Junkeer v Stathopoulos
[2012] VCC 648
•28 May 2012
| Revised | |
| IN THE COUNTY COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-05504
| DEBORAH LILITHE JUNKEER | Plaintiff |
| v | |
| GEORGE STATHOPOULOS | Defendant |
---
JUDGE: | HER HONOUR JUDGE KENNEDY | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16 & 22 May 2012 | |
DATE OF JUDGMENT: | 28 May 2012 | |
CASE MAY BE CITED AS: | Junkeer v Stathopoulos | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 648 | |
REASONS FOR JUDGMENT
---
Catchwords: Practice and Procedure – application to set aside default judgment – whether default judgment irregular by reason of non-compliance with Rule 21.02(2) – whether appropriate to dispense with requirements pursuant to Rule 2.04(1) and treat as regular judgment – whether default judgment should otherwise be set aside – application dismissed
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Corrigan | Kiatos & Co. |
| For the Defendant | Mr A. W. Sandbach | GPZ Legal |
HER HONOUR:
Background
1 This is an application by the defendant for the setting aside of a judgment entered in default of defence on 22 March 2011.
2 The defendant seeks to set aside the judgment on the basis that it is irregular; and alternatively on the basis that it is regular.
3 In order to assess this application, it is necessary to recite the history in some detail.
Factual History
4 In late 2007/ early 2008, the plaintiff, Mrs Deborah Junkeer, had some precious stones that she wished to sell. Her son, Mr Warren Junkeer, met with the defendant (whom he knew through various property transactions), and made arrangements for the defendant to sell the stones.
5 The precise nature of the discussions is the subject of dispute. However, Mr Junkeer alleges that he advised the defendant that the stones were worth some $250,000, and that he reached agreement with the defendant on the basis that he would achieve a sales price of at least $150,000.[1] Further, that when the defendant advised him that he could only sell the stones for $90,000, a variation to the agreement was effected whereby the defendant would pay the amount of $150,000 to his mother, which would occur on settlement of a Brighton property (which occurred in March 2008).[2]
[1] See paras 6-7 of the Affidavit of Mr Junkeer of 8 May 2012.
[2] See paras 16-18 of the Affidavit of Mr Junkeer of 8 May 2012.
6 The defendant disputes this version of events and suggests that he sold the stones for $45,000 cash, and that this was authorised by Mr Junkeer. Further, that Mr Junkeer agreed to invest these proceeds in a Queensland property in which he was the Grantee pursuant to a Call and Option Deed.[3]
[3] See paras 10, 11 & 16 of the Affidavit of Mr Stathopoulos of 3 April 2012.
7 Mr Junkeer says that subsequently, on 8 May 2008, the defendant gave him a cheque for $115,000, which was paid by a company operated by the defendant, Smoothseas Pty Ltd.[4] He was told this was payment to part pay the debt.[5] However, after this cheque bounced the plaintiff demanded something in writing.
[4] See para 22 of the Affidavit of Mr Junkeer of 8 May 2012.
[5]The defendant denied Mr Junkeer’s statement that he gave him a cheque for $115,000 drawn on Smoothseas, or any other company. However, by affidavit of 16 May, Mr Junkeer actually annexed a cheque dated 8 May 2008 drawn on Smoothseas Pty Ltd in the amount of $115,000, apparently consistent with Mr Junkeer’s evidence.
8 Thereafter, Mr Junkeer says that the parties executed a Deed dated 6 June 2008 at the offices of Commlaw, with Mr Leonidas, the solicitor acting for the defendant, signing as witness.[6]
[6] See para 32 of the Affidavit of Mr Junkeer of 8 May 2012.
9 The Deed[7] recited that “the parties acknowledge that Stathopoulos is indebted to Junkeer in the amount of $135,000 which sum relates to goods sold and delivered together with interest.” The parties further covenanted that the sum of $135,000 was to be paid upon 45 days notice being given by Junkeer to Stathopoulos (clause 1), and further that until such time as the debt was repaid, interest was to accrue at the rate of $1,000 per week (clause 2). The amounts of $135,000 appear to have been handwritten as substitutes for the typed version of $150,000. Mr Junkeer stated that the reason for these amendments was that the defendant negotiated him down based on the high interest.
