G.D.K Electrical Services Pty Ltd (in liq) v Taylor
[2016] WADC 165
•25 NOVEMBER 2016
G.D.K. ELECTRICAL SERVICES PTY LTD (in liq) -v- TAYLOR [2016] WADC 165
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 165 | |
| 01/12/2016 | |||
| Case No: | CIV:4548/2015 | 25 NOVEMBER 2016 | |
| Coram: | DERRICK DCJ | 25/11/16 | |
| PERTH | |||
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| PDF Version |
| Parties: | G.D.K. ELECTRICAL SERVICES PTY LTD (in liq) GARRIE TAYLOR |
Catchwords: | Practice and procedure Appeal against decision of registrar refusing application to set aside default judgment |
Legislation: | District Court Rules 2005 (WA) Rules of the Supreme Court 1971 (WA) Civil Judgments Enforcement Act 2004 (WA) Corporations Act 2001 (Cth) |
Case References: | Cole & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 French v Triple M Melbourne Pty Ltd [2006] VSC 36 Hall v Hall [2007] WASC 198 Hazart Pty Ltd v Rademaker (1993) 11 WAR 26 Hogg v J Isherwood-Hicks Pty Ltd (1992) 108 FLR 262 Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [2009] WASC 10 Starrs v Retravision (WA) Pty Ltd [2012] WASCA 67 The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257 (S) The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257; (2007) 35 WAR 412 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
GARRIE TAYLOR
Defendant
Catchwords:
Practice and procedure - Appeal against decision of registrar refusing application to set aside default judgment
Legislation:
District Court Rules 2005 (WA)
Rules of the Supreme Court 1971 (WA)
Civil Judgments Enforcement Act 2004 (WA)
Corporations Act 2001 (Cth)
Result:
Appeal allowed
Representation:
Counsel:
Plaintiff : Mr M D Williams
Defendant : Mr S D Blyth
Solicitors:
Plaintiff : Valenti Lawyers
Defendant : Lewis Blyth & Hooper
Case(s) referred to in judgment(s):
Cole & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
French v Triple M Melbourne Pty Ltd [2006] VSC 36
Hall v Hall [2007] WASC 198
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Hogg v J Isherwood-Hicks Pty Ltd (1992) 108 FLR 262
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [2009] WASC 10
Starrs v Retravision (WA) Pty Ltd [2012] WASCA 67
The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257 (S)
The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257; (2007) 35 WAR 412
- DERRICK DCJ:
Introduction
1 On 29 June 2016 the defendant filed a notice of appeal against a decision of a registrar of this court dismissing the defendant's application to set aside a default judgment that had been entered against him. The appeal was ultimately listed to be heard on 25 November 2016.
2 On the afternoon of 24 November 2016 the plaintiff's solicitors sent an email to the court advising that the plaintiff would not oppose the making of the final orders sought by the defendant on the appeal save for the order sought by the defendant in relation to costs. This advice was provided despite the fact that the plaintiff had on the morning of 24 November 2016 filed an outline of submissions in opposition to the appeal being allowed.
3 At the hearing of the appeal on 25 November 2016 I made orders in the following terms:
1. The appeal is allowed;
2. The default judgment entered against the defendant is set aside;
3. The defendant is given leave to defend the action;
4. The defendant is to file and serve a defence within 14 days;
5. The action is listed for a directions hearing before a registrar at 9.30 am on 17 January 2017; and
6. The defendant's application that the plaintiff pay the costs of application to set aside the default judgment and the costs of the appeal is adjourned to a date to be fixed with liberty to apply.
4 The order adjourning the issue of costs was made at the request of the parties.
5 At the hearing of the appeal I said that I would publish written reasons for my decision allowing the appeal. These are my reasons.
Background to the appeal
6 The defendant was at all material times the general manager of the plaintiff and the husband of the sole director of the plaintiff.
7 On 22 December 2015 the plaintiff commenced proceedings against the defendant by writ of summons endorsed with a statement of claim. The writ and statement of claim was personally served on the defendant on 22 December 2015.
