Feldman v Huf (Ruling)

[2023] VCC 743

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMON LAW DIVISION

Revised
Not Restricted
Suitable for Publication

Defamation List

Case No. CI-23-00471

BENJAMIN NATHAN FELDMAN	Plaintiff
v
WAYNE LINDSAY HUF	Defendant

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JUDGE:	HER HONOUR JUDGE CLAYTON
WHERE HELD:	Melbourne
DATE OF HEARING:	5 May 2023
DATE OF RULING:	15 May 2023
CASE MAY BE CITED AS:	Feldman v Huf (Ruling)
MEDIUM NEUTRAL CITATION:	[2023] VCC 743

RULING
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Subject:CIVIL PROCEDURE – DEFAMATION – COSTS

Catchwords:              Defamation – application to set aside judgment in default of appearance – whether judgment was regularly entered – informal service – costs –indemnity costs – whether defendant is entitled to indemnity costs due to special circumstances – breach of overarching obligations

Legislation Cited:      County Court Civil Procedure Rules 2018 (Vic), r6.03(1)(b), r6.11, r21.01; Civil Procedure Act 2010 (Vic), s19, s20, s23, s24

Cases Cited:Federal Bank v Bate (1889) 5 WN (NSW) 67; JRC Enterprises Pty Ltd v Zoomlion Australia-New Zealand Pty Ltd [2013] VSC 646; Lubura v Nezirevic (2013) 42 VR 43; French v Triple M Pty Ltd [2006] VSC 36; Maatouk v Katrib [2022] NSWDC 463

Ruling:  Application granted. No order as to costs. 

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Baum	Merton Lawyers
For the Defendant	Mr H Hassan	Budgen Allen Graham Lawyers

HER HONOUR:

1The plaintiff, Mr Benjamin Feldman, and the defendant, Mr Wayne Huf, are members of the owners corporation (“the OC”) for a property in Barkly Street, Elwood (“the property”).

2Mr Feldman commenced proceedings for defamation on 8 February 2023 alleging Mr Huf published two documents which contained defamatory imputations.  The documents were said to have been published on or about 23 December 2021 and on or about 18 March 2022 to members of the OC and residents of the property.

3Mr Feldman obtained judgment in default of appearance on 17 March 2023.  The matter was listed on the court’s own motion for directions on 30 March 2023.  On that occasion Mr Huf appeared by his lawyer and indicated his intention to apply to set aside the default judgment.

4Mr Feldman concedes that judgment ought be set aside, but only if Mr Huf pays his indemnity costs both of the application to enter judgment, and the application to set judgment aside.  Mr Feldman seeks payment into Court by way of security for costs, failing which the judgment be reinstated.

5Mr Huf, in turn, says judgment should never have been entered as service was not effected, and seeks his indemnity costs of his application to set judgment aside.

6The issues for determination are:

(a)   Whether judgment was regularly entered;

(b)   Whether the plaintiff is entitled to the usual costs order;

(c)   Whether the defendant is entitled to his costs of the application to set judgment aside.  

Was judgment regularly entered?

7There is no dispute that Mr Huf was properly served with a concerns notice on 17 December 2022.  Mr Huf contacted his solicitor, Mr Timothy Graham, on 19 December 2022 about the concerns notice.  On 20 December 2022, Mr Graham contacted Mr Huf to obtain further instructions but did not respond to the concerns notice, despite instructions to do so.  There is no legislative requirement for the defendant to respond to a concerns notice but had Mr Graham done so, Mr Feldman would have been aware that Mr Huf had engaged solicitors.

8Mr Feldman issued proceedings on 8 February 2023.

