McKay v Barker

[2014] VCC 2222

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE

CIVIL DIVISION
COMMERCIAL LIST – GENERAL CASES DIVISION

Case No. CI-10-00904

PETER WALTER MCKAY & ORS	Plaintiffs
v
MERVYN JAMES BARKER	Defendant

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JUDGE:	His Honour Judge Cosgrave
WHERE HELD:	Melbourne
DATE OF HEARING:	10 December 2014, 15 December 2014
DATE OF RULING:	19 December 2014
CASE MAY BE CITED AS:	McKay & Ors v Barker
MEDIUM NEUTRAL CITATION:	[2014] VCC 2222

REASONS FOR RULING
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Subject:  COSTS

Catchwords:   Set aside default judgment – irregular judgment in relation to some defendants – not irregular in relation to one plaintiff --           

Cases Cited:JRC Enterprises Pty Ltd v Zoomlion Australia New Zealand Pty Ltd [2013] VSC 646; Lubura v Nezirevic [2013] VSCA 215

Ruling:  The defendant pay the third plaintiff’s costs of the summons, parties to otherwise bear their own costs.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Dyrenfurth	Rothwell Lawyers
For the Defendant	Mr M Pirrie	Trueman Dawson

HIS HONOUR:

1       On 15 December 2014, I gave oral reasons for setting aside the default judgment entered in this matter against the defendant. Given that the application had already been argued over two days and there was other business before the court, I directed the parties (after a short argument on costs in which they stated their respective positions) to file written submissions on costs by 5.00pm on 17 December 2014. Because one counsel said that he could not attend court on 19 December to speak to his submissions, I indicated that, in order to give judgment this year, I may well make the decision regarding costs based on the written submissions. Neither party objected to this proposed course or insisted upon being heard.

2       During argument on 15 December 2014, the defendant contended that he should have his costs because part of the reason for setting aside the judgment in respect of some plaintiffs was the irregularity of the judgment. For their part, the plaintiffs argued that because the default judgment was set aside in any case in the exercise of the court’s discretion, the usual costs order should apply and the defendant should bear the plaintiffs’ costs of the application. The plaintiffs also submitted that an order for security for costs should be made against the defendant. Counsel referred me to the decisions of Lubura v Nezirevic[1] and JRC Enterprises Pty Ltd v Zoomlion Australia New Zealand Pty Ltd[2] and contended that there should be a stay on the order to set aside judgment until the security for costs was posted to the satisfaction of the County Court Registrar.

[1][2013] VSCA 215

[2][2013] VSC 646.

3       Lubura’s case concerned a claim by Nezirevic that Lubura assaulted him at and outside a club in Dandenong. As a result, Nezirevic lost the sight in one eye and suffered other injuries including bruising and laceration.

4       The police also charged Lubura with four criminal counts: intentionally causing serious injury, and (as an alternative) recklessly causing serious injury, common assault and affray. On the last of the three occasions when the charges were listed for trial, the proceeding was resolved and the jury discharged. As a result, on 25 November 2011, a fresh presentment was filed containing two charges. The first was that Lubura on 8 July 2007 assaulted a person unknown to the Director of Public Prosecutions and the second was that on the same day, he unlawfully fought and made an affray. Lubura pleaded guilty to both charges. On 30 November 2011 at the hearing of the plea, Judge Kennedy found the offences proven but did not record a conviction.

5       In the civil case, because Lubura did not enter an appearance, Nezirevic entered a default judgment for damages to be assessed. On 30 September 2011, Lubura was ordered to pay Nezirevic damages in the sum of $262,000 plus interest. Shortly after, Lubura received a warrant from the Sherriff’s office. He then sought advice about setting aside the judgment. At first instance, a judge of this court refused the application but then Lubura obtained leave to appeal to the Court of Appeal.

6       Robson AJA delivered the leading judgment. His Honour upheld the appeal and set aside the default judgment. In so doing, he said that the court must consider awarding costs and providing security which would adequately cover the prejudice to the respondent in having the judgment set aside.[3] In that case, the court agreed it was appropriate that Lubura pay the costs of and incidental to the setting aside application, the costs thrown away by entering judgment, the costs of assessing Nezerivic’s damages, and the costs of attempting to enforce the judgment. In the absence of agreement, these costs were to be taxed on an indemnity basis. His Honour accordingly ordered that there be a stay on the order to set aside judgment until the security was posted.

[3][2013] VSCA 215 at para [119]

7       The decision in JRC Enterprises Pty Ltd was another case of setting aside a default judgment. Mukhtar AsJ adopted the approach in Lubura of requiring the defendants to provide security for the payment of the costs thrown away by reason of the judgment being set aside. A director of the plaintiff assessed the costs at $30,000 based on quotes and business records. The court decided to allow $15,000.

8       While His Honour did set aside the judgment, he did so with obvious reluctance. He quoted the test which referred to the need for only a “defence on the merits” or a “prima facie defence” and how a court dealing with such an application could not reach conclusions about a witness’s credibility. But at the same time, he expressed his scepticism about the defendant’s application[4], he noted the facts of the matter seemed to very much favour the plaintiff[5] and commented how part of the explanation for the defendant’s procedural default lacked conviction[6] and reflected an unreasonable belief which lacked supporting grounds.[7]

[4][2013] VSC 646 at para [1]

[5]Ibid at para [27]

[6]Ibid at para [33]

[7]Ibid

9       The present case is different from each of those above. I am satisfied that the judgment was irregular in relation to the first, second and fourth plaintiffs. Had these plaintiffs taken appropriate action, the issues created by the terms in which the judgment was given could have been addressed. However, the plaintiffs took no steps to deal with the issues. Indeed, the bankruptcy application in the Federal Court against the defendant appears to rely upon the County Court default judgment obtained by the four plaintiffs. I infer from the failure by the first and fourth plaintiffs to have the damages assessed that they do not consider they are suffering substantial hardship in not proceeding. Certainly, there is no affidavit material from the plaintiffs on the subject.

10      As I understand the position, there is no invariable principle that security must be given by a defendant who succeeds in setting aside judgment. Counsel for the plaintiffs did not refer to such a principle. Also, such a principle would be inconsistent with my experience of legal practice.

11      In the circumstances, I consider it is appropriate to order that:

(a) the defendant pay the third plaintiff’s costs of the summons filed on 17 November 2014, such costs to be taxed on a standard basis in default of agreement; and

(b) the parties are otherwise to bear their own costs of and incidental to the defendant’s summons filed 17 November 2014.