Flynn v Taki Investments & Design P/L - [2010] SADC 56

District Court of South Australia
(Civil: Appeal Against a Master's Decision)
FLYNN v TAKI INVESTMENTS & DESIGN P/L
[2010] SADC 56
Reasons for Decision of His Honour Judge Beazley (ex tempore)
24 March 2010
PROCEDURE
Appeal against order of a Master made on 26 November 2009 dismissing the appellant’s application to set aside default judgment obtained by respondent – whether default judgment regularly obtained – presumptive service of Proceedings – onus on appellant to show a bona fide and plausible defence – appellant impecunious – no doubt that appellant indebted to the respondent – the conclusion of the Master that on the evidence before him there was no meritorious defence clearly correct – nothing in the additional affidavit “evidence” which the appellant sought to tender on the appeal, could lead to any other conclusion.
Held: Appellant has not demonstrated any error in Master’s reasons. Appeal dismissed with costs.
District Court Act 1991 (SA) s 43; District Court Rules 2006 R 229, 230 and 286, referred to.
House v The King (1936) 55 CLR 499; Way's (Aust) Pty Ltd v Partnership Systems Pty Ltd [No 2] [2004] VSC 330; Mulpara Pty Ltd v Thunder Enterprises [2008] SASC 94; Daly v Silley [1960] VR 353; Masters v Cameron (1954) 91 CLR 353; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 445; Khan v Khan (2004) 62 NSWLR 229 at 2430-244, considered.

FLYNN v TAKI INVESTMENTS & DESIGN P/L
[2010] SADC 56
Introduction

This is an appeal by the defendant Peter Flynn (the appellant) from orders made by a Master of this Court on 26 November 2009. The Master had on that day dismissed an application by the appellant to set aside a judgment obtained by the plaintiff, Taki Investments and Design Pty Ltd (the Respondent), in default of an appearance by the appellant.
The application centred upon the fact that the Master had previously ordered that the respondent could effect presumptive service of the proceedings upon the appellant at certain premises at Mile End in this State. In his application the appellant had also sought an order that the respondent serve a copy of the summons and statement of claim upon the appellant. As it transpired there is no doubt that subsequent to the default judgment being obtained, the appellant was personally handed a copy of the summons and statement of claim on 22 July 2009, when he attended at the office of the respondent’s solicitors.
The Master’s Orders
On 26 November 2009 the Master made the following orders:
1. That the appellant’s application (FDN 11) is dismissed.
2.That the appellant is to pay the respondent’s costs of and incidental to the application and the action.
3. Liberty to apply on the issue of the adjudication of costs.
4.That the Master noted that he had advised the appellant that he could appeal against these orders, or that he could bring a further application to set aside the default judgment.
The Background
The respondent Taki Investments and Design Pty Ltd issued proceedings against the appellant on 14 November 2007. It claimed that it had loaned the appellant the sum of $127,000 on 27 September 2005 and that the appellant had failed or refused to repay that sum and interest due to it under the terms of a certain loan agreement.
The appellant has never denied borrowing nor, indeed, receiving the said sum of $127,000. The respondent further asserted that the terms of the loan agreement were incorporated into a document, described as “an equitable mortgage”, over certain land to be developed by the appellant at Belair Road, Torrens Park. The respondent had not sought to register the “equitable mortgage” over the land comprised in Certificate of Title Register Book vols. 5859 and 5869 folio 942.
In the subject proceedings the respondent further asserted that the appellant had failed to make repayments from about 8 April 2007, and that there was due and owing to it the loaned sum of $127,000 plus interest in the sum of $14,161.37 as at the date of the commencement of the proceedings.
The respondent had served the proceedings upon the appellant on 20 February 2009 pursuant to the order for presumptive service upon certain premises at Mile End. The respondent entered judgment in default of appearance on 25 March 2009.
