Nasser v Smith

No judgment structure available for this case.

Local Court of New South Wales

CITATION: Nasser v Smith [2008] NSWLC 7

JURISDICTION: Civil

PARTIES: Henri Ron Nasser (Plaintiff and Respondent to Motion)
Guy Earl Smith (Defendant and Applicant for Motion)

FILE NUMBER: 3880/07

PLACE OF HEARING: Downing Centre

DATE OF DECISION: 05/08/2008

MAGISTRATE: Magistrate D Heilpern

CATCHWORDS: Set Aside Judgment - Estoppel

LEGISLATION CITED: Rule 36.16 Uniform Civil Procedure Rules 2005

CASES CITED: Akari v Sole [2008] NSWSC 5
Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229
Carr v Finance Corporation of Australia Limited (1980-81) 147 CLR 247
Cohen v McWilliam (1995) 38 NSWLR
Eddaglide Pty Ltd v Anor v Taubert and Ors [2000] NSWSC 1226
Hall v Nominal Defendant (1966) 117 CLR 423
Szczygiel v Peeku Holdings [2006] NSWSC 73

TEXTS CITED:

REPRESENTATION: Mr Rosenblatt (Pl/Res)
Mr Refenes (Df/App)

ORDERS:

Reasons for Decision

1 By Notice of Motion dated 19 March 2008, the defendant seeks orders that the court sets aside default judgment entered on 4 July 2007. These orders are opposed by the plaintiff who initially proceeded by way of a “Notice of Motion to dismiss Notice of Motion” a process I was not previously aware of. The plaintiff agreed that the matter ought proceed on the basis that the plaintiff opposed the motion of the defendant to set aside judgment.

2 The basis for the application for setting aside the default judgment is Rule 36.16 of the Uniform Civil Procedure Rules 2005.

36.16 Further power to set aside or vary judgment or order

3 The key issue in this case is that there was a previous application to set aside judgment determined by the Registrar on 21 February 2008. This was dismissed although there is no written or sound recording of the matter at that level. Thus this is a second application to set aside judgment, and accordingly there are additional matters to consider.

Facts and Chronology

4 The matter arises out of the purchase at auction by the plaintiff of a Tongan neck rest for $14,000 on 3 September 2005. The defendant conducted the auction. The plaintiff claims the neck rest was not as represented by the defendant, in that the bone and ivory inlays were all recently added thus the value of the item was far less than he had paid. He thus seeks liquidated damages in the sum of $17,050.07 plus interest plus costs.

5 The statement of claim was filed on 27 April 2007 and was served on the defendant’s then solicitor Michael Rogers on 1 May 2007. No defence was filed and default judgment was entered on 4 July 2007 for $20,630.59. On 14 November 2007, the plaintiff sought a writ of execution to enforce the judgment. On 27 November the defendant filed a Notice of Motion to set aside the default judgment. This was heard before the registrar on 21 February 2008 and was dismissed.

6 As there is no record of those proceedings, evidence as to what occurred there is limited to the affidavit filed by Louis Ryckmans in relation to this motion dated 1 April 2008. At paragraph eight he attests to the evidence that was put before the registrar being the affidavits of both parties, and “relevant submissions”. The one page affidavit of the defendant is unsigned, but purportedly witnessed by his previous solicitor, and ambiguous as to instructions between the defendant and his solicitor. The delay is poorly explained, and based on miscommunication between the lawyers for the plaintiff and the defendant. There is no mention in the affidavit that the solicitor was instructed to file a defence by the defendant, or any explanation for a failure to comply with these instructions. The defence is only vaguely outlined, and in particular there is no draft defence annexed. The notes of the solicitor appearing for the plaintiff appear at annexure C, and suggest that issues raised included that there was no evidence from the solicitor, no real explanation for the delay, no defence and thus the notice was dismissed.

Defendant’s Submissions

7 The defendant frankly admits that there are additional hurdles in a second application to set aside judgment, pointing to the following passages from Eddaglide Pty Ltd v Anor v Taubert and Ors [2000] NSWSC 1226 (15 December 2000):

The application faced an initial hurdle, in that a similar application was dealt with by Hamilton, J., and after a contested hearing, Hamilton, J. dismissed such an application on 22 November 2000. In those circumstances it seemed to me, prima facie, that the approach to interlocutory decisions set out in Brimaud v Honeysett Instant Print Pty Ltd, McLelland J, 19 September 1988, applied; so that the application before me today could, in the ordinary course, succeed only if a material change of circumstance was shown, or if there had been discovery of new material which couldn't reasonably have been put before Hamilton, J.

