| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : LUU -v- LAU [2011] WADC 168 CORAM : REGISTRAR KINGSLEY HEARD : 26 AUGUST 2011 DELIVERED : 12 OCTOBER 2011 FILE NO/S : CIV 1865 of 2011 BETWEEN : DANG DOAN TRINH LUU Plaintiff
AND
ERIC CHI CHUNG LAU
Defendant
Catchwords: Practice - Application to set aside judgment - Application for stay of execution under Civil Judgments Enforcement Act 2004 Legislation: Nil Result: Judgment set aside
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Representation: Counsel:
Plaintiff : Mr W Vogt
Defendant : Mr E Knayake
Solicitors:
Plaintiff : Vogt Graham Lawyers
Defendant : Hunter Cook Legal
Case(s) referred to in judgment(s):
Hall v Hall [2007] WASC 198
Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257
Re Williams; Ex parte Whatsmore's Sports Centre 7 FLR 101
Webster v Lampard (1993) 177 CLR 598
Westpac Banking Corporation v Gibbings [2010] WASC 379
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1 REGISTRAR KINGSLEY: By an indorsed claim the plaintiff Luu claimed $113,943.74 together with interest being the sum of loans made by Luu to the defendant Lau over a period of time.
2 Default judgment was entered against Lau on 29 June 2011. On 7 July 2011 in a Form 7 application under the Civil Judgments Enforcement Act 2004 Lau sought orders that executing be stayed and the default judgment be set aside and the defendant be granted leave to defend. No issue has been taken as to the form of the application.
Irregularity 3 The defendant's counsel submits the judgment is irregular. Citing Re: Williams; Ex parte Whatsmore's Sports Centre 7 FLR 101 defendant's counsel submits that as a default judgment is not an interlocutory proceeding the affidavit of service cannot contain hearsay. Defendant's counsel submits that the identification of the defendant by process server Boyce where Boyce asks 'Are you Eric Chi Chung Lau' to which the reply is to the effect 'yes I am' is hearsay. 4 Re: Williams was a matter arising under the Bankruptcy Act. Rule 109 of the Bankruptcy Rules provides: Every affidavit of personal service shall contain evidence to the satisfaction of the Court as to the identification of the person served. 5 Judge Gibbs stated that 'statements made by the person served might in some circumstances be admissible as original evidence that he was the debtor; for example if they showed that he had knowledge of matter which he would not likely to know if he were not the debtor'. Referring to a previous authority to the contrary, Judge Gibbs stated '…. I feel I ought not follow that case if it decides that the mere admission by the person served that he is the debtor is, without more, sufficient proof of service'. 6 In my opinion the learned judge fell into error. The hearsay rule prohibits the tender of out of court assertive narratives. It is the concept of the narrative - the past observation of facts and events - that is the essence of the hearsay rule. But an exception to the hearsay rule is where spontaneous statements are made in the context of an event or transaction such that it does not constitute a narration of the event. 7 In this case the evidence is that in the context of the transaction of serving the writ, Boyce asked 'are you Lau'. The reply is 'yes I am'. In my opinion, that spontaneous statement, at the time of the event, is not hearsay. (Page 4)
8 Accordingly in my opinion, the affidavit of Boyce is admissible and there is no irregularity of service in that regard. 9 Lau's counsel submits that the affidavit of service refers to service of a writ issued out of the Supreme Court and not the District Court. In my opinion that error is a mere irregularity which does not render the judgment irregular. 10 In my opinion the default judgment is a regular judgment. That being the case Lau must show a defence on the merits.
The evidence 11 The evidence before me consists of: Delay 12 Default judgment was entered on 29 June 2011 and by a Form 8 Application dated 7 July 2011 under the Civil Judgements Enforcement Act Lau seeks to have execution stayed and judgment set aside. 13 The affidavit of Charles Robert Cook sworn 27 July 2011, the solicitor for Lau, explains that Lau's original instructions where that he was served with the writ on 19 June 2011. Due to other work the memorandum of appearance was not brought to Cook's attention until 30 June 2011. Cook sought to electronically file the memorandum on that day but was unable to. On 1 July 2011 the paralegal for Cook attempted to file the memorandum at the registry, only to be told judgment had been entered. On pressing Luu's solicitors Cook was told on 4 July 2011 that service had been effected on 17 June 2011 and not on 19 June 2011 as Cook had been instructed. 14 Cook then prepared the application and supporting affidavit to set aside judgment which was filed on 7 July 2011. 15 I am satisfied that there is no delay such that it should preclude Lau from a hearing of the application on its merits. (Page 5)
Context of action 16 Lau and Luu commenced a relationship in 2007. At that time Lau was in negotiations with his former partner in relation to a property settlement. As a result of the negotiations consent orders were made in the Family Court whereby Lau paid $88,000 to his former partner. 17 Lau deposes (par 25 Lau first affidavit) that Luu offered to make a gift of the $88,000 and had a bank cheque drawn up through her bank payable to Lau's former partner. Lau deposes (par 27 Lau first affidavit) that this was the only payment made by Luu on his behalf. 18 Even though Lau accepted the payment, he deposes he was uncomfortable accepting the gift and between November 2008 and March 2010 Lau gave Luu a total sum of $16,000 (par 30 Lau first affidavit). 19 Lau goes on to depose that in March 2010 he received an unstamped letter from Luu stating he was no longer obligated to repay the moneys to him, and that he does not owe any money to Lau (par 32 Lau first affidavit). The letter mentions the sum of $100,000 owing by Lau. 20 Luu in her affidavits refers to the property settlement proceedings in the Family Court between Lau and his former partner. Luu deposes that Lau approached her for a loan to pay out his former partner. Luu agreed to loan Luu sufficient moneys to pay out his former partner and that Lau would repay Luu by instalments (par 18 Luu affidavit). Luu deposes that Lau's brother, in November 2008, deposted $8,000 as a first lump sum instalment payment (par 23 Luu affidavit). 