Liu v Liashenko - [2014] FCCA 204

FEDERAL CIRCUIT COURT OF AUSTRALIA

LIU v LIASHENKO

[2014] FCCA 204

Catchwords:
INDUSTRIAL LAW – PRACTICE AND PROCEDURE – Application to set aside default judgment – unsatisfactory explanation for delay – insufficient prospects of success – application dismissed.

Legislation:
Federal Circuit Court Rules 2001 (Cth) r.13.03B(2)

Cases cited:
Liu v Liashenko [2013] FCCA 470
3D Funtimes Ltd v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407
On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366

Applicant:

XIN FU LIU

Respondent:

VICTOR LIASHENKO

File Number:

SYG 2538 of 2012

Judgment of:

Judge Emmett

Hearing date:

11 February 2014

Date of Last Submission:

11 February 2014

Delivered at:

Sydney

Delivered on:

11 February 2014

REPRESENTATION

Counsel for the Applicant:

Ms Deborah Dinnen

Solicitors for the Applicant:

Mr Miles Foran (Gilbert + Tobin)

Solicitors for the Respondents:

Mr John Bui(Kazi Portoseli Lawyers)

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2538 of 2012

XIN FU LIU

Applicant

And

VICTOR LIASHENKO

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

This is an application by the respondent to set aside Orders made by the Court on 23 May 2013 for default judgment pursuant to r.13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”). Ex Tempore reasons for judgment were given at the time (see Liu v Liashenko [2013] FCCA 470).
In support of the Application in a Case filed by the respondent on 12 December 2013, the respondent read an affidavit affirmed by him on 10 December 2013 in which he stated as follows:
“1. I am the Respondent in these proceedings.
2. I migrated from China to Australia in or about 16 August 1977. I migrated to Australia for want of a better life.
3. I came to Australia with my parents, brother and sister. I was thirty (30) years of age when I came to Australia.
4. When I arrived in Australia I could not speak English.
5. In or about 1982 I married my wife, Anna Liashenko. There are three children to the relationship who are all over the age of 18.
6. Upon my arrival in Australia I immediately commenced working in the plasterboard industry. I was employed for four and a half years. I then commenced operating as a sole trader.
7. My ABN number is 8202985431. Annexed and marked with the letter “A” is a true copy of ABN lookup.
8. I am builder with experience in plastering and installing dry plaster boards.
9. I have been operating in Australia for approximately thirty five (35) year. My clients range from residential homes and on occasions commercial properties.
10. I have never employed labourers with respect to my business. On occasions I subcontract my work to approximately three (3) to five (5) different subcontractors.
11. I commenced contracting with the Applicant, Xin Fu Liu, in or about end 2008. Our relationship continued until about January 2010 whereby Mr Liu and myself had a number of disputes and accordingly our relationship terminated.
12. Mr Liu lodged a complained with the Fairwork Ombudsman [sic] on 22 November 2010 in relation to underpayment of wages.
13. The matter proceeded before the Fairwork [sic] Ombudsman on 23 April 2011. Pete Cherry of the Fairwork [sic] Ombudsman found that there had been no contravention of the Commonwealth Workplace Laws or the relevant industrial instrument in circumstances where he was unable to do determine that an employment relationship existed. Annexed an marked with the letter “B” is a true copy of correspondence received from the Fairwork [sic] Ombudsman.
14. In or about March 2013, I received the documents in the mail in relation to Mr Xin Fu Liu. I was under the impression that since the matter had been heard by the Fairwork [sic] Ombudsman and Mr Liu claim’s [sic] was dismissed that this issue had already been dealt with.
15. In or about end of March 2013, I forwarded the letter from the Fairwork [sic] Ombudsman to the solicitors representing the Applicant. I forward the documents to show them that the case had already completed.
16. Because I had not received a response forwarding the letter to Fairwork [sic] Ombudsman to Gilbert & Tobin I thought this had finalised the matter.
17. In or about October 2013, I received a Writ for Levy of property in the mail.
18. I immediately contacted my solicitors, Kazi Portolesi Lawyers, and provided them with a copy of the Writ for Levy of Property. I caused my solicitors to forward a correspondence to the solicitors for Mr Xin Fu Liu on 18 November 2013. Annexed and marked with the letter “C” is a true copy of said correspondence.
19. I caused my solicitors to forward correspondence to the Sherriff of NSW on 14 November 2013. Annexed and marked with the letter “D” is a true copy of said correspondence.
20. On 29 November 2013, I caused my solicitors to forward a further correspondence to the solicitors for the Applicant. Annexed and marked with the letter “E” is a true copy of said correspondence.
21. On 3 December 2013, I understand and believe that my solicitors contacted the solicitors for the Applicant and sought for a response to correspondence dated 18 November 2013. As a result of the conversation my solicitor had with the solicitor for the Applicant on 4 December 2013, I received a correspondence through my solicitors from the Applicant’s solicitors enclosing Court documents pertaining to this issue.
22. I seek to defend this matter. I have a valid defence. Annexed and marked with the letter “F” is a copy of my draft defence in these proceedings.
23. I seek procedural fairness and natural justice.
24. I did not know that Default Judgment was obtained against me.”