[7] See exhibit WGJ-3 of the Affidavit of Mr Junkeer of 8 May 2012.
10 The defendant admits signing the Deed, but says he was “assured by Junkeer, with whom I had all relevant dealings, that the Deed of Agreement that I entered into with his mother was not to be enforced.”[8] He further says that he signed the Deed at home and that nobody witnessed his signing; that he then mailed it to Mr Leonidas by post, and that “Charles Leonidas has purported to witness my signature”.[9]
Court proceedings
[8] See para 6 of the Affidavit of Mr Stathopoulos of 3 April 2012
[9] See para 23 of the Affidavit of Mr Stathopoulos of 3 April 2012.
11 On 26 August 2008, the plaintiff’s solicitors sent a demand for $135,000 and interest.[10]
[10] See exhibit WGJ-4 to the Affidavit of Mr Junkeer of 8 May 2012.
12 By correspondence of 3 September 2008, the defendant indicated that he would seek legal advice regarding the demand.[11] Further, on 12 December 2008, the defendant handed a cheque for $158,000[12] drawn on Thalassa Property Division Pty Ltd (Thalassa) to Mr Junkeer to repay the debt, which cheque also bounced.[13]
[11] See exhibit WGJ-5 to the Affidavit of Mr Junkeer of 8 May 2012.
[12] See exhibit WGJ-6 to the Affidavit of Mr Junkeer of 8 May 2012.
[13] See para 37-38 of the Affidavit of Mr Junkeer of 8 May 2012.
13 The defendant admits handing a blank cheque to Mr Junkeer “to satisfy his mother that she would be paid… I relied upon Mr Junkeer’s assurance that he would retain the cheque and ensure it was not banked pending any further instructions from me.”[14]
[14] See para 25 of the Affidavit of Mr Stathopoulos of 15 May 2012.
14 The plaintiff thereafter commenced proceedings under the Instruments Act 1958, by Writ (CI-09-00239) filed on 23 January 2009 against Thalassa to enforce the cheque and obtained judgment in default of appearance on 6 March 2009.[15] That judgment remains unsatisfied.
[15] See exhibit WGJ-9 to the Affidavit of Mr Junkeer of 8 May 2012.
15 The plaintiff then issued this proceeding based on the Deed on 19 November 2009.
16 An appearance was filed by MGA Lawyers on behalf of the defendant on 2 December 2009.
17 By order of 15 April 2010, Judge Anderson set the proceeding down for trial on 7 February 2011, and ordered the defendant to file and serve an amended defence on or before 21 May 2011.
18 Daniel Lew and Co thereafter filed a Notice Commencing to Act on 14 October 2010, after MGA Lawyers ceased acting on 30 September 2010.
19 On 9 September 2010, the plaintiff filed a summons for summary judgment. On 18 October 2010 the defendant filed an affidavit in relation to this application wherein he stated, inter alia :
“I admit that I owe Warren Junkeer or his parents, the Plaintiff, $45,000.00 and I have offered to pay this amount to Warren Junkeer on numerous occasions but he has refused to accept it.”[16]
[16] See para 11 of the Affidavit of Mr Stathopoulos of 18 October 2010 contained in exhibit WGJ-10 to the Affidavit of Mr Junkeer of 8 May 2012.
20 This summons was subsequently dismissed without an adjudication on the merits on 21 October 2010, and the proceeding set down for trial on 29 March 2011. There was also an order that the defendant file and serve a Defence by 5 November 2010.
21 By further order of 14 February 2011, Judge Anderson granted leave to Daniel Lew and Co. to cease acting for the defendant. In correspondence addressed to His Honour’s Associate, Daniel Lew stated that they had been unable to contact their client since mid December 2010 to obtain instructions; further that they had made countless phone calls to his mobile and sent emails but received no reply.[17]
[17] See exhibit WGJ-20 to the Affidavit of Mr Junkeer of 16 May 2012.