9Process server Glynis McNeight of “Gotcha Process Serving Agency” swore an affidavit of service dated 28 February 2023.  In her affidavit, she sets out what she contends amounted to formal service of the document.  Her account does not differ substantially in substance from Mr Huf’s account.[1]  It appears that on 11 February 2023, Ms McNeight “forcefully” knocked at Mr Huf’s front door, so forcefully that Mr Huf feared she would break the glass in the front door. When it was not answered she crept down the side of the house and peered in the windows where she spotted Mr Huf and said, “Bingo. You’ve been sprung”.  She conceded her actions “might have caused a fright” to Mr Huf.  On Mr Huf’s account, his young children were very frightened by the loud knocking, causing him to be concerned.  It is not difficult to imagine that very loud knocking accompanied by a person sneaking down the side of the property to peer into windows would cause considerable alarm.

[1]Affidavit of Wayne Huf dated 17 April 2023

10Mr Huf went to the back of his house to make sure the door was locked and did not answer the front door.  He heard Ms McNeight say something like “I know you’re in there”.  He did not recognise her.  It was understandable that he would not open his front door to a stranger forcefully knocking and venturing down the side of his property to peer in windows.

11Mr Huf went into the backyard to make sure the rear gate was locked.  Ms McNeight drove her car to the rear of the property.  She says she “quietly approached the gate”.  Mr Huf says she got out of her car and ran towards him, causing him to run back inside to his children.

12Ms McNeight says she could see Mr Huf standing about two feet from the fence so she threw the documents over the fence and “confirmed to Mr Huf that he had been served with the Letter, Writ and Statement of Claim”.  Mr Huf says he was inside with his children, did not see her throw the documents over the fence and never heard Ms McNeight identify herself or her purpose during the entirety of the interaction.

13The conduct of Ms McNeight was overzealous and liable to cause unnecessary alarm. Throwing documents over a fence does not, in my view, amount to putting the copy down in the person’s presence and telling the person the nature of the document in accordance with r6.03(1)(b) of the County Court Civil Procedure Rules 2018 (Vic) (“the Rules”).  She could not have known where Mr Huf was at the time the documents landed over the fence, nor known that he had been outside at the time she supposedly informed him of the nature of the documents.  

14Consequently, I am satisfied that personal service was not effected.

15However Mr Huf did, at some point, become aware of the documents.  He took a photograph of them and sought advice from his solicitor.  Mr Huf says after conferring with his solicitor he did not believe he had to take further action until he was properly served with the documents. This accords with Mr Graham’s evidence that he did not consider “throwing documents over a person’s fence without a proper explanation of their contents constituted personal service”.[2] 

[2]Affidavit of Timothy Graham dated 3 May 2023, page 3, paragraph 13

16Whilst I concur with Mr Graham that this conduct does not constitute personal service, Mr Graham should have advised Mr Huf that r6.11 of the Rules provide that where a document has not been served in the manner required by the Rules but has nevertheless come to the notice of the person, as had occurred in this case, the document shall be taken to have been served on the day it came to that person’s notice.

17In this case, on Mr Huf’s evidence, the document came to his notice about 20 minutes after Ms McNeight departed. Accordingly, pursuant to r6.11 Mr Huf was properly served.

18The Rules provide that where service has been effected and no notice of appearance has been entered, judgment can be entered.[3]

[3]County Court Civil Procedure Rules 2018 r21.01

19Judgment in this case was regularly entered.

Is the plaintiff entitled to his costs?

20Judgment having been regularly entered, Mr Feldman says he is entitled to his costs of having judgment entered and his costs of the application to set judgment aside.

21Mr Feldman relies on authority for the proposition that, where judgment is regularly entered, the Court will not set aside judgment except on terms that the defendant pay the plaintiff’s costs of the application to enter judgment and the application to set judgment aside.[4]  Further Mr Feldman says those costs ought to be on an indemnity basis.[5]

[4]Federal Bank v Bate (1889) 5 WN (NSW) 67

[5]JRC Enterprises Pty Ltd v Zoomlion Australia-New Zealand Pty Ltd [2013] VSC 646, [38]-[42]. See also Lubura v Nezirevic (2013) 42 VR 43