8 The plaintiff's claim as pleaded in the statement of claim can be summarised as follows:
1. In or around October 2010 the plaintiff, at the defendant's request, agreed to lend, and the defendant agreed to borrow, money pursuant to certain terms and conditions (the Loan Agreement): statement of claim, par 4;
2. Between 19 October 2010 and 30 August 2014 the plaintiff loaned money to the defendant pursuant to the Loan Agreement (the loaned funds): statement of claim, par 5;
3. It was an implied term of the Loan Agreement that the defendant would repay the loaned funds: statement of claim, par 6;
4. It was a term of the Loan Agreement that the loaned funds were repayable on demand: statement of claim, par 7;
5. As at 17 September 2015 the defendant was indebted to the plaintiff in the sum of $103,800.71 (the debt) being monies which the defendant had borrowed from the plaintiff pursuant to the Loan Agreement: statement of claim, par 8;
6. On 17 September 2015 the plaintiff's liquidators, acting on behalf of the plaintiff, demanded repayment of the debt by the defendant: statement of claim, par 9;
7. In breach of the implied term of the Loan Agreement the plaintiff has failed to repay the debt to the plaintiff: statement of claim, par 10; and
8. In the alternative, the debt is money had and received by the defendant to the use of the plaintiff as particularised in a document titled 'Account Transactions [Accrual]' for the period 19 October 2010 to 16 September 2014: statement of claim, par 11.
9 On the basis of the above allegations the plaintiff claims payment by the defendant of the sum of $103,800.71 and interest thereon.
10 In par 4 of the statement of claim the plaintiff, under the heading 'Particulars of Loan Agreement', pleads as follows:
Full particulars of the Loan Agreement and its terms and conditions will be provided upon receipt of the defendant's answers to the plaintiff's interrogatories as the circumstances in which the Loan Agreement was made, and its terms and conditions, are in the sole knowledge of the defendant.
11 On 29 December 2015 the defendant filed a memorandum of appearance pursuant to and in accordance with r 22A of the District Court Rules 2005 (WA) (the DCR). The defendant's memorandum of appearance revealed that he was at the time unrepresented.
12 On 20 January 2016 the court sent a letter to the defendant bearing that date in which it advised the defendant that the matter had been listed for a directions hearing on 4 March 2016. By the letter the court also informed the defendant that if the parties were likely to seek the 'usual programming orders' at the directions hearing then 'it may be that those orders can be made by consent'. In the letter the court directed the defendant to the relevant Circular to Practitioners as well as to the court's website for the purposes of locating 'some pro forma consent orders containing the usual programming orders'.
13 The date by which the defendant was required under O 20 r 4(1) of the Rules of the Supreme Court 1971 (WA) (the RSC) to file and serve his defence was 7 February 2016: RSC, O 3 r 3. The defendant did not file his defence by this date.
14 On 10 February 2016 the plaintiff, as a result of the defendant's failure to file his defence, obtained default judgment against the defendant pursuant to O 22 r 2(1) of the RSC. The terms of the judgment were as follows:
No defence having been filed by the Defendant herein, it is this day adjudged that the Defendant do pay to the Plaintiff the sum of $103,800.71 together with:-
1. Interest on the sum of $103,800.71 from 17 September 2015 up to and including 9 February 2016, totalling $2,474.15 being 145 days at the daily rate of 17.063.
2. The Defendant do pay the Plaintiff's costs of the action to be taxed if not agreed.
15 On or about 3 March 2016 the plaintiff's solicitors sent a letter to the defendant, incorrectly dated 3 March 2015, informing the defendant that they acted on behalf of the plaintiff, that the court had entered default judgment against him on 10 February 2016, that the directions hearing listed for 4 March 2016 had been vacated, and that his appearance on that date was therefore no longer necessary. After receiving the plaintiff's solicitor's letter the defendant sought legal advice and engaged his current solicitors.
16 By chamber summons dated 17 March 2016 filed on 18 March 2016 the defendant made an application under O 22 r 10 of the RSC to set aside the default judgment entered against him (the application). In support of the application the defendant filed an affidavit sworn by himself on 17 March 2016 and an affidavit sworn by Ms Kristy Lewis on 27 May 2016. Ms Lewis is a solicitor employed by the defendant's solicitors.
17 In his affidavit the defendant deposed to the following:
…
4. On or about 23 December 2015 I was personally served with the Writ of Summons for the action.
5. On 29 December 2015 I filed a Memorandum of Appearance for the action in the District Court.
6. On 20 January 2016 I received a letter from the District Court advising that the matter had been listed for a directions hearing on 4 March 2016 at 10:30am ('Directions Hearing'). Attached hereto and marked ('GT1') is a copy of the letter.
7. At this time, I was a self-represented litigant and was not aware that the Rules of Supreme Court 1971 (WA) required me to file a defence before the date of the Directions Hearing. I had just assumed that the Court would order me to file a Defence at the Directions Hearing.
8. On or about 3 March 2016 I received a letter from the Plaintiff's Solicitors, Valenti Lawyers, advising that:
(a) the Court entered default judgment on 10 February 2016; and
(b) the Directions Hearing had been vacated.
