Mordale Pty Ltd v Bingham & the State of Queensland

[1995] QSC 288

IN THE SUPREME COURT
OF QUEENSLAND

Writ No. 1262 of 1995

Brisbane

Before the Hon. Justice Mackenzie

[Mordale Pty Ltd. v. Bingham & The State of Queensland]

BETWEEN

MORDALE PTY LTD and ROBERT MURCH and JOHN DWYER
  Plaintiffs

AND  JOHN BINGHAM
  First Defendant

AND

THE STATE OF QUEENSLAND  
  Second Defendant

JUDGMENT - MACKENZIE J.

Judgment delivered 9 /11/1995

Counsel:       D. Campbell for applicant
  R. Derrington for respondents

Solicitors:     K.M. O'Shea, Crown Solicitor for applicant
  Jones King for respondents

Hearing date: 3 November 1995

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  Writ No.1262  of 1995

Before the Hon. Mr Justice Mackenzie

[Moredale Pty Ltd.v. Bingham & The State of Queensland ]

BETWEEN

MORDALE PTY LTD and ROBERT MURCH and JOHN DWYER

Plaintiff

AND

JOHN BINGHAM
   First Defendant

AND

THE STATE OF QUEENSLAND

Second Defendant

JUDGMENT - MACKENZIE J

Judgment Delivered  9/11/ 1995

The applicant first defendant who is Registrar of the Supreme Court at Cairns seeks to set aside an interlocutory  judgment entered by the plaintiffs on 22 September 1995.   The applicant plaintiffs  were defendants in an action concerning pastoral leases in which Mr Justice McPherson ordered on 25 October 1990 that an injunction restraining dealings with the property in question be granted on the usual undertaking as to damages.  However because the plaintiffs or some of them were residents of the United States it was ordered that security in the sum of $30,000 be available to support the undertaking given by the plaintiffs in that action and in an earlier action.  The affidavit of Mr Doherty, solicitor for the plaintiffs, discloses that consequent upon the orders of Mr Justice McPherson bank guarantees were provided by the Commonwealth Bank and were deposited with the applicant.  On 4 June 1991 the applicants succeeded in both actions but on 31 October 1991 the Full Court set aside the decisions. 
          According to the Statement of Claim, on 3 July 1991, which is alleged to be prior to the expiration of the appeal period because the judgment had not been perfected until sometime after the pronouncement of  the judgment by Mr Justice McPherson,  the Registrar returned the two securities held by him to the successful plaintiffs.  The appeal was not lodged until 17 July 1991. It is alleged that in returning the securities to the plaintiffs the Registrar was in breach of a duty of care owed by him to the respondents to this application. 
          According to the Statement of Claim the guarantees lodged with the Registrar were the bank guarantee pursuant to the order to support the undertaking as to damages in the sum of $30,000 and a further bank guarantee which the plaintiffs and defendants had agreed upon as security for costs, also in the sum of $30,000.
          The writ was served on the applicant in these proceedings on 7 August 1995, the first day of his long service leave.  He has deposed  that he immediately wrote a letter to the Director General, Department of Justice Attorney General, seeking that an appearance and defence be entered on his behalf.  The letter was posted on the same day.  However according to an acting records officer in the department inquires cannot locate a record of the letter being received. 
          Mr Franzen, a solicitor in the Crown Solicitor's Office, made inquires on 24 July 1995 as to whether or not the first defendant had been served with the writ.  Upon being told by an officer of the department that when he had last spoken to the first defendant the writ had not been served, Mr Franzen caused an entry of appearance to be filed on behalf of the second defendant.  On the 25 July 1995 Mr Franzen received a telephone call from Mr Doherty in which the question of the Crown Solicitor's Office accepting service on behalf on the first defendant was raised.  Mr. Franzen told him that it would be necessary to serve the writ on the first defendant personally.  Mr Franzen deposes that he did not become aware subsequently that the first defendant had been served until judgment by default came to his notice on the 22 September 1995.  After inquiries instituted by Mr Franzen the fact that the first defendant had been served and that he maintained that he had requested an entry of appearance and defence be entered was discovered.
          There is no allegation that the application to set aside has been made other than promptly.  It is also accepted that no prejudice has been occasioned by reason of delay.  It was submitted by Mr Derrington that there was no  satisfactory explanation for the failure to enter an appearance.  He drew attention to the lack of any oral contact with the Crown Solicitor or the department by the applicant.  The applicant submits that the fact that the intention to enter judgment by default had not been communicated prior to doing so was a factor to be taken into account.  That was put on the basis of "normal courtesies" rather than any obligation, as it must have been.
