Knox Basketball Incorporated v Wayne

[2013] VCC 1984

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST

GENERAL CASES DIVISION

Case No. CI-13-04194

KNOX BASKETBALL INCORPORATED	Plaintiff
v.
CARROLL WAYNE & ANOR	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	11 December 2013
DATE OF JUDGMENT:	11 December 2013 (revised 12 December 2013)
CASE MAY BE CITED AS:	Knox Basketball Incorporated v. Wayne & Anor
MEDIUM NEUTRAL CITATION:	[2013] VCC 1984

REASONS FOR JUDGMENT

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Catchwords:             Practice and procedure – Application to set aside default judgment – Whether a defence on the merits shown – Whether payments made with authority – Judgment set aside.    

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D. Harrison	Goodman Group Pty Ltd
For the Defendants	Mr S. Minahan	Hardys

HIS HONOUR:

1On 29 October 2013, the plaintiff entered judgment in default of appearance for damages to be assessed. The plaintiff then made application for a freezing order on 25 November 2013. The Court adjourned the matter until today, required the defendants to make application to set aside the judgment according to a timetable and granted a temporary restraining order in respect of the first defendant’s property.

2The primary matter before the Court today is the defendant’s application by summons filed 2 December 2013 to have the default judgment set aside. There was no issue in relation to the explanation given by the defendants as to the reason why judgment was allowed to be entered. The primary dispute relates to the question of whether the defendants have shown there is a defence on the merits.

3A subsidiary issue arises as to whether, if judgment were set aside, a freezing order should be made or the more limited restraining order in respect of the first defendant’s property should be continued.

4The plaintiff’s amended statement of claim discloses that the defendants are sued in respect of monies paid to the second defendant by the plaintiff during a period when the first defendant was the plaintiff’s chief executive officer. The amended statement of claim pleads the following matters:

a.in December 2012, the first defendant (purportedly on behalf of the plaintiff) entered into a contract with the second defendant whereby the second defendant “would provide consulting services to the plaintiff and the plaintiff would fund expenses incurred by the second defendant”. The pleading continues by alleging that “the terms of the services contract are not known to the plaintiff”;

b.a total of $157,289.18 was paid to the second defendant pursuant to the services contract;

c.the plaintiff’s board at a meeting on 17 January 2013, “passed a resolution to not allocate any further funds to the contract”.

5The plaintiff is an incorporated association which is responsible for the conduct of basketball competitions in the Knox area involving in excess of 1,000 teams. It appears that in May 2013, the old board of the plaintiff was ousted in favour of the new board of the plaintiff which has brought the present proceeding.

6The material filed in the application by the first defendant and by the present chairperson of the plaintiff’s board discloses that:

a.there was a consultancy agreement which apparently was signed by one of the directors, probably the former acting chairman of the plaintiff;

b.that substantial payments had been made by the plaintiff to the second defendant prior to the board meeting on 17 January 2013;

7The first defendant asserts that notwithstanding the wording of the minute of the meeting in January 2013, it was not intended to prevent the payment of further monies to the second defendant in respect of sums which had been “incurred” prior to that date. These sums, it was said, were the payments that were made following the meeting in January and which were in accordance with invoices exhibited to the first defendant’s affidavit.

8There are some matters which are not addressed in the affidavit material:

a.from the plaintiff’s side, the actions of the old board and in particular, the purported services agreement between the plaintiff and the second defendant and the payments made apparently pursuant to that agreement prior to the meeting in January 2013;

b.for the defendants’ part, they have not referred to correspondence which was apparently sent to the first defendant after he was dismissed by the new board in June 2013. This correspondence refers to promises that he made that the monies advanced to the second defendant would be repaid the following week.

9In my view, it is appropriate that judgment be set aside at this stage and the matter be given a trial date and an interlocutory timetable so that the dispute is proceeding towards resolution. I consider this is a better option than requiring the parties to file further affidavit material which, in my view, is likely simply to further confirm that there is a dispute between the parties which should be resolved at trial.

10The first defendant says that he has a counterclaim for the balance that would be payable, if his contract of employment as chief executive officer had run to conclusion. It is likely that the question of whether his employment was appropriately terminated will be determined upon a consideration of the other issues in dispute in the proceeding relating to the payments made to the second defendant, and whether they were made by the first defendant without the authority of the plaintiff’s board.

11I do not consider, in the circumstances of this case, that it would be appropriate to either make a freezing order or to continue the restraining order made on 25 November 2013. Although the plaintiff has judgment, the damages were not to be assessed until May 2014. To grant injunctive relief in relation to the first defendant’s property or to make the order setting aside judgment conditional upon payment into Court the payments made to the second defendant after 17 January 2013, seem to me to be inappropriate in the circumstances.

12The trial date will be fixed at the earliest opportunity, if the parties wish this can be on 17 March 2014. This will require the matter to be transferred to the expedited cases division. The plaintiff through it’s counsel, has indicated it would wish to file an amended statement of claim. This would seem to be inevitable in view of the matters which have arisen on the affidavit material. Although the defendants have exhibited a draft defence and counterclaim to the first defendant’s affidavit, it will be appropriate for the defendants not to be required to file a pleading until they have seen the plaintiff’s amended claim. It may, however, be appropriate for the parties in the meantime to proceed with discovery to ensure that this matter can reach an early trial date. There will need to be the opportunity for a mediation as soon as the pleadings are closed and discovery has been completed.

13I propose to stand the matter down briefly to enable counsel to consider between themselves proposed orders to take account of the indications I have given in these reasons for decision.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 11 December 2013 and revised on 12 December 2013.

Dated: 12 December 2013

Catherine Kusiak 

Associate to His Honour Judge Anderson