Attached hereto and marked ('GT2') is a copy of the letter.
9. I was not aware until 3 March 2016 that I had a default judgment entered against me on 10 February 2016. Also I did not understand the appropriate Court process to apply to set aside a default judgment.
10. I have now sought legal advice and wish to have the judgment against me set aside so that I will have the opportunity to defend this action.
11. I believe that I have a good defence to the action. My defence is that:
(a) I never requested to borrow moneys from the Plaintiff;
(b) I never entered into a loan agreement with the Plaintiff;
(c) I never borrowed any moneys from the Plaintiff;
(d) I am not indebted to the Plaintiff in the sum of $103,800.71 or any amount at all; and
(e) any monies that I may have received from the Plaintiff were:
i. for payment of services I provided to the Plaintiff; or
ii. spent on promotional activities for the Plaintiff.
18 In her affidavit Ms Lewis deposed to the following:
…
3. I make this affidavit in support of the Defendant's application to have default judgment set aside.
…
6. On 6 April 2016 Lewis Blyth & Hooper sent Valenti Lawyers an email requesting a copy of the document referred to in the particulars to paragraph 11 of the Statement of Claim titled 'Account Transactions [Accrual]' ('the Document').
7. On 7 April 2016 Valenti Lawyers emailed Lewis Blyth & Hooper a copy of the Document. Attached hereto and marked ('KJL1') is a copy of the email and the Document.
8. The Document:
(a) has inter alia a heading titled 'Garrie Taylor – Loan' and numerous transactions are listed thereunder ('Loan Account');
(b) provides that the total debit balance under the Loan Account is $413,499.28;
(c) provides that the total credit balance under the Loan Account is $531,840.23; and
(d) therefore provides that the Loan Account has a credit balance of $118,340.95.
9. By letter dated 8 April 2016 Lewis Blyth & Hooper:-
(a) advised Valenti Lawyers of the facts in the above paragraph;
(b) advised Valenti Lawyers in effect that notwithstanding the Defendant does not admit the accuracy of the Document, the Document does not support the Plaintiff's allegation that the amount of $103,800.71 is owed by the Defendant, to the Plaintiff, pursuant to the alleged loan agreement or is money had and received by the Defendant to the use of the Plaintiff;
(c) further advised Valenti Lawyers that the Document appears to provide that the Plaintiff owes the Defendant the amount of $118,340.95; and
(d) requested that Valenti Lawyers advise as to how the Document supports the Plaintiff's allegation that the amount of $103,800.71 is:
i. owed by the Defendant, to the Plaintiff, pursuant to the alleged loan agreement; or
ii. money had and received by the Defendant to the use of the Plaintiff.
Attached hereto and marked ('KJL2') is a copy of the letter.
10. On 13 April 2016 Valenti Lawyers emailed Lewis Blyth & Hooper and advised inter alia that:
(a) they were seeking instructions from the liquidators of the Plaintiff in regards to the matters set out in Lewis Blyth & Hooper's letter of 8 April 2016 and, in particular, the assertion that the loan account between the Plaintiff and the Defendant has a credit balance; and
(b) they anticipated those instructions would be forthcoming in the next day or two.
11. As at the date of signing this Affidavit, Lewis Blyth & Hooper has not received any further correspondence from Valenti Lawyers in respect to the matters raised in Lewis Blyth & Hooper's letter of 8 April 2016.
19 Ms Lewis' description in par 8 of her affidavit of the contents of the document referred to in par 11 of the statement of claim and attached to her affidavit (the Account Transactions document) is accurate. The full title of the Account Transactions document (leaving out the reference to the plaintiff's address) is 'GDK Electrical Pty Ltd Account Transactions [Accrual]'. The Account Transactions document, so far as it relates to the defendant, covers the period 19 October 2010 to 2 September 2014.
20 In opposition to the application the plaintiff filed an affidavit sworn by Mr Cameron Shaw on 20 May 2016. In his affidavit Mr Shaw relevantly deposed as follows:
1. I am a registered liquidator, registration number 430750, and I am one of the joint and several liquidators of G.D.K Electrical Services Pty Ltd (In Liquidation) (ACN 127 672 253) (Company).
2. I am duly authorised to swear this affidavit on behalf of Richard Albarran, the other joint and several liquidator.
3. I make this affidavit in support of the Plaintiff's response to the Defendant's Chamber Summons dated 17 March 2016 seeking to set aside the default judgment which was regularly entered against him on 10 February 2016.
4. On 22 October 2014, the Plaintiff's creditors resolved to liquidate the affairs of the Plaintiff and Richard Albarran (Mr Albarran) and I were appointed as the liquidators of the affairs of the Plaintiff.
