Giuliana Properties Pty Ltd v Mahrami

[2023] WADC 21

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   GIULIANA PROPERTIES PTY LTD -v- MAHRAMI [2023] WADC 21

CORAM:   REGISTRAR JEYAMOHAN

HEARD:   22 FEBRUARY 2023

DELIVERED          :   Ex tempore

FILE NO/S:   CIV 1245 of 2022

BETWEEN:   GIULIANA PROPERTIES PTY LTD

Plaintiff

AND

MOHAMMAD LATIF MAHRAMI

Defendant

Catchwords:

Practice and procedure - Application to set aside default judgment - Principles to be applied - Indemnity costs - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA)
Oaths,Affidavits and Statutory Declarations Act 2005 (WA)
Commercial Tenancy (Retail Shops) Act 1985 (WA)
Property Law Act1969 (WA)

Result:

Judgment set aside

Representation:

Counsel:

Plaintiff	:	Mr J Davis
Defendant	:	Mr J R C Sippe

Solicitors:

Plaintiff	:	DW Fox Tucker
Defendant	:	Lemonis & Tantiprasut

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

Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano [2003] WASCA 20

Starrs v Retravision (WA) Ltd [2012] WASCA 67

Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129

TSW Analytical Pty Ltd v The University of Western Australia [2017] WASCA 67

Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382

REGISTRAR JEYAMOHAN:

[This judgment was delivered extemporaneously on 28 February 2023 and edited from the transcript.]

Introduction

1. These reasons concern the defendant's application to set aside default judgment.

Background

1. By way of background on 29 March 2022 the plaintiff commenced these proceedings against the defendant.  The plaintiff's claim is in the plaintiff's capacity as the lessor to recover amounts purportedly owing by the defendant as guarantor pursuant to a purported breach of the lease by Bestway.

2. On 1 June 2022 the plaintiff was granted judgment against the defendant in default of his appearance in the proceeding.  It is not in dispute that the judgment was validly entered.

3. On 12 August 2022 the defendant filed this application to set aside the default judgment against him.

Legal principles

1. The principles relevant to an application under O 13 r 14 of the Rules of the Supreme Court1971 (WA) (RSC) to set aside a regularly entered default judgment are well-established.

2. First, the discretion under O 13 r 14 of the RSC is to be exercised so as to do justice between the parties in the circumstances of the case. A defendant should only be denied the opportunity to proceed in the ordinary way, and after taking advantage of the usual interlocutory processes, if there is a high degree of certainty about the outcome should the matter go to trial: Starrs v Retravision (WA) Ltd [2012] WASCA 67 [36], [51].

3. Second, it is not for the court to resolve factual issues.  Provided the defendant's case is not inherently incredible, the question is whether, if the defendant's evidence were accepted at trial, the defendant would have a real prospect of success: that is, whether the defence is reasonably arguable.  That is not a high threshold: TSW Analytical Pty Ltd v The University of Western Australia [2017] WASCA 67 [46].

4. Third, the following factors are also relevant to the exercise of the discretion: Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382 [11]:

   •The explanation given by the defendants for allowing the judgments to be entered against them.

   •The length of the delay between the judgment being entered and the application to set it aside, and the defendants' explanation for that delay.

   •the extent of any prejudice that the plaintiff would suffer if the judgment were set aside.

5. A defendant who has an apparently good defence is unlikely to be refused the opportunity of defending (even though a lengthy interval of time had elapsed), provided that no irreparable prejudice is done to the plaintiff: Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano [2003] WASCA 20 [16] - [18].

The evidence relied upon

1. The defendant relies on the following affidavits filed in support of this application:

   1.the affidavit of Phatcha Mintie Tantiprasut sworn 12 August 2022 (First Tantiprasut Affidavit);

   2.the affidavit of Rahmat Mahrami sworn 12 August 2022 (Rahmat Affidavit);

   3.the affidavit of Mr Mahrami sworn 12 August 2022 (Mahrami Affidavit);

   4.the affidavit of Farzaneh Pashm Forosh sworn 12 August 2022, who translated Mr Mahrami's affidavit for the purposes of the Oaths,Affidavits and Statutory Declarations Act 2005 (WA); and

   5.the further affidavit of Ms Tantiprasut sworn 13 January 2023 (Second Tantiprasut Affidavit).