3 Mr Colyer for the applicant submitted that that rule of practice did not apply in this case. It was expressed as applying in the case of an interlocutory order of a substantive nature made after a contested hearing, in contemplation that it would operate until the final disposition of the proceedings. He submitted that the decision of Hutchinson v Nominal Defendant (1971) 1 NSWLR 443, on which McLelland, J. relied, confirmed that the principle applied in that sort of case.

4 By contrast, Mr Colyer submitted, cases such as Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423, especially at 440, and Carr v. Finance Corporation of Australia Limited (1980-81) 147 CLR 247, especially at 248, showed that an order refusing to set aside a default or summary judgment does not finally dispose of the rights of parties, because it is open to the disappointed defendant to apply again to have the judgment set aside. It was that susceptibility of such an order to a further application which made it an interlocutory order, and the judgments of the High Court in those two cases did not suggest that later applications were subject to the limitations set out in Brimaud v Honeysett.

5 In my opinion, the principles underlying Brimaud v Honeysett are that litigation should come to an end and that there should not be repeated litigation of the same matters; and also that a single judge should not, in substance, sit on appeal from a decision of another single judge. Those two principles apply with at least as much force to an interlocutory order of the kind under consideration here, as to the kind of interlocutory order explicitly dealt with in Brimaud v Honeysett.

6 In my opinion, the same ordinary rule of practice applies to cases of this kind as to cases of the kind discussed in Brimaud v Honeysett. That does not mean that second applications will never be entertained unless those requirements are satisfied. However, it does, I think, mean that a very powerful case based on the interests of justice would need to be made out before those principles are departed from.

8 I note that in Carr the High Court specifically found per Gibbs CJ: (my emphasis)

The test now applied in this Court for determining whether a judgment is final or not is whether the judgment or order appealed from, as made, finally determines the rights of the parties: Licul v. Corney (1976) 50 ALJR 439, at p 444. An order refusing to set aside a default judgment does not as a matter of law finally dispose of the rights of the parties, for it is open to the disappointed defendant to apply again to have the judgment set aside: Hall v. Nominal Defendant (1966) 117 CLR 423, at p 440 .

9 In Hall, Barwick CJ stated:

The matter, it seems to me, is quite different from the case of successive applications for extensions of time for the taking of a step in an action or for setting aside a default judgment in an action. In these cases, the matter is under the control of and generally within the discretion of the court in which the action is brought.

10 The defendant contends that there is in this case a material change of circumstances, new material to be put forward, and that there is a strong case based on the interests of justice. To support these contentions he relies on an affidavit filed in this second motion. This affidavit was not objected to, and nor was there any request to cross-examine the defendant on the contents of the affidavit.

11 On the issue of delay in filing a defence the defendant essentially claims that the solicitor previously acting for him did not follow his instructions with respect to the matter, and that he was told that his matter was in hand. He supports this with correspondence to his then solicitor. He states that he instructed his solicitor to file a defence if the matter was not settled. Contact from the Sheriff in November was the first he heard that the defence had not been filed, and he acted to ensure an application to set aside judgment was made. He was not present at the Registrars hearing of the matter because he was told that there was “no need to go”. There was further non-responsive conduct by his solicitor after the Registrar’s hearing, and the defendant changed lawyer on the 12th of March 2008 leading to the current motion.

12 As to an arguable defence, the defendant attests that he is an expert in the field, and that it is an original artefact with original bone inlays. He supports his opinion with a preliminary experts report from Ethnology Services, which whilst not in expert form, points to the item being genuine. He also has tendered a proposed defence that raises contractual exclusions in the terms and conditions of the auction, and in particular clause 12 (a) which states that the second defendant “does not accept responsibility for the authenticity, attribution, genuineness, origin……of any lot”. He also has annexed an email from the plaintiff including the words “Unfortunately it really pays not to bid on a photo…..I realize that this is my headache, but if you agree to take it back, I will accept 80% of the purchase price. If not, I’m a big boy”. The defendant also claims in his draft defence that he has no contract with the plaintiff, as he was agent for the vendor.