…
10. As one of the liquidators of the Plaintiff, I have access to and have reviewed the book and records of the Plaintiff.
11. The Plaintiff's records, accessed on 11 December 2015, indicate that there is a loan account between the Defendant and the Plaintiff which shows $107,893.97 is presently due and owing to the Plaintiff from the Defendant in respect of that loan.
12. Attached hereto and marked 'CSH3' is a true copy of a list of the accounts held by the Plaintiff as at 11 December 2015 and the current balances.
13. The Defendant asserts, in his affidavit sworn on 17 March 2016, that he did not borrow any moneys from the Plaintiff, and that, further, any moneys which were received were for payment for services or for promotional activities for the Plaintiff. The Defendant has failed to produce any documentary evidence in support of those assertions.
14. I make this affidavit on behalf of the Plaintiff and in support of its opposition to the Defendant's Chamber Summons application dated 17 March 2016.
21 The list of accounts held by the plaintiff attached to Mr Shaw's affidavit is a document headed 'GDK Electrical Pty Ltd Accounts List [Summary]' and is dated 5 April 2016 (the Accounts List). The Accounts List contains an entry under the heading 'Assets' which records 'Garrie Taylor – loan $107,893.97'.
22 On 24 June 2016 the application was heard by the registrar.
23 During the course of the hearing of the application the defendant's counsel submitted, in essence, that the default judgment should be set aside for the following reasons:
1. The defendant had provided an explanation for failing to file the defence within the prescribed time limit;
2. The plaintiff had 'snapped' default judgment on the defendant without communicating with the defendant;
3. The defendant had not delayed in bringing his application to set aside the default judgment; and
4. The defendant had established 'an arguable defence on the merits which is a low threshold' (ts 2).
24 At the commencement of the plaintiff's counsel's submissions the registrar informed the plaintiff's counsel that he was 'not interested' in hearing about the circumstances that gave rise to the default judgment or the fact that the default judgment had been entered without the plaintiff's solicitors making any contact with the defendant. In this regard the registrar said (ts 5):
I should say, I don't believe that any plaintiff has any obligation to the defendant to inform them of anything. They are given notice in the writ that they are required to do something and if they don't, there may be consequences and that's all that's happened here.
25 In the course of making his submissions the plaintiff's counsel pointed out to the registrar that on the plaintiff's pleaded case the Account Transactions document related only to the plaintiff's claim for money had and received. The plaintiff's counsel then told the registrar that the plaintiff accepted 'that there appears to be an error' in the Account Transactions document and 'that it appears to give a credit to the defendant' and that consequently 'in respect of this hearing today, the plaintiff isn't relying on that particular cause of action and is only relying on the loan agreement' (ts 6).
26 In arguing against the setting aside of the default judgment, the plaintiff's counsel submitted, in essence, that the defendant's bare assertion made in his affidavit sworn on 17 March 2016 that he did not enter the Loan Agreement, did not request to borrow any money from the plaintiff and did not borrow any money from the plaintiff was not sufficient to establish that he had a defence on the merits.
27 As I have already indicated, the registrar dismissed the application. In giving oral reasons for his decision the registrar stated that the plaintiff's pleaded claim was 'fairly thin' in that it asserts the existence of a loan but does not plead anything other than an implied term of the loan (ts 8). The registrar then continued as follows (ts 9 - 10):
When I say that the claim was thinly pleaded where it comes to the allegation of the loan, the particulars of the loan are stated to be – particulars will be forthcoming after the plaintiff had – defendant has answered the plaintiff's interrogatories as to the circumstances in which the loan agreement was made and its terms and conditions because they're in the sole knowledge of the defendant. One would think that it's a relatively easy onus for the defendant to discharge in the application. It would simply be a matter of the defendant expressing more or less the parameters of what he knows about his relationship, the relationship that he has with the plaintiff.
Unfortunately he doesn't say anything much about – well nothing about the relationship at all except to suggest that there may have been a relationship where – well, such that he would provide services to the plaintiff and there may be a relationship as such that he would undertake or engage promotional activities on behalf of the plaintiff but there's nothing more than a suggestion of those relationships. There's no detail at all.
Other than that, there's simply a denial that he ever requested to borrow moneys from the defendant, that he ever entered into an agreement, a loan agreement with the plaintiff, and that he never borrowed any moneys from the plaintiff, so essentially if judgment was set aside, he would require the plaintiff to establish its case.