The Masters Reasons
The Master delivered ex-tempore reasons for the orders he ultimately made. The appellant who was unrepresented before the Master, and in this court, had submitted that he had not been served with the proceedings; that he had a meritorious defence and counterclaim, and that he wished to defend the proceedings.
As to the question of service, the Master set out the history of the proceedings. It was apparent that the respondent had attempted unsuccessfully to effect personal service upon the appellant. Accordingly, the Master, having been satisfied on the evidence that the appellant had in the past employed a Mile End address as an address for service, made an order for presumptive service to be effected at that address. Despite submissions to the contrary from the appellant, the Master affirmed that the Mile End address was appropriate for such presumptive service. Indeed the appellant had conceded before the Master that, generally, documents delivered at that address would eventually reach him; because a secretary known to him, resided at that address. He submitted that on this occasion the documents had not been received at that Mile End address. It is trite that where a default judgment has been irregularly obtained the court will set it aside without the need for an application to explain the default, nor to show an arguable defence. [1] The Master however was satisfied that the documents had been so served, and thus the appellant would have received those documents in the ordinary course of post. In my opinion, the order which had been previously made by the Master in February 2009 as to presumptive service, and which was itself not the subject of a ground in the Notice of Appeal, was in fact properly made.
[1] See: Daly v Silley (1960) VR 353; Mulpara Pty Ltd v Thunder Enterprises [2008] SASC 94; and Way's (Aust) Pty Ltd v Partnership Systems Pty Ltd (No.2) ]2004] VSC 330
The Master held that the respondent’s summons had been duly served on 20 February 2009, and that the default judgment entered administratively on 25 March 2009, was regularly obtained. Again there is no proper basis for the appellant to challenge those findings. What remained was whether the appellant could establish a meritorious defence.
The Master noted that the application to set aside judgment was filed only on 20 July 2009; shortly before the appellant was personally served by the respondent in about November 2006, with a Bankruptcy Notice.
The appellant had sought an adjournment of the hearing of the application to set aside the default judgment to enable him to investigate his loan agreement with the respondent. The Master had made an order on 8 September 2009 directing that the matter be set down for argument. Following various administrative problems the argument was listed for 26 November 2009. The appellant was unrepresented and had failed to file any affidavit setting out the basis for an arguable defence.
The Master invited him to explain the factual basis of any alleged defence to the respondent’s claim. The respondent asserted that an “arrangement” had been entered into with the respondent whereby the respondent would provide an additional loan in the sum of $55,000. The Master enquired of the appellant as to whether there was any documentation as to that additional loan and why the loan was not forthcoming. The appellant responded:
I’m not sure. I’m not sure if he didn’t have the funds or whether we didn’t finalise the deal. I really need to get discovery from [the appellant’s] agent John Fabian to find out what happened to the deal in the end.
In effect the highest the appellant could put his “defence” before the Master was that there was some deal but he could not explain it until he was told by his own agent, Mr Fabian, why the deal had not been consummated.
The Master concluded that even if such an “arrangement” had been in contemplation, the appellant could not establish that the arrangement had been carried into effect. Indeed based on the appellant’s explanation, the “arrangement” was no more than a proposal which had not been accepted by the respondent. Accordingly, the Master rejected the appellant’s assertions of a meritorious defence, - and concluded that there was no arguable defence. He rejected the application to adjourn the proceedings and dismissed the application to set aside the default judgment accordingly.
The Master noted that the appellant was always at liberty to bring a further application to set aside the default judgment in the event that he could establish an arguable defence. The appellant elected to appeal against the whole of the orders of the Master.
Notice of Appeal
In his notice of appeal the appellant sought orders that the judgment be set aside and that he be permitted to file a defence within 21 days. The notice of appeal of some seven pages was a well drawn document, detailing precisely the points which had been made before the Master. In addition, on the day of the hearing, the appellant sought to tender affidavits deposing to matters which he alleged gave rise to some form of estoppel. There is no doubt that the appellant is a highly intelligent man, quite capable of competently presenting his arguments before this court as he did before the Master.
