.

7. The defendant has thus demonstrated another argument for saying that the judgment ought to remain set aside on the basis that there is at least an argument for showing that that judgment was irregular.

8. A further argument raised by the defendant is that even if there was a valid guarantee given by the defendant he is now discharged by reason of variation of that guarantee.  He has deposed to what appears to be variations of the terms of the guarantee in March and December 1998 when the term for repayment of the guarantee was extended.

9. I heard much argument as to whether such a variation would vitiate the guarantee in circumstances where the defendant might know and approve of the variation.  Whilst I have been sceptical or indeed suspicious of some of the evidence given on behalf of the defendant I was urged by the plaintiff to accept the position that the defendant placed his affairs in the hands of Mr Ziatas and trusted him completely.  If I accept that was the situation, which I do, I have to at least accept that there is the possibility that the defendant did not know of the true import of his endorsement on those various letters in which he agreed to the terms.

10. This aspect is just another part of this complex case involving the actions of the plaintiff, defendant and third party.  This aspect like many of the aspects in this case cannot be satisfactorily dealt with without hearing evidence from all of the parties including the third party.

Conclusion

1. Having considered the large amount of material placed before the Court and not having completely ignored the unsatisfactory way in which the defendant has conducted himself both in relation to the transaction and these proceedings I have come to the view that on the case as pleaded by the plaintiff and in the alternative way in which it was set up the defendant has demonstrated a credible defence and that if the judgment were set aside and the matter argued on its merits he would have a real prospect of success. 

2. In the circumstances I would dismiss this appeal.