In my opinion, in bringing an application such as this, an applicant has always got to go further than to suggest that it's appropriate that discretion be exercised such as would require the plaintiff to prove its case at trial. The defendant needs to bring some evidence which would justify the plaintiff being put to that task.
… [I]n the case where there's a suggestion that there is a relationship or are relationships and it's in the context of those relationships that the defendant says that he's never borrowed or never requested to borrow money from the plaintiff which may be regarded as qualified evidence, similarly I've never entered into a loan agreement with the plaintiff and I've never borrowed any money from the plaintiff, those defences or those denials, in the absence of evidence as to the extent of the relationships or the relationship is insufficient to justify an exercise of discretion in favour of the defendant. He needs to bring evidence and he hasn't done so.
As to the balance of considerations, they're of no particular consequence. On their own they're not going to be sufficient to justify an exercise of the discretion in favour of the defendant and, as I have indicated earlier, there's nothing in the circumstances of judgment being entered that, in my opinion, tell against the plaintiff at all.
The appeal
28 By notice of appeal filed on 29 June 2016 the defendant appealed against the registrar's decision dismissing the application. In support of his appeal the defendant filed a further affidavit sworn by him on 19 September 2016 and a further affidavit sworn by Ms Lewis on 23 November 2016.
29 In pars 4 to 8 of his affidavit the defendant, under the heading 'The reason why I did not file a Defence' substantially repeats the explanation that he gave in his affidavit sworn on 17 March 2016 for not filing a defence within the prescribed time period. In addition, in pars 9 and 10 of his affidavit the defendant deposes to the following:
9. On or about 11 March 2016:
(a) I sought legal advice in respect to the action and the default judgment from Lewis Blyth & Hooper;
(b) Kristy Lewis of Lewis Blyth & Hooper advised me that default judgment was entered against me because I did not file a defence within 14 days after the last day of the time limited for entering an appearance;
(c) I advised Kristy Lewis of Lewis Blyth & Hooper that I wanted the opportunity to defend this action; and
(d) I instructed Kristy Lewis of Lewis Blyth & Hooper to apply to the District Court to set aside the default judgment.
10. At all material times prior to 11 March 2016:
(a) I was a self-represented litigant;
(b) I was not aware that:
(i) I was required to file a defence within 14 days after the last day of the time limited for filing an appearance, and therefore prior to the Directions Hearing; and
(ii) default judgment could be entered against me if I failed to comply with paragraph 10(b)(i); and
(c) I had assumed that the District Court would order me to file a defence at the Directions Hearing.
…
30 In relation to the issue whether he has a defence to the plaintiff's claim against him, the defendant deposes to the following:
14. I was the general manager of the plaintiff from on or about 21 September 2007 until the date the plaintiff went into liquidation being on or about 22 October 2014.
15. I have never been a director or secretary of the plaintiff. Attached hereto and marked 'GT3' is a copy of an ASIC current and historical company extract for the plaintiff.
…
Loan Agreement Claim
17. In respect to the Loan Agreement Claim:
(a) I never requested to borrow moneys from the plaintiff;
(b) the plaintiff never agreed to lend me any money;
(c) I never agreed to borrow any money from the plaintiff;
(d) I never entered into any Loan Agreement with the plaintiff;
(e) the plaintiff has never loaned me any monies pursuant to the alleged Loan Agreement or at all;
(f) I never borrowed any moneys from the plaintiff pursuant to the alleged Loan Agreement or at all; and
(g) I am not indebted to the plaintiff in the sum of $103,800.71 or any amount at all.
18. I had no knowledge that the plaintiff had recorded a loan to me in its books until these proceedings were commenced.
19. For the reasons set out in paragraph 17 above, I verily believe that any record of a loan to me in the plaintiff's books is incorrect.
20. I cannot produce any documentary evidence to support my assertions in paragraph 17 above as I did not enter into any Loan Agreement with the plaintiff and the plaintiff never loaned me any money.
21. I verily believe that I have a good defence to the Loan Agreement claim for the reasons set out in paragraph 17 to 20 (inclusive) above.
Money Had and Received Claim
22. I have never had or received any money to the use of the plaintiff.
23. Kristy Lewis of Lewis Blyth & Hooper has advised me and I verily believe that on 7 April 2016 Valenti Lawyers emailed Lewis Blyth & Hooper a copy of the 'Account Transactions [Accrual]' document, being the document the plaintiff claims particularises the money I had and received to the use of the plaintiff.
24. On or about 7 April 2016:
(a) Lewis Blyth & Hooper emailed me a copy of the 'Account Transactions [Accrual]' document; and
(b) I viewed the document for the first time.