21 Luu then goes on to depose (pars 24 and 31) that she loaned further sums to Lau between 16 January 2009 and 14 April 2009 totalling $53,943.74. Of the sum of $53,943.74 Luu deposes Lau has repaid only $13,500. 22 Luu deposes the only gift made to Lau was in relation to an airline ticket for Lau to travel to Japan (par 33 Luu affidavit). 23 Luu goes on to depose that Lau did not pay her $1,000 per month from November 2008 until March 2010 (par 39 Luu affidavit). Luu deposes in relation to the March letter that she was suffering severe depression, effected by emotional and physical abuse committed by Lau, feeling no self-worth and stress (par 41). Luu now realises it was not her intention to release Lau from his obligations to repay the loans (pars 43 and 46). (Page 6)
Principles to be applied 24 In Hall v Hall [2007] WASC 198 Newnes J stated at [63] – [67]: It is apparent that what a defendant will generally be required to show by way of a defence on the merits has been expressed in a number of ways that, in their terms, are not always easy to reconcile. There are, however, two fundamental principles that I think have never been doubted. The first is that the discretion is unfettered and no hard and fast rules can be laid down as to how it is to be exercised. The second is that the discretion is to be exercised so as to do justice between the parties, having regard to the particular circumstances of the case. It seems to me, with respect, that there is force in the suggestion of Ward LJ in Day v RAC Motoring Services Ltd that the different verbal formulations in the cases are properly to be viewed as emphasis in the context of the facts of the particular case. It is obvious that the weight or emphasis to be given to the various factors that fall for consideration in the exercise of the discretion will vary from case to case, as the circumstances differ. And the circumstances may differ widely; for example, from cases where there is a serious question as to the defendant's bona fides through to cases of simply oversight by the defendant, or its agent, which it promptly seeks to remedy. Given particularly the general nature of the discretion, it would, in my view, be wrong to place too much store on the precise terms in which the test has been expressed from time to time, isolated from the particular circumstances. Again, with respect, it seems to me there is obvious force in the observations of Ward LJ that courts should be very wary about attempting to come to a provisional view as to the probable outcome of a defence involving issues of fact, based on the affidavit evidence available on an application of this nature, unless there is some inherent improbability in what is being asserted or some extraneous evidence which would contradict it. The evidence before the Court on such an application is necessarily limited and generally untested by cross-examination, and it is not appropriate to seek to resolve disputed questions of fact on the affidavit evidence: Lau v Citic Australia Commodity Trading Pty Ltd. I do not, however, understand the decisions of the Full Court in Rollond v Bank of Western Australia and Parker v Transfield Ltd to require such a course to be undertaken. That is, I do not understand the statements in those cases to the defendant having a 'credible defence' which would have 'a real prospect of success' to be referring to a provisional view as to probable findings of fact at trial. Rather, I understand the Court to mean that it must appear from the affidavit material before the Court that the defendant's case is not inherently incredible and that if the defendant's evidence were accepted at trial the defendant would have a real prospect of success. (Page 7)
25 In Westpac Banking Corporation v Gibbings [2010] WASC 379 Master Sanderson stated that the test in relation to setting aside judgment was considered in Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASCA 257. Master Sanderson was of the opinion it was at least implicit the court in the Pilbara case considered there was merit in the formulation by Newnes J. 26 Accordingly, I have adopted the approach stated by Newnes J. I also note that unless the evidence is inherently incredible then it should be accepted for the purposes of the hearing (see Webster v Lampard (1993) 177 CLR 598).
Discussion 27 It is clear from the evidence of Luu and Lau there are quite opposing views. Luu says there were loans of money whereas Lau states there were gifts of money. Lau states he paid moneys in reduction of the gift whereas Luu says no moneys were paid in relation to the $88,000. 28 Whilst Luu's counsel sought to categorise Lau's evidence as inherently incredible, in my opinion it is reasonable in the context of Luu and Lau starting a relationship that there be a sharing of moneys, and that Lau, not wishing to take advantage of that generosity, would see to make some repayment. 29 Further there is such a conflict on the evidence that, in my opinion, it warrants scrutiny in open court. Lau deposes that over the period November 2008 until March 2010 he gave Luu $1,000 per month, totalling approximately $16,000. Luu deposes Lau paid nothing over that period. 30 In addition there is the legal status of the March letter. Lau's counsel says there is no consideration for the letter and if the letters were to be categorised as a forbearance to sue then it would fail. Lau's counsel says the March letter created an estoppel – and Lau has deposed as to how he altered his financial affairs in response to the letter – such that Luu is now estopped from making a claim on Lau.
Conclusion 31 For these reasons I am of the opinion that the default judgment ought be set aside. 32 I will hear counsel on the issue of costs and on programming orders.
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