22 Judge Anderson also ordered that the defendant was to file and serve a Defence (the third time) by 2 March 2011, and that if the defendant defaults in complying with this order, the plaintiff will be able to seek judgment in default of compliance in accordance with the Rules. The plaintiff was also ordered to serve a copy of the order on the defendant by prepaid post addressed to the defendant at 507 Centre Road Bentleigh, Victoria, 3204.
23 Subsequently, the judgment in default of defence the subject of this application was entered on 22 March 2011 in an amount of $135,000, together with interest of $145,000 and costs of $1399.30, totalling $281,399.30.
24 The defendant says that he did not file a defence because he believed he would reach agreement with Junkeer to resolve the plaintiff’s claim, and did not believe he would obtain a default judgment because he was assured by Junkeer that the Deed was not be to be enforced.[18]
[18] See para 6 of the Affidavit of Mr Stathopoulos of 3 April 2012.
25 This explanation for the failure is unsupported by any objective contemporaneous correspondence. Moreover, it does not explain the continuing failure to act after entry of the judgment, despite the fact that the defendant accepts that he “received the relevant notice shortly thereafter”.[19]
[19] See para 21 of the Affidavit of Mr Stathopoulos of 3 April 2012.
26 Indeed, no action at all took place after 22 March 2011 until, by correspondence of 13 October 2011, Goldsmiths Lawyers sought the plaintiff’s consent to the setting aside of the judgment.[20] Again, no reference is made to the alleged “assurance” of Mr Junkeer, nor was any application made to the court. Rather, Goldsmiths Lawyers delayed doing anything until 7 February 2012 whereupon they merely filed a Notice of Solicitor Acting.
[20] See exhibit WGJ-19 to the Affidavit of Mr Junkeer of 16 May 2012.
27 In the meantime the plaintiff had issued proceedings for bankruptcy of the defendant, which matter has been adjourned three times, the third time, on 3 April 2012.[21]
[21] See paras 5-8 of the Affidavit of Mr Junkeer of 16 May 2012.
28 It was only at this time (3 April) that the current application was made through GPZ Legal, who had filed a Notice of Change of Practitioner on 3 April 2012.
29 The only explanation for this extensive delay between 22 March 2011 and 3 April 2012, is that the defendant claims he “continued to deal with Junkeer directly with a view to reaching agreement as to how the $45,000 together with appropriate interest could be repaid to him….”[22].
[22] See para 21 of the Affidavit of Mr Stathopoulos of 3 April 2012.
30 This is an unsatisfactory explanation.
31 The defendant’s summons was originally returnable on 9 May 2012, but was adjourned to 16 May 2012 in order to give the defendant the opportunity to file and serve further material.
32 At the conclusion of the hearing before me on 16 May 2012 (which took an entire day), the defendant sought a further adjournment to place material as to his impecuniosity, in the event that an order was made for a payment into court. Although I initially refused this application, I ultimately allowed the defendant to rely on a further affidavit of 23 May 2012, which exhibited an affidavit filed in the Federal Magistrates’ Court of 3 April 2012 (following a further hearing on 22 May 2012).[23]
[23] A further affidavit of 25 May 2012 was also filed which sought to clarify a statement in para 10 of the earlier FMC affidavit.
33 In any event, as will be seen below, no order for a payment into court is to be made.
Inadequacies/ conflicts in defendant’s material
34 The defendant’s delay in this case is significant and his explanations for that delay inadequate.
35 There were also a number of unsatisfactory aspects in the defendant’s material which included:
· the defendant alleges that the Call and Put Option Deed relating to the Queensland property remains open until October 2012.[24] However, the Deed exhibited to his affidavit suggests that the time for both the call option expiration date and the put option expiration date have passed;[25]
[24] See para 19 of the Affidavit of Mr Stathopoulos of 3 April 2012.
[25] See exhibit GS-1 to the Affidavit of Mr Stathopoulos of 3 April 2012.