Attached hereto and marked 'GT4' is a copy of the 'Accounts Transactions [Accrual]' document.
25. I do not admit the accuracy of 'Account Transactions [Accrual]' document.
26. However, the 'Accounts Transactions [Accrual]' document:
(a) has inter alia a heading titled 'Garrie Taylor – Loan' and numerous transactions are listed thereunder ('the Account');
(b) provides that the total debit balance of the Account is $413,499.28;
(c) provides that the total credit balance of the Account is $531,840.23.
27. Therefore, the 'Account Transactions [Accrual]' document:
(a) provides that the Account has a credit balance of $118,340.95;
(b) does not support the plaintiff's allegation that I had and received money to the use of the plaintiff in the sum of $103,800.71 or any amount at all; and
(c) provides that the plaintiff owes me the sum of $118,340.95.
28. I believe that I have a good defence to the plaintiff's Money Had and Received Claim for the reasons outlined in paragraphs 22 to 27 (inclusive) above.
29. If judgment were set aside, I believe that I would have a real prospect of successfully defending the claim.
31 In her affidavit sworn on 23 November 2016 Ms Lewis annexes copies of correspondence entered into between her firm and the plaintiff's solicitors during the period 21 March 2016 to 7 November 2016.
32 The plaintiff did not file any affidavits on the appeal.
Nature of the appeal
33 The appeal is brought under r 15(1) of the DCR.
34 An appeal from the decision of a registrar to a judge under r 15(1) of the DCR is a hearing de novo: DCR r 15(6); Hazart Pty Ltd v Rademaker (1993) 11 WAR 26, 28. I am therefore to treat the application as though it had not been previously determined. It is not necessary for the plaintiff to establish appealable error on the part of the registrar: Hazart Pty Ltd v Rademaker (28); Cole & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 [13], [14].
35 Given that the appeal is a hearing de novo I received into evidence on the appeal the affidavits sworn by the defendant on 19 September 2016 and the affidavit sworn by Ms Lewis on 23 November 2016.
Legal principles
36 It is convenient at this point to state the principles applicable to the determination of an application to set aside a default judgment.
37 As is apparent from the terms of O 22 r 10, the discretion to set aside a default judgment is unfettered. The ultimate aim in the exercise of the discretion must always be to do justice to the parties having regard to the particular circumstances of the case: Hall v Hall [2007] WASC 198 [63]. However, it is clear from the authorities that factors which bear upon the exercise of the discretion to set aside a default judgment entered pursuant to O 22 r 2(1) of the RSC include the extent of any delay in bringing the application to set the judgment aside, the explanation for the failure to file the defence within the prescribed time limit, and whether the evidence before the court discloses that the defendant has a defence on the merits. It is the last of these factors that is of the most significance when it comes to the exercise of the discretion under O 22 r 10. Generally speaking, if a default judgment has been regularly entered (as in this case) it will not be set aside unless the court is satisfied that the defendant has a defence on the merits.
38 In Hall v Hall Master Newnes, as he then was, addressed the question of precisely what a defendant must show in order to demonstrate the existence of a defence on the merits. After reviewing a number of authorities which had dealt with this question the Master said the following:
63. It is apparent that what a defendant will generally be required to show by way of a defence on the merits has been expressed in a number of ways that, in their terms, are not always easy to reconcile. There are, however, two fundamental principles that I think have never been doubted. The first is that the discretion is unfettered and no hard and fast rules can be laid down as to how it is to be exercised. The second is that the discretion is to be exercised so as to do justice between the parties, having regard to the particular circumstances of the case.
64. It seems to me, with respect, that there is force in the suggestion of Ward LJ in Day v RAC Motoring Services Ltd [[1999] 1 All ER 1007] that the different verbal formulations in the cases are properly to be viewed as emphasis in the context of the facts of the particular case. It is obvious that the weight or emphasis to be given to various factors that fall for consideration in the exercise of the discretion will vary from case to case, as the circumstances differ. And the circumstances may differ very widely; for example, from cases where there is a serious question as to the defendant's bona fides through to cases of a simple oversight by the defendant, or its agent, which it promptly seeks to remedy.
65. Given particularly the general nature of the discretion, it would, in my view, be wrong to place too much store on the precise terms in which the test has been expressed from time to time, isolated from the particular factual circumstances.
66. Again, with respect, it seems to me that there is obvious force in the observation of Ward LJ that courts should be very wary about attempting to come to a provisional view as to the probable outcome of a defence involving issues of fact, based on the affidavit evidence available on an application of this nature, unless there is some inherent improbability in what is being asserted or some extraneous evidence which would contradict it. The evidence before the Court on such an application is necessarily limited and generally untested by cross-examination, and it is not appropriate to seek to resolve disputed questions of fact on the affidavit evidence: Lau v Citic Australia Commodity Trading Pty Ltd [[1999] VSCA 34].