13 The defendant thus submits that the decision of the Registrar was based on limited matters relating to delay, where it is one available inference that the solicitor acting had factors relating to his own professional embarrassment in mind. The real reason for the delay was inaction of the previous solicitor. Key aspects of the grounds of defence were not articulated to the court. The defendant submits that the appropriate remedy is one of an order for costs against the defendant, which he would not oppose.

Plaintiffs Submissions

14 The plaintiff says that this is not a situation where there is anything put on this motion that could not have been put on the first motion. All material now being put by the defendant as to his proposed defence, and the reasons for delay were within the knowledge of the defendant as at the date of the original motion to set aside default judgment. It is thus not “new” material. He submits that there are significant differences between the affidavit relied upon in the first motion, and that relied upon in the second motion, calling into question the credibility of the defendant, and raising the likelihood that this is simply a debtor seeking to delay the inevitable. He submits that this is a defendant who “sat on his rights”, and that there must be some finality for the plaintiff lest there be ongoing applications to set aside judgments. He submits that the evidence was fully ventilated at the first motion, and the defendant cannot rely on lawyer’s incompetence to avoid the consequences: Mortimer v SA [2001] SASC 37. The plaintiff submits that were the court to grant the applications it would mean that “all future applicants” have two bites at the apple.

15 On the defence proposed he submits that the expert’s report is of little weight.

16 The plaintiff also submits that in the absence of an appeal from the Registrars decision there are four consequences. Firstly there are issue estoppels on issues of delay and defence, given that the Registrar dismissed the motion necessarily determining both (Re Martin; Ex Parte Amtron Australia Pty Ltd (1996) 62 FCR 438 at 442). Secondly “the default judgment became a final judgment on 4 July 2007 and constituted a res judicata” (Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 and Chaimberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502). Thirdly the plaintiff has a “vested right” to retain his judgment unless an application to extend time in which to file an appeal was granted (Gallo v Dawson [1990] 93 ALR 497). Fourthly, by application of the Anshun doctrine, the defendant is estopped from raising matters that could have been adduced at the first hearing (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, Bryant v CBA (1995) 57 FCR 287 and Henderson v Henderson [1843] 67 ER at 319).

17 The plaintiff also claims that the present application is an abuse of process in that it constitutes a successive application for the same relief. (Wentworth v Rogers per Sperling J, 28/04/1995 SCNSW unreported and McLelland J in Brimaud v Honeysett Instant Print Pty Ltd NSW SC 19 September 1988 unreported and Northern Star Agriculture Pty Ltd v Morgan & Banks [2007] NSWSC 98).

Defendants Submissions in Reply

18 In reply, the defendant states that he retained a professional to do the job, that the ills of the solicitor should not prejudice the defendant in person (Jackamara v Krakouer 153 ALR at p 297). He further states that the estoppel matters do not apply as an application to set aside judgment is of an interlocutory type.

Legal Analysis

19 The starting point for legal analysis in this matter is that the defendant bears the burden of satisfying the court that he is entitled to the relief sought. The court has a discretionary power to set aside a default judgment. This is not a review or an appeal from the Registrars decision - it is a fresh motion. In Akari v Sole [2008] NSWSC 59 Hall J at 29 restated in cogent terms the law relating to the exercise of the discretion to set aside default judgment:

Accordingly, in general terms, the relevant matters to be addressed on an application to set aside a default judgment include the issues of delay, and explanation for any delay or default which occasioned the entry of default judgment, whether a good defence on the merits has been established and the question of whether any prejudice would be occasioned to the plaintiff by the making of an order setting aside the judgment.

20 At paragraph 67, Hall J quotes from Cohen v McWilliam where Preistly JA listed a schedule of Australian authorities on the issue setting aside judgment. His Honour observed:

I think a careful reading shows there is not one example in the schedule where a litigant has been shut out by procedural default from litigating a defence which the Court felt was arguable.

21 In Cohen v McWilliam (1995) 38 NSWLR (quoted with approval in CBA v Clune [2007] NSWSC 305 at 12), the court found:

"It is, however, another question whether concern about the extent of delays, either in a particular case or generally, should, in the absence of prejudice in the particular case, be taken into account in exercising a discretion to set aside a default judgment. The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed. The temptation to impose a limitation through motives of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the relevant discretion to yield to that temptation...”