22Mr Huf says special circumstances exist which warrant a costs order in his favour.  He says Mr Feldman behaved unreasonably in applying for default judgment because he gave Mr Huf no prior notice of that application, and this was in breach of his overarching obligations under the Civil Procedure Act 2010 and contrary to established authority in defamation proceedings.[6]

[6]French v Triple M Pty Ltd [2006] VSC 36, [20]; Maatouk v Katrib [2022] NSWDC 463, [34]

23In particular, Mr Huf notes that the parties were fellow members of the OC, owners of premises in the same property and involved in other litigation.  There was no basis for Mr Feldman to consider he could not contact Mr Huf, alert him to the proceedings and inform him of the risk of not filing an appearance.

24Mr Huf notes that Mr Feldman was not aware that he had engaged lawyers, due to Mr Graham’s failure to respond to the concerns notice as instructed, and says that consequently the bar for Mr Feldman to provide proper warning was higher.

25I accept it would have been prudent for Mr Feldman’s lawyers to attempt to contact Mr Huf prior to entering judgment. 

26I note that Mr Feldman’s lawyer has assessed his client’s legal costs at nearly $25,000 for the application to enter judgment and to set judgment aside.

27Those costs could have been avoided if Mr Feldman had not rushed to enter judgment in default.  Given that he knew Mr Huf personally and remained in contact with him through the OC and other litigation, there could be no real doubt that he would be unable to locate Mr Huf.  Once he issued his proceedings, he had twelve months to serve it, so there was no time pressure.  Nor, in the circumstances of their interactions, which include other litigation, could Mr Feldman reasonably have formed the view that Mr Huf would not participate in proceedings.  I do not accept that entering judgment in default so promptly after issuing proceedings, without making any attempt to contact Mr Huf, resulted from a genuine belief that entering judgment would finalise the dispute.

28As a lawyer himself he must have known that the inevitable result of entering judgment in this matter would be an application to set that judgment aside.  If, as appears to be the case, he considered he would obtain his costs of doing so on an indemnity basis, his conduct suggests he wanted to cause Mr Huf a financial penalty.

29Even if I was satisfied that Mr Feldman had acted reasonably in entering judgment, once the matter came before the Court on 30 March 2023 and Mr Huf indicated his intention to make an application to set judgment aside, orders could have been made by consent without the need for parties to incur significant further costs in preparing affidavits and submissions for what ended up being a dispute solely about costs.

30In those circumstances I do not consider Mr Feldman is entitled to his costs.

Is the defendant entitled to his costs?

31However this does not mean that Mr Huf is entitled to his costs.

32The fact is that Mr Huf was represented by lawyers, and those lawyers failed to act on instructions in relation to the concerns notice and failed to provide appropriate advice about service of documents under the Rules.

33Mr Huf’s lawyers also have overarching obligations which they neglected. They knew that Mr Feldman was attempting to serve proceedings, indeed they should have known that, pursuant to r6.11, Mr Feldman had served those proceedings. They should have contacted Mr Feldman’s lawyers immediately, even if only to dispute that formal service had occurred.

34The considerable costs both parties have now incurred in entering judgment, attending a directions hearing, making an application, filing submissions and appearing at a hearing about costs, could all have been avoided if Mr Graham had picked up the phone to Mr Feldman’s lawyers after Mr Huf brought him the writ and statement of claim.

35In the circumstances, neither party acted in accordance with their obligations under the Civil Procedure Act 2010 to:

(a)   avoid undue delay and expense;

(b)   cooperate with the other party;

(c)   narrow the issues in dispute

(d)   ensure costs are reasonable and proportionate.[7] 

[7]Civil Procedure Act 2010 ss19, 20, 23, 24

36Both parties could have taken steps that would have avoided the need for this application.  In the circumstances, I do not consider that either party is entitled to an order that the other party pay his costs.

37Accordingly, I order that the judgment entered in default of appearance is set aside and there be no order as to costs.