67. I do not, however, understand the decisions of the Full Court in Rollond v Bank of Western Australia Ltd [unreported; FCt SCt of WA; Library No 980498; 3 September 1998] and Parker v Transfield Pty Ltd [[2000] WASCA 382] to require such a course to be undertaken. That is, I do not understand the statements in those cases to the defendant having a 'credible defence' which would have 'a real prospect of success' to be referring to a provisional view as to probable findings of fact at trial. Rather, I understand the Court to mean that it must appear from the affidavit material before the Court that the defendant's case is not inherently incredible and that if the defendant's evidence were accepted at trial the defendant would have a real prospect of success.
39 I respectfully adopt the Master's understanding as expressed in the last of the above quoted pars of his judgment in Hall v Hall. That is, in deciding if the affidavit evidence before me discloses that the defendant has a defence on the merits, I will approach the matter on the basis that it must appear that the defendant's case is not inherently incredible and that if his evidence were to be accepted at trial he would have a real prospect of success.
Analysis and ruling
40 Against the background of the above outlined facts, evidence and legal principles I make the following observations.
41 The defendant has provided an explanation for not filing a defence by the due date, namely that he assumed from the terms of the letter from the court dated 20 January 2016 that he would be ordered at the directions hearing to file a defence. The explanation has not been challenged by the plaintiff.
42 The defendant has not in his affidavits expressly addressed the issue of whether he, at the time of being served with the writ of summons, read and understood the note on the writ; that is the note stating that if the defendant entered an appearance he must also file and serve a defence on the plaintiff within 14 days of the time limited for entering an appearance otherwise judgment may be entered against him. However, given that the defendant filed his memorandum of appearance within the prescribed time period I infer that he did read and understand the note on the writ.
43 The defendant was unrepresented at the time. Given this fact, and bearing in mind the terms of the court's letter advising the defendant of the directions hearing, I do not consider that the defendant's explanation for failing to file his defence within the prescribed time limit is either inherently implausible or completely unreasonable. I can appreciate how despite the note on the writ an unrepresented litigant could form the erroneous view that the listing of the directions hearing, at which programming orders were to be made, had in effect superseded the requirement as stated in the writ for the filing of a defence within a specified time period. Of course, if the defendant had proceeded to go and look for himself at the pro forma programming orders referred to in the court's letter it may well have become apparent to him that the listing of the directions hearing did not remove the need for him to proceed to file a defence within the prescribed time limit. However, once again some allowance does, I think, need to be made in this context for the fact that the plaintiff was unrepresented. It is not, in my view, altogether surprising that the defendant, as an unrepresented litigant, decided not to be proactive prior to the directions hearing.
44 In summary, in my view the fact that the defendant has provided an explanation for failing to file his defence, and the nature of his explanation, does point in favour of setting aside the default judgment. This is not a case in which the defendant has wantonly and without any reason chosen to ignore the requirements of the rules of court.
45 As I have already pointed out, the defendant was required to file and serve his defence on or before 7 February 2016. The plaintiff obtained default judgment on 10 February 2016, a very short time after the due date for the filing of the defence. Further, the plaintiff obtained default judgment without contacting the defendant to inform or remind him of his obligation to file a defence, and to advise or warn him that if he did not file a defence within the prescribed time period or within some other specified period of time it would make an application for default judgment to be entered against him. The plaintiff embarked upon this course of conduct despite the fact that it must have known from the memorandum of appearance that the defendant was unrepresented.
46 There are some superior court decisions which in my view support the conclusion that the conduct of the plaintiff in obtaining default judgment in the circumstances that I have described was improper or unreasonable: Hogg v J Isherwood-Hicks Pty Ltd (1992) 108 FLR 262, 264; French v Triple M Melbourne Pty Ltd [2006] VSC 36 [23]; Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [2009] WASC 10 [1] - [30], [39]. However, in at least three decisions of the Court of Appeal of this State the court appears to have stopped short of describing conduct not entirely dissimilar to the conduct of the plaintiff in the present case as improper or unreasonable: The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257; (2007) 35 WAR 412 [1] - [3], [53] - [54]; The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257 (S); Starrs v Retravision (WA) Pty Ltd [2012] WASCA 67 [34] - [43]. In light of these Court of Appeal decisions I will refrain from categorising the conduct of the plaintiff in entering default judgment in the circumstances in which it did as improper or unreasonable, although I will say that in my view such conduct is to be discouraged. In any event, what is in my view abundantly clear from all of the authorities to which I have referred is that the conduct of the plaintiff in entering default judgment against the unrepresented defendant without at least contacting him and warning him of its intention to obtain default judgment if a defence was not filed within the prescribed time limit is a factor which points in favour of the default judgment being set aside. To the extent that the registrar held a contrary view (and it would appear from his above quoted remarks that he did so), I respectfully disagree with him.