22 These findings are particularly pertinent in the present case where there has been suggestion of misconduct by the defendant’s original solicitor, and most importantly, where there is an absence of submissions or evidence by the plaintiff of prejudice. I have carefully reviewed my notes of oral submissions, the written submissions and the affidavit material. The closest that the plaintiff comes to submitting prejudice is at Paragraph 16 of the affidavit of Louis Ryckmans of the 13th of February 2008 where legal fees are referred to. There is no evidence, for example, that the plaintiff acted in the light of the default judgment or first motion to dispose of the neck rest, thus making it impossible for him to have experts reports prepared should the matter go for trial.

23 In my view the original motion was, from the material available to me, most wanting. Indeed, nowhere is there evidence that the lawyer states that he was instructed to put on a defence but neglected to do so. That he was so instructed and did not file a defence is an uncontested fact in this matter. The second affidavit in the current application is most detailed and meets all the requirements of Akari v Sole. Whilst the apparent sins of the lawyer do not of themselves give rise to a right to a rehearing of the same application, (Mortimer v SA) they provide an explanation as to why the first application was so lacking in comparison to the second.

24 In my view this is an exceptional and unusual case where justice demands that the second motion to set aside judgment be granted. The explanation for the delay between judgment and the first motion is uncontested. The delay to the second motion is relatively short. The first motion omitted to put key matters properly or at all to the Registrar in circumstances that on the face of them raise suspicions. The change of lawyer is a material change of circumstance given the suggestions in this case, and even though there were matters that could and should have been put to the Registrar, they were not. Thus although they are not “new material” that is “discovered”, they point to only half the story being put before the Registrar. There is no prejudice to the plaintiff, but for the delay and the legal costs, which can be ameliorated by costs and interest. The defendant appears to have more than an arguable defence, on issues of fact, contract and agency. Indeed even in the statement of claim it is clear that the neck rest is worth something, albeit less than the amount paid. In summary, there is a very powerful case based on the interests of justice that lead me to the conclusion that the motion ought be granted.

25 I have not come to that conclusion lightly. There are competing interests here – justice is hardly quick, and cheap if a judgment is not final. Lord Denning MR, for example, in Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 at 245 countered the applicant's submission that to strike out an action without trial for time default would contravene Magna Carta, with this retort:

"To this there is a short answer. The delay of justice is a denial of justice. Magna Carta will have none of it. 'To no one will we deny or delay right or justice' [Magna Carta, ch 40]. All through the years men have protested at the law's delay and counted it as a grievous wrong, hard to bear. Shakespeare ranks it among the whips and scorns of time [Hamlet, Act III, sc 1]. Dickens tells how it exhausts finances, patience, courage, hope [Bleak House, ch 1]. To put right this wrong, we will in this court do all in our power to enforce expedition: and, if need be, we will strike out actions when there has been excessive delay. This is a stern measure. But it is within the inherent justice of the court. And the Rules of Court expressly permit it."

26 In Szczygiel v Peeku Holdings [2006] NSWSC 73 (16 February 2006) Campbell J considered the provisions of the Civil Procedure Act in the following terms:

Section 56 provides that the overriding purpose of the Act and of the Rules of Court in their application to civil proceedings is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The Court is required to give effect to that overriding purpose in exercising any power given to it by the Act. Often, the just resolution of the real issues in the proceedings cannot occur without there being a trial of the merits of disputed facts. However, there are occasions when justice can require that proceedings be determined even if there is not a determination of disputed facts on the merits. Section 57 sets out multiple purposes which the Court is to have regard to in furthering the overriding purpose set out in section 56. Those multiple purposes are the just determination of the proceedings, the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings, and all other proceedings in the Court, at a cost affordable by the respective parties. Further, section 58 of the Civil Procedure Act2005 sets out, in subsection 2, a power to have regard to a variety of matters in deciding what are the dictates of justice in a particular case. Those matters include: the degree of expedition with which the prospective parties have approached the proceedings (including the degree to which they have been timely in their interlocutory activities); the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties; the use that a party has made or could have made of any opportunity that had been available to the party in the course of proceedings, under Rules of Court; the practice of the Court or any direction of a procedural nature given in the proceedings; and the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction.

Section 61 contains, as well as a general power for the Court to give directions, a specific provision, in subsection 3, that if a party to whom a direction has been given fails to comply with the direction, the Court may, amongst other things, dismiss the proceedings.
Given this complex of statutory provisions, it is within the specific intent of the statutory framework in which the Court conducts its business that it can on occasions be appropriate to dismiss proceedings, even though there has not been a hearing on the merits, in circumstances where there has been a failure to comply with directions.

