Ivanhoe Grammar School Ltd v Volpe

[2010] VCC 873

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE

CIVIL DIVISION

Case No. CI- 06-03640

THE IVANHOE GRAMMAR SCHOOL LTD	Plaintiff
v
MANUELA VOLPE	First Defendant
and
LEO VOLPE	Second Defendant

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JUDGE:	HIS HONOUR JUDGE GINNANE
WHERE HELD:	Melbourne
DATE OF HEARING:	13 July 2010
DATE OF JUDGMENT:	13 July 2010 - Revised 20 July 2010
CASE MAY BE CITED AS:	Ivanhoe Grammar School Ltd v Volpe and Anor.
MEDIUM NEUTRAL CITATION:	[2010] VCC 0873

REASONS FOR JUDGMENT

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Catchwords: PRACTICE – application to set aside default judgment entered more than 3 years previously – claim for school fees – willingness of school to allow children to remain enrolled – no representation by school that fees not payable – no adequate explanation for failure to file an appearance or the delay in application – no arguable defence – application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Harrison	Russell Kennedy
For the Defendants	Mr D Clarke	Sidaoui Law Firm
HIS HONOUR:

1          The first defendant applies to set aside a judgment by the plaintiff in default of appearance of 12 February 2007 in the sum of $117,371. The judgment is related to school fees owing for the attendance of the first and second defendants’ children at Ivanhoe Grammar School.

2          The proceeding was commenced on 10 October 2006 and it appears that the first defendant was served with the originating process on 29 January 2007.

3          The amount claimed in the Writ was alleged to be owing under a Debt Agreement entered into between the plaintiff and the defendants on 12 April 2006. Two affidavits have been filed in support of the application by the first defendant and one by the solicitor for the plaintiff in opposition to it.

4          The Court has a discretion whether or not to set aside a default judgment and in this case, the first defendant has to satisfy the Court that setting aside the default judgment is an appropriate exercise of the Court’s discretion.

5          The Court, in exercising its discretion, commonly identifies three matters of particular relevance:

(i)	the explanation for the failure to file an appearance;
(ii)	any delay and the explanation therefore for the time taken to seek to set aside the judgment;
(iii)	whether there is any utility in setting aside the judgment. This is answered by determining whether there is an arguable defence; obviously a defence does not have to be proved, it is sufficient that it is arguable.

6          Questions of prejudice to the plaintiff may be of relevance and, of course, the Court has an overriding discretion.

7          I have been assisted in this matter by helpful submissions by both Mr Clarke, for the first defendant, and Mr Harrison, for the plaintiff.

8          There is very little evidence as to why no appearance was entered by the first defendant. It has been suggested by counsel for the first defendant that the overall effect of the evidence before the Court is that the first defendant largely left the conduct of the family’s business affairs to her husband, the second defendant. Whilst this may well have been the case, in the first defendant’s affidavits there is no reference to the service of the originating process, the Writ, and any decision as to the steps that should be taken by either the first or second defendants to address them.

9          The next matter is the question of delay in seeking to set aside the default judgment. It is not clear from the material when it was that the first defendant became aware of the default judgment. Again, that is a matter that is commonly addressed in affidavits filed in support of an application to set aside a default judgment. It is suggested that that best that can be done from the materials is that the first defendant became aware of the judgment on 8 September 2008 when a Bankruptcy Notice was served.

10        The delay in applying to set aside the judgment continued until June this year when the summons before me was filed. The explanation for that delay included that the first defendant did not receive legal advice to make the application until she retained her current solicitor. Next, it is said that the first defendant’s husband (the second defendant), was more involved in the conduct of the addressing of the debts that he had incurred and that affected the first defendant (his wife). However, the material does suggest that both the first and second defendants approached the matter of the school fees owing by entering into, or being party to, negotiations with the School about the payment of the debts. This led to steps being taken to have the first Bankruptcy Notice dismissed and payment of $30,000 made towards the debt.

11        The first defendant, so I am informed from the Bar table, is the registered proprietor of the family home at Doreen and later, apparently, on assignment from her husband, has at least part of the legal interest in a substantial parcel land at Westmeadows. The first defendant’s present response to the debt is dependent upon the completion of the sale of that property which, at this point, has been postponed until October this year.

12        Perhaps the most important consideration is whether there is an arguable defence and therefore a utility in setting aside the default judgment.

13        A number of matters have been put forward in respect of that issue. The issue is whether an arguable defence has been established and not whether I am satisfied that the defence has been made out.

14        It was argued that the first defendant acted under duress in entering into the Debt Agreement. For instance, in her first affidavit, the first defendant swears that:

“We were under duress and compelled to accept the proposal by the school to agree on the removal of the caveat in exchange of securing a signed debt agreement prepared by the lawyers”.

15        The first defendant contends that the Debt Agreement was silent as to its terms and conditions and defective in the absence of a specific timeframe for performance.

16        The other points made by counsel for the first defendant are that the School knew that it was unlikely that the defendants would be able to pay the School fees, at least until the Westmeadows property was sold, and that the charge granted to the School was intended to secure the debt until that sale had been completed. Ultimately, the arguable defence that was foreshadowed by counsel for the first defendant had two elements: One was that the School had engaged in conduct that amounted to making representations that the school fees would not have to be paid until they were sorted out “in due course”. This representation was alleged to have been made near the start of the 2006 school year, so it was put, to induce the parents to keep the two older children in the School. It was then argued that the parents acted on that inducement. Secondly, it was said that the School knew that the first defendant lacked any independent financial assets or financial capacity to analyse the situation in which she was placed and that a defence akin to an Amadio[1] defence may be available to her.

[1]             Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447

17        The difficulty I have, even on an arguable level, with the proposed defence is that it must have been known by the first defendant and the second defendant that if the children were left in School that they would be liable for the fees at some point. I do not accept that there is an argument that the School represented that there was an indefinite moratorium on payment of the school fees.

18        When this conclusion is coupled with the execution of the Debt Agreement on 12 April 2006, the difficulty in accepting any arguable defence based on representations made towards the start of 2006 becomes more apparent. It becomes further apparent when the payment of $30,000 towards school fees that was made to stave off the first Bankruptcy Notice is considered.

19        Underpinning the suggested arguable defence is the proposition that when the two older children were allowed to remain in school, or the parents were induced to keep them in school, there arose both a duty on the School towards the parents, plus a deferral of the obligation to pay the school fees for some indefinite period. I do not find in the affidavit material any substance to support such a case. Nor do I see anything to support an arguable case for relief under the Fair Trading Act 1999.

20        I do not consider that any of the matters relevant to a decision to exercise the discretion to set aside a default judgment have been established.

21        The affidavits suggest that the defendants were under financial duress at the time they were negotiating with the School in 2006 about outstanding fees. But that does not translate into a cause of action that might provide a defence or a counterclaim to the School’s claim.

22        For those reasons, I dismiss the first defendant’s Summons filed with the Court on 15 June 2010, with costs, including the costs of 8 July 2010 on a party/party basis to be taxed on Scale D in default of agreement.

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