47 This is not a case in which there was any substantial delay on the part of the defendant in making his application to set aside the default judgment. He made the application within 15 days of being advised by the plaintiff's solicitors that default judgment had been entered against him after he had obtained legal advice. This is a further factor favouring the setting aside of the default judgment.
48 I turn finally to the issue of whether the affidavit evidence before the court discloses that the defendant has a defence on the merits. The submissions made by the plaintiff in relation to this issue at the hearing of the application (and also in the written outline of submissions filed on 24 November 2016) can be summarised as follows:
1. Pursuant to s 1305 of the Corporations Act 2001 (Cth) a loan in favour of a company recorded in the company's books is primary evidence of indebtedness. The Accounts List is a book of the plaintiff and is therefore primary evidence of the defendant's indebtedness to the plaintiff in the amount claimed;
2. The defendant has failed to produce any evidence to overcome 'the presumption' that there was a loan (ts 7);
3. Implicit in the affidavits sworn by the defendant is an acceptance that he did receive moneys from the plaintiff either in payment of services which he rendered to the plaintiff or to spend on promotional activities for the plaintiff;
4. The defendant has failed to produce any records, such as taxation records, in support of his assertion that any moneys he may have received from the plaintiff were for the payment of services that he provided to the plaintiff or were used by him on promotional activities for the plaintiff;
5. The defendant has failed to particularise the services which he provided to the plaintiff or the promotional activities that he engaged in on behalf of the plaintiff; and
6. In the circumstances stated in 1 to 5 above the defendant has failed to demonstrate that he has a defence on the merits to the plaintiff's claim.
49 With respect to point 3 above I note, although not much turns on the issue, that in my view it is not implicit in the second of the affidavits sworn by the defendant that he accepts that he did receive monies from the plaintiff.
50 I do not accept the plaintiff's submissions as summarised above, which were in essence accepted by the registrar in dismissing the application but which, as I have already pointed out, were not ultimately pressed on the appeal.
51 On the defendant's affidavits he denies the existence of the Loan Agreement and denies that he ever borrowed money from the plaintiff pursuant to a loan agreement or at all. The defendant also denies that he ever received money to the use of the plaintiff.
52 It is true that that the defendant has not produced any documentation in support of his denial of the existence of the Loan Agreement. However, that is hardly surprising given that on his version the Loan Agreement did not exist. It is also true that the defendant has not produced documentation supporting his assertion that if he did receive any money from the plaintiff this was for services that he rendered to the plaintiff, or for promotional activities that he undertook on behalf of the plaintiff. However, the defendant's failure to produce such documentation at this point in time (if the documentation exists and is in the defendant's possession) does not, in my view, make his assertion in this regard, or for that matter his assertion that he was never loaned money by the plaintiff, inherently incredible. This is particularly so when it is borne in mind not only that the plaintiff has not particularised in the statement of claim when the Loan Agreement is alleged to have come into existence or when and how the sum allegedly advanced was paid to the defendant, but also that it is not readily apparent from either the Account Transactions document or the Accounts List why it is alleged that the defendant owed $103,800.71 as at 17 September 2015. I do not consider that the defendant's failure to at this point in the proceedings adduce evidence of the precise nature or extent of his relationship with the plaintiff renders as inherently incredible his denials that he borrowed money from the plaintiff or had and received money to the use of the plaintiff with the consequence that he has failed to demonstrate that he has a defence on the merits. In this regard I respectfully disagree with the view apparently held by the registrar.
53 It may be that ultimately the defendant's assertions contained in his affidavits will be proved to be without foundation. However, as things currently stand, and for the reasons I have stated, I am satisfied that the defendant's case as deposed to in his affidavits is not inherently incredible, and that if his evidence as set out in the affidavits is accepted at any trial he would have real prospects of successfully defending the plaintiff's claim. It follows, in my opinion, that the defendant has demonstrated that he has a defence on the merits to the plaintiff's claim against him. My conclusion in this regard also obviously points in favour of setting aside the default judgment.
54 For the reasons stated above I am satisfied that the appeal against the registrar's decision should be allowed and that the default judgement entered against the defendant should be set aside.
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