27 In forming this view I have considered each of the plaintiffs submissions, and in particular the submissions as to estoppel and abuse of process. As to abuse of process, Sperling J in Wentworth v Rogers did not close the door on successive applications for the same relief. He stated a “general rule” subject to exceptions such as “a change of circumstances” or “where evidence has become available which was not available at the earlier time”. General rules ought give way to exceptional cases, and in my view this falls within that category. McLelland J in Brimaud v Honeysett was railing against re-litigation of interlocutory matters where there is “no limit”. In this situation, the law places clear limits on re-litigating an application to set aside a default judgment. In this case the limits have not been reached.

28 Res judicata is a defence that the cause of action has already been dealt with to judgment, and thus cannot be re-litigated. Issue estoppel is a defence that a judicial determination directly involving an issue of law or fact disposes once and for all of the issue so that it cannot be raised later by the same parties. The plaintiff peppers his submissions with authorities that outline the nature of these and other equitable defences. What the plaintiff fails to do is to provide me with any authority for the proposition that a party is estopped from making a second application to set aside default judgment. However, such a proposition would seem to be in direct contrast with the comments in Hall and Carr above. In Chamberlain the court was dealing with a consent judgment that purported to deal with all the issues between the parties. A default judgment is only final until an application to set it aside is determined. In circumstances, such as these, it is only final until a further application is considered.

29 In reaching this conclusion I have also considered the cases referred to on page one of the plaintiffs further submission of law faxed on 22 April 2008. Some are repetitions of cases from the original submissions and some are new. Again, it seems to me that each of the cases are treated on the merits of the individual facts as they were presented. In some cases there is real prejudice to the respondent, in some cases they are a clear abuse of process. The key difference in this case is that there is no pleaded or submitted prejudice to the plaintiff beyond costs and interest.

Summary

30 In my view there is no bar by estoppel or abuse of process to a second application to set aside a default judgment. In considering such a matter the factors are whether there are new matters, a change circumstances or powerful reasons of justice that apply to a particular case. Further factors include consideration of prejudice to the plaintiff, any delay, the reasons for delay and the existence of an arguable defence. Thus, some applicants will have two bites of the apple. The defendant has satisfied me on balance that the default judgment ought to be set aside.

Orders

31 The default judgment is set aside. The defendant is to file a defence by 22 May 2008. Both parties are to file and serve evidence by 19 June 2008. A hearing date will be obtained from registry, and a review date some three weeks prior to that.

32 The defendant is to pay the applicants costs of this motion as assessed or agreed.

Magistrate David Heilpern

8 May 2008.

Actions

Download as PDF Download as Word Document

Citations

Nasser v Smith [2008] NSWLC 7

Cases Citing This Decision

0

Cases Cited

16

Statutory Material Cited

1

Eddaglide Pty Ltd and ANOR. v Taubert [2000] NSWSC 1226

Hall v Nominal Defendant [1966] HCA 36

Bienstein v Bienstein [2003] HCA 7

CITATION:	Nasser v Smith [2008] NSWLC 7
JURISDICTION:	Civil
PARTIES:	Henri Ron Nasser (Plaintiff and Respondent to Motion) Guy Earl Smith (Defendant and Applicant for Motion)
FILE NUMBER:	3880/07
PLACE OF HEARING:	Downing Centre
DATE OF DECISION:	05/08/2008
MAGISTRATE:	Magistrate D Heilpern
CATCHWORDS:	Set Aside Judgment - Estoppel
LEGISLATION CITED:	Rule 36.16 Uniform Civil Procedure Rules 2005
CASES CITED:	Akari v Sole [2008] NSWSC 5 Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 Carr v Finance Corporation of Australia Limited (1980-81) 147 CLR 247 Cohen v McWilliam (1995) 38 NSWLR Eddaglide Pty Ltd v Anor v Taubert and Ors [2000] NSWSC 1226 Hall v Nominal Defendant (1966) 117 CLR 423 Szczygiel v Peeku Holdings [2006] NSWSC 73
TEXTS CITED:
REPRESENTATION:	Mr Rosenblatt (Pl/Res) Mr Refenes (Df/App)
ORDERS:

[2008] NSWLC 7

08/05/2008