· that much of the defendant’s evidence is constituted by bare denials;
· the defendant made no mention of the alleged “assurance” of Mr Junkeer when such a reference might be expected (for example, upon receipt of the demand[26], and in correspondence from Goldsmiths[27]);
· that the defendant admitted that he owed the plaintiff $45,000 in his affidavit of 18 October 2010,[28] but later said that he does “not truly owe the Creditor any money at all” in his more recent affidavit filed in the Federal Magistrates’ Court.[29]
[26] See exhibit WGJ-5 to the Affidavit of Mr Junkeer of 8 May 2012.
[27] See exhibit WGJ-19 to the Affidavit of Mr Junkeer of 16 May 2012.
[28] See para 11 of the Affidavit of Mr Stathopoulos of 18 October 2010 contained in exhibit WGJ-10 to the Affidavit of Mr Junkeer of 8 May 2012.
[29] See para 6 of the Affidavit of Mr Stathopoulos of 3 April 2012 contained in exhibit GS-A to the Affidavit of Mr Stathopoulos of 23 May 2012.
36 Although it is inappropriate to make adverse credit findings in the absence of cross examination, such matters suggest that the defendant’s evidence should be carefully scrutinised.
Irregularity
37 Rule 21.02(1) provides that where a defendant does not file a defence within the time limited the plaintiff may enter or apply for judgment in accordance with this Order.
38 Pursuant to rule 21.02(2) judgment shall not be entered or given for the plaintiff unless an affidavit proving the default is filed.
39 The defendant submitted that there was no affidavit proving the defendant’s failure to serve a defence within the time limited in this case, with the result that the judgment was irregular.
40 The affidavit relied upon by the plaintiff was an affidavit of service of Mr Sevdalis of 22 March 2011. Although it does not specifically prove the failure to serve a defence, it gave notice of, and complied with, Judge Anderson’s orders of 14 February 2011. It was also not suggested by the defendant that a defence was actually filed, as ordered, by 2 March 2012, nor at any time prior to the entry of the default judgment on 22 March 2012.
41 I accept in these circumstances that there is, prima facie, an irregularity, albeit one technical in nature.[30]
[30] Sargent v Veneris (Unreported, Supreme Court of Victoria, Beach J, 20 December 1995).
42 Rule 2.01 provides that a failure to comply with the Rules is an irregularity and does not render any judgment a nullity. Pursuant to rule 2.04(1), the court also has power to dispense with compliance with any of the requirements of the Rules, either before or after the occasion for compliance arises.
43 In all the circumstances I am prepared to dispense with the requirements of rule 21.02(2) pursuant to rule 2.04(1).
44 Those circumstances include:
· that I am satisfied, from perusing the file, that the default occurred, that is, there was no defence filed within the time limited, nor at any time thereafter;
· that the defendant was given notice of his obligation to comply with the order; and
· that the defendant was in default in relation to two previous orders to file a defence and had not filed a defence at any time between the date of issue of this proceeding on 19 November 2009 and 22 March 2011.
45 I am fortified in this approach by the finding of Kyrou J in Soderstrom & Ors v Minas[31]. In that case, His Honour found that it was appropriate to dispense with the requirement of rule 21.02(2) under rule 2.04(1) because it was common ground that no defence had been served within the time limited by the Rules, or at any time prior to entry of the default judgment. Although obiter, these remarks are applicable to the present case.
[31] [2011] VSC 361
46 I am therefore satisfied that it is appropriate to dispense with the requirements of Rule 21.02(2) under Rule 2.04(1) so as to treat the judgment as regular.
47 It is unnecessary to consider any other head of power in these circumstances. However, in deference to Counsel’s submissions, I am also of the view that, even if I was not satisfied that it was appropriate to make an order under Rule 2.04(1), then Rule 2.03 would also apply.
48 Rule 2.03 provides that a court shall not set aside a judgment on the ground of a failure to which Rule 2.01 applies (a failure to comply with the rules) on the application of any party unless the application is made within a reasonable time, and before the applicant has taken any fresh step after becoming aware of the irregularity.
