KM & A Chadwick Pty Ltd v Yeung - [1995] FCA 354

JUDGMENT and ORDERS - setting aside - application to set aside orders striking out defence and entering summary judgment - application to file defence in same terms as that struck out - reasons for summary judgment the failure of respondents to comply with orders and failure to appear - principles discussed - consideration of fault of respondents' solicitor - relevance of conflict of interest between respondents represented by one solicitor - whether necessary to demonstrate prima facie case or whether arguable case will suffice - whether adequate explanation of circumstances which led to summary judgment - whether summary judgment should be set aside on basis that security be provided, either to cover amount of judgment, or for costs.

Federal Court Rules O35 r7

Vacuum Oil Pty Ltd v Stockdale (1942) 42 SR 239

Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388

Fancourt v Mercantile Credits Pty Ltd (1983) 48 ALR 1

Rushcutters Investments Pty Ltd v Grellman
(unreported, NSWCA, 17 June 1987)

Byron v Southern Star Group Pty Ltd (1995) 13 ACLC 301

Singh v Varinder Kaur (1985) 61 ALR 720

Silverton Ltd v Harvey [1975] 1 NSWLR 659

KM & A CHADWICK PTY LIMITED v
ERIC TSUN MAN YEUNG and ORS

No NG 3187 of 1994

Tamberlin J
Sydney
2 June 1995

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG3187 of 1994
GENERAL DIVISION                 )

BETWEEN: KM & A CHADWICK PTY LIMITED
Applicant

AND:                   ERIC TSUN MAN YEUNG
  First Respondent
  JOSEPH TAK-WONG WONG
  Second Respondent
  ANNA ANN YEUNG
  Third Respondent
  GARRY LESLIE STAFFORD
  Fourth Respondent
  WAYNE ALBERT STAFFORD
  Fifth Respondent
  ERIC JOHN WALSH
  Sixth Respondent

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       2 JUNE 1995

MINUTE OF ORDERS

THE COURT ORDERS THAT:

The orders made by Sackville J in this matter on 21 February 1995 and 1 March 1995 be set aside.

The respondents be given leave to file defences within ten (10) days from today.

The respondents pay such of the applicant's costs in the main proceeding, on a full indemnity basis, as have been thrown away in relation to the entry of summary judgment by Sackville J, and those which were related to the application to set aside the orders made by his Honour.

The applicant have leave to tax such costs forthwith and to pursue enforcement of the costs order immediately after taxation.

The above orders in relation to costs are not to displace any orders previously made against the former solicitor for the respondents.

NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG3187 of 1994 GENERAL DIVISION )

BETWEEN: KM & A CHADWICK PTY LIMITED
Applicant

AND:                   ERIC TSUN MAN YEUNG
  First Respondent
  JOSEPH TAK-WONG WONG
  Second Respondent
  ANNA ANN YEUNG
  Third Respondent
  GARRY LESLIE STAFFORD
  Fourth Respondent
  WAYNE ALBERT STAFFORD
  Fifth Respondent
  ERIC JOHN WALSH

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1995] FCA 354
Decision Date: 2 JUNE 1995

CaseChat Overview and Summary

In the Federal Court of Australia, KM & A Chadwick Pty Ltd, the applicant, sought to recover moneys from Eric Tsun Man Yeung and others, the respondents, under s 592 of the Corporations Law, in respect of debts incurred between February and April 1991. Sackville J, on 21 February and 1 March 1995, struck out the defence and entered summary judgment for the applicant in the sum of $108,923.11, including interest, together with an order that the respondents pay the applicant's costs. The respondents, not present at the hearing, filed a notice of motion on 6 March 1995 seeking to vacate the orders made by Sackville J and seeking leave to file a defence in the same terms as that struck out. An order for costs was also sought.

The legal issues before the court included whether the Court had the power to set aside a judgment under O35 r7 of the Federal Court Rules and whether the respondents should be given an opportunity to present their case despite their failure to comply with the Court's orders and their failure to appear before the court. The court also considered whether the respondents needed to demonstrate a prima facie case or whether an arguable case would suffice and whether adequate explanations for the circumstances leading to the summary judgment had been provided.

Tamberlin J found that the failure of the respondents' solicitor to comply with the Court's orders was of an exceptional nature. However, given the evidence indicating a triable issue and the conflict of interest between the respondents, the court was satisfied that the respondents should be allowed to file defences provided that the applicant was not unduly prejudiced. The court held that an arguable case or question raised by the person seeking to set aside the judgment was sufficient and that an adequate explanation of the circumstances leading to the summary judgment was not necessary. The court further held that it was not appropriate to order the respondents to provide security for the amount awarded or for costs.

The court set aside the orders made by Sackville J, allowed the respondents to file defences within ten days, and ordered the respondents to pay the applicant's costs in the main proceeding, on a full indemnity basis, as had been thrown away in relation to the entry of summary judgment by Sackville J, and those which were related to the application to set aside the orders made by his Honour. The applicant was given leave to tax such costs forthwith and to pursue enforcement of the costs order immediately after taxation.

Orders