2. The plaintiff relies on the following affidavits by way of response: the affidavit of Nicholas DiMauro made on 20 December 2022 (DiMauro Affidavit); the affidavit of Helen Stain made on 21 December 2022 (Stain Affidavit); and the affidavit of Ritney Lee Ly made on 14 April 2022 (Ly Affidavit).

3. In order to succeed the defendant's application need only to demonstrate a satisfactory reason for the failure of the defendant to enter an appearance and a defence on the merits.

The defendant's evidence

1. In respect of the matter of the defendant's failure to enter an appearance, these matters have been addressed by way of submission and are deposed to by Mr Mahrami in his affidavit as well as Mr Rahmat in his affidavit.  Relevantly, Mr Mahrami has deposed to the fact that he understands limited English, that at the time he was served with the writ commencing these proceedings he was suffering from ill health and that he continues to do so.

2. Mr Mahrami asked his son for help to understand the writ and Mr Mahrami and Mr Rahmat deposed to having misunderstood the document to be a demand for payment and not in fact the document that evidenced the commencement of legal proceedings.

3. Mr Mahrami's son attempted to contact the plaintiff's lawyer to clarify Mr Mahrami's responsibility for the lease and this is deposed to by Mr Ramat in his affidavit at pars 9 and 10.  Mr Mahrami deposed to the fact that he nonetheless contacted his solicitors and due to his misunderstanding of the document, his (Mr Mahrami's) solicitors at the time took no action.  These matters are deposed to by both Mr Ramat in his affidavit at par 11 and Mr Mahrami at his affidavit at par 49.

4. Mr Mahrami, having received a bankruptcy notice which attached the notice of default judgment of 15 June 2022, then met with his solicitors on 29 June 2022 and instructed them to set aside the default judgment.  These matters are deposed to in Mr Mahrami's affidavit at pars 50 ‑ 52 and Mr Ramat's affidavit at par 13.

5. It is submitted by the plaintiff's counsel that on 11 July 2022 Mr Mahrami's lawyers realised that they were conflicted from acting and the matter (on behalf of Mr Mahrami) was taken on by Mr Mahrami's current lawyers.  Mr Mahrami and Mr Ramat have (each) deposed to these matters in pars 53 and 15 of their affidavits respectively.

Analysis

1. On the face of it, therefore Mr Mahrami has deposed to matters what he will seek to rely on and demonstrate a satisfactory reason for the failure to enter an appearance.  Now, as to the matter of the defence on the merits, there have been lengthy submissions put by the defendant or on behalf of the defendant and the plaintiff in respect of the matters before this court.

2. On the question of the defence, the defences that have been advanced and advanced in the submissions in some particularity relate to matters in respect of matters of estoppel, assignment in equity, matters regarding the application and interpretation of the Commercial Tenancy (Retail Shops) Act 1985 (WA), the terms of the purported guarantee and indemnity and the defendant's obligations therein, matters as to statutory interpretation pursuant to the Property Law Act1969 (WA) and questions of law with respect to the assignment and matters of choses in action, in addition to questions of competing factual evidence.

3. There have therefore been quite a number of defences articulated on behalf of the defendant by way of submission.  My conclusion therefore is that the defendant has an arguable defence against both aspects of the plaintiff's claim and furthermore has advanced a sufficient reason for failing to file an appearance to justify the judgment being set aside.

Conclusion and order

1. I should emphasise that in order to succeed, an application of this nature needs only to demonstrate a satisfactory reason for the failure of the defendant to enter an appearance and a defence on the merits.  That therefore shall be my order, that the default judgment be set aside.

Costs

1. I have had regard to the plaintiff's submissions on costs and in particular the costs thrown away on an indemnity basis.  I am minded to award the plaintiff the costs thrown away by reason of this application.

2. As to the matter of indemnity costs, the principles relevant to the grant of costs on an indemnity basis are well established and I would refer you there to the principles set out in the decision of Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129. In effect the court's discretion as to the making of an indemnity costs order must be exercised judicially. The categories of cases in which indemnity costs orders may be made are not closed, but there must be some feature in that case that justifies exercising the discretion in that way.

Conclusion and costs orders

1. I do not regard the matters advanced here by the plaintiff to warrant the making of a costs order on an indemnity basis.  Therefore, the orders that I make are limited to the plaintiff being awarded the costs of the application thrown away.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

AC

Court Officer

3 MARCH 2023