49 In the present case, I am not satisfied that the application was made “within a reasonable time”, having regard to the total absence of an explanation for the delay of more than 12 months. This is particularly so having regard to the provisions of the Civil Procedure Act 2010, which require this court to give effect to the overarching purpose to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[32]
[32] See ss 7- 8 of the Act.
50 It follows that, if it were necessary, there would be an alternative basis on which to treat the judgment as regular.
Regular judgment
51 Circumstances relevant to the exercise of the discretion to set aside a regular judgment include whether the defendant has a defence on the merits; the reason for the default; any delay in the application; and prejudice of the plaintiff.[33]
Prima facie defence
[33] Williams Civil Procedure Victoria at [21.07.15]
52 In terms of a defence on the merits, three defences were articulated by Counsel for the defendant:
· that the deed was a “sham” since Mr Junkeer assured the defendant that the Deed was not to be enforced;
· that the deed was unenforceable on the basis of the rule in Pigot’s[34] case given the material alteration allegedly made by Mr Leonidas;
· that Mr Leonidas had a conflict of interest which vitiated the Deed.
Sham
[34] Pigot's Case [1558 -1774] All ER Rep 50
53 In terms of the alleged “sham”, this may refer to steps which take the form of a legally effective transaction, but which the parties intend should not have the apparent, or any, legal consequences.[35]
[35] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 at [46]
54 The defendant explained the circumstances in which he entered the Deed as follows:
“Junkeer informed me that the purpose of the agreement would be to satisfy his mother that the funds she was expecting were forthcoming. He told me that the agreement would not be enforced. Junkeer informed me that he was receiving substantial pressure from both his parents, particularly his mother, in relation to the sale price of the gem stones, as she considered it to be very low.”[36] (emphasis added)
[36] See para 17 of the Affidavit of Mr Stathopoulos of 3 April 2012; See also para 3 of the Affidavit of Mr Stathopoulos of 3 April 2012 contained in exhibit GS-A to the Affidavit of Mr Stathopoulos of 23 May 2012.
55 The notion that a businessman, who is apparently involved in multi-million dollar transactions, would sign a formal deed yet rely on an oral undertaking (from a third party) not to enforce it, appears highly improbable, and is also internally inconsistent. This is particularly so, having regard to some of the other unsatisfactory elements of the defendant’s evidence, as identified earlier.
56 More significantly, I am not satisfied, on the defendant’s own evidence, that the parties intended the Deed to not have the apparent, or any, legal consequences.
57 Firstly, a vague undertaking not to enforce the Deed actually confirms that there is something otherwise in existence which was legally effective and capable of enforcement. It cannot be suggested in such circumstances that the Deed was a “sham”.
58 Secondly, the evidence of the defendant was that the purpose of the Deed was to satisfy the plaintiff party that the money was forthcoming. Far from being a “sham”, then, it cannot be suggested that Junkeer’s mother – who was the actual party to the Deed – intended that the Deed should not have consequences.
59 I am unable to be satisfied in these circumstances that the defendant has a defence on the basis of an alleged “sham”.
Material alteration
60 The defendant admitted that he signed the deed document[37], but seeks to avoid its terms on the basis of Pigot’s case.[38]
[37] See para 23 of the Affidavit of Mr Stathopoulos of 3 April 2012.
[38] [1558 -1774] All ER Rep 50
61 The rule in Pigot’s case is that, if a material alteration is made by the promisee or a stranger to a deed or a contract when it is in the hands of the promisee, the promisor is discharged from liability.
62 However, any alleged addition of a witness’ signature would not be a “material alteration” unless the document needed to be witnessed. This is particularly so, since the defendant admits the execution of the document.