The respondent’s application is opposed by the applicant on the bases that there has been no satisfactory explanation for the respondent’s delay in seeking to set aside default judgment, the respondent has not raised an arguable case on the merits, the applicant would suffer prejudice and, in the circumstances, it is in the interest of justice that the respondent’s Application in a Case be dismissed.
The respondent was represented this morning by his solicitor, Mr Bui. The respondent was cross examined by counsel for the applicant, Ms Dinnen.
The respondent conceded that he had not drawn the affidavit and that it had been written by his solicitor. Cross examination of the respondent made clear that the respondent had little or no understanding of the content of his affidavit. In particular, the respondent agreed that he did not understand the legal difference between an employee and a subcontractor. The respondent referred to a physical altercation in his affidavit, the details of which he could no longer recall. The respondent acknowledged that he had received various letters from the applicant’s solicitors, including a copy of Orders made by me on 14 February 2013. Inter alia, those Orders informed the respondent that if he did not appear or file a Defence, default judgment may be entered against him on the next occasion.
The respondent’s explanation for his failure to respond to any of the correspondence was that he did not understand what it said and that the matter had been concluded by the Fair Work Ombudsman in his favour.
The documents sent to the applicant were put to him in cross examination. The respondent conceded that he had taken no step to seek any advice in respect of the content of any of those documents until he received a Writ for Levy of his property in October 2013.
The documents sent to the respondent included the applicant’s evidence in support of the substantive claim against the respondent, together with the applicant’s Statement of Claim, Affidavits of Service and Orders made by the Court.
Until the respondent filed the Application in a Case on 12 December 2013, there has been no document filed by or on behalf of the respondent since the proceeding was commenced on 6 November 2012. The opportunities given to the respondent to participate in the proceeding are set out in the affidavit of Miles Foran, affirmed 5 February 2014 and read by the applicant today in response to the respondent’s application to set aside default judgment. That correspondence included letters sent to the respondent by the applicant’s solicitors on 16 January 2013, 16 February 2013 and 7 March 2013. The respondent conceded that he received those letters but did not understand their import.
The respondent’s evidence today was insufficient to persuade the Court that the respondent had a satisfactory explanation for his delay. His explanation that he believed the matter had been finalised by the Fair Work Ombudsman is unacceptable in light of the Court documents with which the respondent was served in this proceeding. This is particularly so in light of the Orders made by me on 14 February 2013 that informed the respondent that if the respondent failed to appear at the next Court event and no Defence was filed by him, default judgment may be entered against him. In 3D Funtimes Ltd v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407, Siopis J stated at [19]:
“It is unsatisfactory that a delinquent party can…simply ignore the orders of the Court made for the purposes of the fair and efficient hearing of Court proceedings; and then, seek to rely upon its own non-attendance at the hearing of the application, to set aside the orders made in the delinquent party’s absence.”
However, I also have regard to whether the respondent has established a defence of sufficient merit to warrant setting aside default judgment and granting leave to the respondent to file and pursue a defence.
The respondent annexed a draft Defence to his affidavit in support of his Application in a Case today. The Defence consists of denial of the applicant’s claims as pleaded in the applicant’s Statement of Claim filed on 6 March 2013. The Defence makes bare assertions that are wholly unparticularised and are otherwise unsupported by evidence beyond the assertions made by the respondent in his affidavit read this morning. Cross examination of the respondent this morning made clear that he did not understand the assertions made in his affidavit, which he said was written by his solicitor. As stated above, cross examination made clear that the respondent’s assertion that the applicant was a subcontractor, not an employee, was no more than that. The respondent acknowledged that he did not understand the difference.
I accept that the respondent may suffer prejudice if the orders he seeks are not made. However, in light of the entirely unsatisfactory explanation for the respondent’s failure to participate in the proceeding and his delay in seeking to set aside the orders for default judgment, the prejudice to the applicant is significant and outweighs any prejudiced to the respondent on the basis of the respondent’s draft Defence and the evidence contained in his affidavit filed 12 December 2013 and his evidence given to the Court today.
In balancing the interests of justice, I am not satisfied that the respondent’s affidavit and draft Defence disclose a defence of sufficient merit to warrant setting aside default judgment and permitting the matter to go to trial. The respondent has failed to engage with the applicant’s Statement of Claim or evidence in any meaningful way. The applicant’s Statement of Claim is fully particularised and supported by evidence. In the absence of any evidence to the contrary, the Court found that the applicant was entitled to the relief sought in the Statement of Claim (see Liu v Liashenko [2013] FCCA 470 at [7]-[8]).
The respondent’s solicitor referred the Court to On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366, where Bromberg J stated at [208] as follows:
“208. Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:
Viewed as a “practical matter”:
(i) is the person performing the work an entrepreneur who owns and operates a business; and,
(ii) in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?”
However, the respondent has not provided any evidence whatsoever to satisfy the criteria referred to by Bromberg J.
In the circumstances, in considering the overall interests of justice, I am satisfied that the respondent’s Application in a Case, filed on 12 December 2013, should be dismissed.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Judge Emmett

Associate:

Date: 11 February 2014