KM and a Chadwick Pty Ltd v Yeung, E.T.M
[1995] FCA 353
•12 May 1995
LIMITED DISTRIBUTION
CATCHWORDS
PRACTICE and PROCEDURE - application to set aside summary judgment and file defence - application for adjournment of notice of motion - history of repeated non-compliance with court's orders - late discovery of conflict of interest between respondents - offer of solicitor to pay costs on indemnity basis - whether adjournment should be granted to allow new solicitors to be instructed.
KM & A CHADWICK PTY LIMITED v
ERIC TSUN MAN YEUNG and ORS
No NG 3187 of 1994
Tamberlin J
Sydney
12 May 1995
LIMITED DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 3187 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: 12 MAY 1995
MINUTE OF ORDERS
THE COURT ORDERS THAT:
The further hearing of these proceedings be adjourned until 25 May 1995 at 9.15am.
Patricia Bouzanis pay to the applicant the costs of and relating to today's hearing on an indemnity basis.
Any further affidavits to be filed by any of the respondents to be filed and served by 19 May 1995, in relation to this application to set aside Sackville J's judgment.
NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.
LIMITED DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 3187 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: 12 MAY 1995
REASONS FOR JUDGMENT
The claim by the applicant company against the respondents in the principal proceedings was based on section 592(1) of the Corporations Law. As a result of proceedings before Sackville J on 21 February 1995 and 1 March 1995, orders were made striking out the defence and entering judgment for the applicant company in the sum of $108,923.11 including interest, together with an order that the respondents pay the costs of the applicant.
On 6 March 1995 the respondents filed a notice of motion, which is presently before me, seeking to set aside the orders of Sackville J and leave for the respondents to file a defence in the same terms as contained in the defence struck out by Sackville J. The basis of the orders made by Sackville J was the failure of the respondents to comply with the Court's orders relating to discovery, together with their failure to provide at any stage an acceptable explanation for the breaches of the Court's orders or to provide a sufficient basis for concluding that the respondents were able or willing to co-operate with the Court or with the applicant in ensuring that the matter was ready for trial within an acceptable period.
The history of the matter demonstrated that there had been repeated delays in the conduct of the proceedings up to that time. Moreover, the respondents failed to appear on the hearing of the applicant's motion to strike out the defence and enter judgment. On 17 March 1995 the notice of motion to set aside the orders of Sackville J came before me. On that occasion I gave directions that all affidavits to be relied on by the applicants on the motion were to be filed by 31 March 1995. The notice of motion was set down for hearing before me today.
By 1 April 1995 the only affidavit filed was that of Patricia Bouzanis of 24 February 1995. This affidavit purported to give an explanation as to why there was no appearance on 21 February 1995 and stated that Ms Bouzanis did not know the reason why in the past the Court's timetable had not been complied with, but she undertook to comply with all future directions made by the Court.
When the matter came before me this morning, Mr Aldridge for the respondents filed in court a number of affidavits dated today. One of the affidavits was by Patricia Bouzanis who was responsible for the carriage of the proceedings. She stated that yesterday after discussion with the fifth respondent she formed the view that her clients' interests may be in conflict as between the clients themselves. Furthermore a letter annexed to her affidavit of 12 May 1995 from the second respondent indicated the definite possibility of a conflict of interest between herself and the interests of the first, second and third respondents.
That letter expressed grave concern at Ms Bouzanis acting for the Stafford interests as well as the other respondents. Mr Aldridge submitted that in order to present properly the case for the respondents on this notice of motion it was necessary that independent new solicitors should be instructed as a result of the conflict of interest which had arisen. He therefore sought an adjournment to enable this to be done and evidence to be compiled and filed in relation to the question of whether the judgment ought to be set aside.
In addition to the affidavit of Patricia Bouzanis of 12 May 1995, four further affidavits dated today were filed in court for the purpose of consideration on the adjournment application, setting out in general terms the evidence of the second, fourth, fifth and sixth respondents in relation to the main action. These affidavits were dated 11 and 12 May 1995. The situation before me is that not only was the defence struck out and judgment entered as a result of serious and continuing failures to comply with orders, and even failure to appear before the Court, but also there was a basic non-compliance in relation to the orders made on 17 March 1995 that affidavits be filed by 31 March 1995.
No attempt was made to file any further affidavits until this morning, about six weeks out of time. This morning, as I mentioned, five affidavits were filed in court on behalf of the respondents. They were sworn this morning and not seen by counsel for the applicant prior to that time.
It is urged on me by Mr Brabazon for the applicant that in these circumstances no adjournment should be granted and the notice of motion should be dismissed. He points out that the court has an inherent and unfettered, though judicial, discretion in the exercise of its power to set aside judgments and that the court must consider whether any useful purpose would be served by setting aside the judgment and explaining how it came about that the respondents found themselves bound by a judgment.
He says there is no affidavit showing that the respondents have a good defence on the merits prima facie and no explanation to show that justice requires that in the circumstances the respondents should be excused. Where there has been gross negligence on the respondents' part the Court will normally be the more disposed to require at least a reasonably clear case of merits to be shown to incline it to interfere. He also says that non-compliance has been continuing, and by its nature unnecessary delays, expense, and other prejudices to the applicant have arisen. He points to the uncertainty and anxiety which will be engendered in the applicant, its directors and shareholders, if the proceedings are not finally disposed of immediately. He says that those prejudices will not be alleviated by any indemnity as to the costs as a condition of any adjournment.
Mr Wong, the second respondent, appeared in court and addressed the Court in his own right. He stated from the floor of the Court that he was not aware of the default judgment until April this year and he indicated that he wished to put a number of matters before the Court as to the history leading up to the default judgment and events since that time. Mr Aldridge indicated that his instructing solicitor, Ms Bouzanis, would meet any additional costs incurred by the respondent on the motion before me (the applicant in the main proceeding) if an adjournment were to be granted so that Mr Wong and the other respondents could approach fresh solicitors to conduct the proceedings.
The history shows a gross disregard on the part of the respondents' legal representatives with respect to the proper conduct of this proceeding up to today. I am reluctant however to sheet this home to the respondents personally without giving them a chance to make their version of the events known to the Court. The situation is in some respects an exceptional one in that at the last moment the serious conflict of interest position has been somewhat belatedly detected and it appears to me that in order to enable the respondents to properly present their case on the motion it is proper to grant an adjournment for them to approach fresh solicitors; however as a condition of this indulgence I require that all affidavits to be relied on by the respondents be filed and served within the next seven days.
I consider that the applicant's position can be protected by an indemnity as to costs coupled with a short adjournment. Accordingly I propose to adjourn the further hearing of these proceedings for a period of two weeks until 9.15 on 25 May 1995, that is a Thursday.
I order Patricia Bouzanis to pay to the applicant the costs of and relating to today's hearing on an indemnity basis.
I direct that any further affidavits to be filed by any of the respondents should be filed and served within one week from today, that is by 19 May 1995, in relation to this application to set aside the judgment.
I propose that the hearing of the motion to set aside the judgment will proceed on 25 May 1995 at 9.15 am.
I certify that this and
the preceding six (6)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.
Associate:
Date: 12 May 1995
Counsel for Applicant: Mr M L Brabazon
Solicitors for Applicant: Wilkinson, Throsby & Edwards
Counsel for Respondents: Mr M R Aldridge
Solicitors for Respondents: T Bouzanis Solicitors
Date of Hearing: 12 May 1995
Date Judgment Delivered: 12 May 1995
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