63 Firstly, even if the agreement must operate as a deed (because there is no consideration), there is no express provision for attestation in Victoria as a formal requirement for such a deed.[39]
[39] Butterworths, Halsbury’s Laws of Australia (at 23 May 2012) 140 Deeds and Other Instruments, ‘1 Deeds’ [140-55]
64 Secondly, and in any event, the deed can clearly operate as an agreement. Thus, although Counsel for the defendant suggested that there was no consideration, the deed recites that, “in consideration of the presents and in further consideration of Junkeer agreeing to defer the immediate payment of the debt, Stathopoulos has agreed to enter this Deed on the terms and conditions herein.”[40]
[40] See Recitals C and B contained in exhibit WGJ-3 of the Affidavit of Mr Junkeer of 8 May 2012.
65 In these circumstances there is good consideration for an agreement, being the forbearance to immediately require payment.
66 It follows that, whether the 6 June 2008 document constitutes a deed or an agreement, the alleged addition of a witness’ signature is not a material alteration.
67 Counsel for the defendant suggested that the alleged addition was “material” on the basis of the decision in Brott v R[41].
[41] (1997) 173 CLR 426
68 However, that case does not assist the defendant.
69 The case was concerned with whether a solicitor who added his signature as a witness to a guarantee was guilty of forging the guarantee in circumstances where the surety’s signature was not affixed in his presence (the surety being dead and his signature being forged). This was in circumstances where a guarantee was effective in Victoria even if the execution was not witnessed.
70 The High Court determined that the conviction of forgery could not stand. Critically, Toohey, Gaudron and McHugh JJ highlighted that the issue was concerned with materiality, and that “nothing the applicant did made or altered the character or legal effect of the guarantee”[42].
[42] Brott at 443
71 Similarly, in the current case, even if the signature of Mr Leonidas has been added as alleged, I do not consider there has been a “material alteration”.
72 I am therefore not satisfied that there is a good defence based on the alleged alteration.
Alleged conflict
73 Finally, in terms of the alleged conflict, the evidence of the defendant was that Mr Junkeer told him that Comlaw had acted for the family or members of it and that, whilst at Comlaw’s office, Mr Leonidas pointed to a number of boxes full of files which were in a meeting room and told him those files were “all to do with the Junkeer family.”[43]
[43] See para 22 of the Affidavit of Mr Stathopoulos of 15 May 2012.
74 This evidence is vague, and is to be compared with the direct evidence of the plaintiff that Mr Leonidas was not acting for his mother at the time he recommended the firm to the defendant, or at any time while the written contract was negotiated and executed.[44]
[44] See para 28 of the Plaintiff’s Affidavit of Mr Junkeer of 8 May 2012.
75 The evidence, therefore, does not articulate any basis for a conflict.
76 It is also unclear how any conflict would necessarily vitiate the deed as suggested, and no authority was cited by the defendant.
77 Again, therefore, no prima facie defence is demonstrated.
Summary
78 I am not satisfied that the defendant has established a prima facie defence on any of the bases identified.
79 The defendant has also made admissions inconsistent with the existence of a defence. These are constituted by the provision of at least one company cheque, and his own sworn testimony that he owes (at least) the $45,000.
80 The defendant’s unsatisfactory explanation for the default and extensive delays also strengthen this conclusion. Thus, notwithstanding three orders of this court, the defendant never filed a defence, nor did he move to set aside the judgment until over 12 months had passed. If the defendant had the defences he now relies upon, it would be expected that he would bring them forward earlier.
81 Although it may be that the prejudice to the plaintiff can be addressed by an order as to costs, the other factors weigh against setting aside the judgment. Thus, given the absence of a good defence, the inadequate explanation for the default, and the extensive delays, I am not satisfied, in the exercise of my discretion, that the default judgment should be set aside.
Conclusion
82 I am satisfied that it is appropriate to dispense with the requirements of Rule 21.02(2) under Rule 2.04(1) so as to treat the default judgment as regular.
83 Having regard to all the circumstances, including the absence of any prima facie defence against a background of extensive delays, I am not satisfied that the default judgment should be set aside.
84 The defendant’s summons dated 3 April 2012 is dismissed.
85 I will hear from the parties on the question of costs.
0
1
0