The Grounds of Appeal
In essence in his grounds of appeal the appellant asserts:
1.That service of the proceedings had not been properly effected upon him.
2.That he first knew of the default judgment in the month of July 2009, when he learnt that the respondent had issued a bankruptcy notice against him.
3.That he had a meritorious defence on the basis that “the respondent agreed to desist from making future demands for repayments of moneys allegedly advanced to the appellant, on the basis that he would enter into a developing building project with the appellant and be recompensed for any losses that he may have incurred in his dealings with the appellant”.
4.That the Master ought to have granted him an adjournment to adduce further evidence.
The Hearing of the Appeal
The appeal was listed for hearing on 17 March 2010. The appellant did not attend, however his friend, Mr Steele, attended to seek an adjournment for six to eight weeks. The appellant had filed an affidavit to which was exhibited a report from the Psychologist Mr Graham Killoran. I adjourned the appeal until today. The appellant attended and did not seek to further adjourn the hearing on the basis of alleged ill health.
One of the grounds in the Notice of Appeal is that the Master ought to have adjourned that application to set aside the judgment to enable the appellant to seek documents from his agent Mr Fabian, which might have disclosed the nature of the alleged agreement reached with the respondent in November 2006. When he was asked why he hadn’t made contact with Mr Fabian to enquire why “the agreement” had not been carried into effect, he explained that he had been too busy with the project. The appellant sought to tender, inter alia, affidavits sworn by him on 15 March 2010 and 24 March 2010 respectively.
Affidavit sworn 15 March 2010
In his affidavit sworn on 15 March 2010, the appellant exhibited emails, dated 25 February 2010, which noted the recent death of Mr Fabian, and explained that Mr Fabian’s estate did not contain any relevant records of the appellant’s alleged business dealings with the respondent.
In his exhibited report dated 9 March 2010 the psychologist Mr Graham Killoran opined that the appellant had suffered from a deteriorating depressive condition from at least 23 February 2009 and which had, been the subject of an earlier report from Mr Killoran dated 23 February 2009. That latter report was not produced by the appellant. That date of 23 February 2009 is of course shortly after the presumptive service at the Mile End address.
Mr Killoran’s diagnosis in February 2009 was of a chronic adjustment disorder, “occupational problems and stressful work conditions”. The major cause of that disorder was said to be with the combination of work events and a death threat. The opinion of Mr Killoran was that the appellant needed ongoing psychological help for at least a further unspecified period until legal issues were resolved.
On 1 December 2009, one day after the Master had emailed his reasons to the appellant, Mr Killoran noted that the appellant faced more stressors involving legal matters and death threats.
In his further addendum report Mr Killoran, explained that whenever the appellant faced any hearings in the subject proceedings, his condition worsened. It is clear that the Master treated the appellant with a great deal of sympathy. The application was adjourned from time to time. It can hardly be in the appellant’s interest to simply continue to adjourn the proceedings. While these matters continue the appellant’s health will not improve. The transcript made it plain that the appellant had competently presented his case to the Master. The Master left it open for the appellant to make a fresh application should additional evidence come to hand.
Nature of Appeal
The appeal is brought pursuant to s 43 of the District Courts Act, 1991. The appeal is by way of rehearing pursuant to the District Court Rules, 2006; and in particular 6 DCR 292. This rule reflects an intention to narrow the scope of the rehearing, so that this court ought not interfere with the exercise of a discretion unless it can be shown that there was some error in the manner in which the Master exercised his discretion.[2]
[2] See House v The King (1936) 55 CLR 499 at 505
In this case the Master exercised his discretion to decline an adjournment.
As I have already said on the evidence before him the decision of the Master to decline an adjournment was clearly correct.
I turn then to the affidavit sworn by the appellant on 24 March 2010.
Affidavit sworn 24 March 2010
The appellant deposed to what he alleged was evidence of a genuine dispute. He now alleged that there was in fact an agreement reached with a director of the respondent whereby the respondent would not seek to recover its loan until the Belair Road property was completed, and that the respondent would lend the appellant a further sum of $75,000 rather than the sum of $55,000 to which he had referred before the Master. His exhibited to that affidavit an affidavit of Mr Steele deposing to his recollection of such an agreement.