          On the material before me I am satisfied that for some reason the process of obtaining authority from the department for the applicant's representation broke down.  This was, on the face of the material, contributed by his absence on long service leave.  I am satisfied that there is a satisfactory explanation in the relevant sense for the entry of appearance not being filed at an appropriate time.
          Mr Derrington submitted that there is no prima facie defence on the merits.  He submitted that an undertaking as to damages remained in force at least until the action was at an end and, at the earliest, that would not be until the end of the appeal period.  It was further submitted that the release of guarantee providing security for costs was even more difficult to justify because until the action was finally disposed of it could not be known whether or not the plaintiff would pay the defendant's costs.  He submitted that the action was finally disposed of  when the right of appeal was exhausted either by determination or lapse of time (Austin Reed Pty Ltd v. Royal Insurance Co Ltd (No 2) (1956)1WLR1339. He referred to correspondence in which it appeared to be conceded that the guarantees should not have been handed back at the time when they were. The applicant submits that there is a prima facie defence on the merits to both aspects of the claim. It submits that there were two aspects. The first was that as Mr Justice McPherson's order dealt with only the provision of one guarantee the order did not cover the second guarantee and hence no duty arose with regard to it in any event. Secondly, it was submitted that upon judgment being delivered no further order was sought by either party with regard to the guarantee held by him pursuant to Mr Justice McPherson's order. The defence will be that the applicant was not obliged to hold the guarantee until the time for appeal had expired. The defence will be that the applicant owed the respondents no duty to hold the first guarantee beyond the date of judgment or further order and owed no duty with respect to the second guarantee. Mr Derrington properly drew my attention to the The Bernisse and the Elve 1920 P.1 in which Lord Sterndale made an order for payment out of moneys paid in as security notwithstanding a successful application for stay of execution pending appeal.
          As the threshold for deciding to set aside the judgment is  whether there is a prima facie defence, I am satisfied that it has been reached in this case and that I ought to set aside the interlocutory judgment entered by the plaintiffs and give the first defendant leave to enter an appearance.
          With respect to costs Mr Derrington submits that the first defendant should be ordered to pay the costs thrown away by the setting aside of the judgment and of and incidental to the present application.  It is submitted that the first defendant, by his solicitor, demanded strict compliance with the rules as to service and cannot complain if he himself has failed to comply.  Although it is not explicitly stated in the evidence it is apparent that the applicant applied through proper channels to have the Crown Solicitor act for him.  It was not a case of the Crown Solicitor, simply by reason of the first defendant being a public servant, having the right to represent him without proper approval.  The finding that for some reason the request became lost does not support the criticism about demanding strict compliance with the rules.  It is also true that the judgment was entered without a second inquiry having been made from the Crown Solicitor whether he was acting.  There was no legal obligation to do so.  Further it appears that the question of whether the formalities necessary for the Crown Solicitor to act for the applicant had occurred was not followed up within the Crown's systems prior to judgment being entered.  In the circumstances I propose to order that the costs of the present application be the plaintiffs' costs in the cause.             
          The orders are the following:

1.      The interlocutory judgment entered by the plaintiffs against the first defendant in               Writ No. 1262 of 1995 on 22 September 1995 is set aside.

2.      The first defendant in the said action is given leave to enter an appearance within              eight days of the date of this order.

3.      The costs of the application shall be plaintiffs' costs in the cause.