Mr Steele deposed to his involvement in the business dealings between the appellant and the respondent and confirmed the appellant’s affidavit about a meeting with the respondent’s director Mr Taki at Mr Taki’s home.
He asserted that an agreement had been reached between the appellant and the respondent whereby the respondent would lend some further money. He said that he recalled that a formal agreement was to be prepared by John Fabian. He purported to speculate as to why the respondent had not proceeded with the agreement.
Appellant’s Submissions
The appellant essentially repeated the submissions that he had made before the Master, save for asserting that in light of his affidavit sworn on 24 March 2010, the court ought to conclude that the appellant had a genuine defence in that the respondent ought be estoppel from obtaining or enforcing judgment against him.
Respondent’s submissions
Counsel for the respondent relied upon the findings and reasons of the Master, and submitted that the appeal was entirely without merit.
Discussion
The appellant’s asserted defence before the Master was that in November of 2006, the respondent was considering a proposal to lend a further sum of $55,000 and to convert his loan of $127,000 into capital in a joint venture, with the appellant with respect. The affidavit sworn on 24 March 2010, despite revising the additional loan to $75,000, does not improve the appellant’s case.
On the appellant’s own admission, such an “agreement” was never carried into effect. Before the Master, all the appellant could say was that his agent, who is now deceased, may well have some documents to explain what had happened.
In my opinion the “evidence” of the alleged agreement contained in the respective affidavit of the appellant and Mr Steele does not assist the appellant in his assertion that he has a meritorious defence.
On the most favourable view of those affidavits any arrangement between the respondent and the appellant was always to be subject to formal documentation. No formal documentation was prepared.[3] In fact whether the additional loan was to be in the sum of $55,000, as stated to the Master; or $75,000 or $100,000 as later alleged by the appellant, no such sum was ever produced, nor did the appellant demand payment of the same.
[3] See Masters v Cameron (1954) 91 CLR 353
The documentation was not prepared, and was not executed by the respondent. On the evidence before me, no defence arises pursuant to an agreement;[4] nor in estoppel.[5] It may be that the appellant can in the future, adduce evidence which can support a meritorious defence. However on the evidence before the Master supplemented by the affidavits sworn on 15 and 24 March 2010 there is no such meritorious defence. As the Master concluded, it was a proposal which was never consummated. Indeed the appellant conceded before the Master:
[4] See Masters v Cameron (1954) 91 CLR 353
[5] See Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 445; cf Khan v Khan (2004) 62 NSWLR 229 at 243-244
I thought we had reached an agreement when we left because we shook hands on it but I think the devil was in the detail, it did not progress from there …I don’t know whether Taki just pulled out because he did not have the money or changed his mind or what the circumstances were. I was involved in the construction of $6 billion worth of properties. I wasn’t as focussed on that little element. That was just put to me as a resolution between Taki’s representative and myself, just a way to convert his outstandings into something where he had an equitable interest.
Conclusion
The Master had before him the clearest possible evidence that the loan monies totalling $127,000 had been received by the appellant in September 2005. The respondent had been kept out of its money since 2007.
Even allowing for the fact that the appellant was unrepresented, there was no basis for the adjournment of the proceedings nor was there any basis at all for setting aside the default judgment on the evidence before the Master.
Considering the matter at its highest for the appellant it is obvious that no arrangement was ever formalised. In my view there is no arguable defence.
In my opinion the appellant, having put his case at its highest, has not demonstrated any error in the Master’s reasons based upon the evidence before him, nor on the additional evidence contained in the affidavits tendered on the appeal.
Accordingly the appeal is dismissed.
The formal orders of the court are:
1. That the appeal be dismissed.
2.That the appellant pay to the respondent the costs of an incidental to the appeal to be taxed or agreed.