National Australia Bank Ltd v Esposito
[2019] WASC 27
•12 FEBRUARY 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NATIONAL AUSTRALIA BANK LTD -v- ESPOSITO [2019] WASC 27
CORAM: MASTER SANDERSON
HEARD: 28 NOVEMBER 2018
DELIVERED : 12 FEBRUARY 2019
FILE NO/S: CIV 2475 of 2017
BETWEEN: NATIONAL AUSTRALIA BANK LTD
Plaintiff
AND
ANDONIO ESPOSITO
First Defendant
SARA MARIA ESPOSITO
Second Defendant
Catchwords:
Practice and procedure - Application to set aside summary judgment entered in absence of party - Principles to be applied - Application to adduce further evidence
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Leave granted to rely on further evidence
Summary judgment set aside
Application for summary judgment dismissed
Category: A
Representation:
Counsel:
| Plaintiff | : | Mr H West |
| First Defendant | : | Mr T Galic |
| Second Defendant | : | Mr J C Yeldon |
Solicitors:
| Plaintiff | : | Dentons Australia |
| First Defendant | : | MGM O'Connor Lawyers |
| Second Defendant | : | Westmont Legal |
Case(s) referred to in decision(s):
Aboyne Pty Ltd v Dixon Homes Pty Ltd [1980] Qd R 142
TLJ v Lai [2018] WASCA 201
Yerkey v Jones (1939) 63 CLR 649
MASTER SANDERSON:
By chamber summons filed 18 July 2018 the second defendant applied relevantly for the following order:
The orders made on 10 May 2018 in default of appearance by the Second Defendant be set aside, alternatively there be a stay of enforcement of those orders pending an appeal.
To understand what led to the filing of that chamber summons, it is necessary to trace the procedural history of the matter. The action was commenced by a writ of summons lodged 5 September 2017. An appearance was lodged by both defendants on 29 January 2018. At that time, the one firm of solicitors was acting for both defendants. A case management conference was held before Registrar Davies on 8 February 2018. The plaintiff was represented and both defendants were represented by the same solicitor. The registrar noted that 'another solicitor will come on the record for the second defendant'. She adjourned the case management conference sine die.
On 12 April 2018 a notice of change of solicitor was filed on behalf of the second defendant - in other words, from that date onwards the first and second defendants were represented by separate solicitors. On 27 March 2018 the plaintiff filed an application for summary judgment against both defendants. The matter came on for directions in masters chambers on 12 April 2018. I ordered that all affidavit material to be relied upon by the defendants should be filed and served by 3 May 2018. I then adjourned the matter to chambers on 10 May 2018.
When the matter returned to chambers on 10 May 2018, no affidavit material had been filed on behalf of the defendants. Neither of the defendants appeared either in person or through their solicitors. Having considered the affidavit material filed in support of the application, I was satisfied there was no defence and accordingly I entered judgment. The judgment was for a monetary sum and for delivery up of a property in Yokine. The plaintiff was suing on a loan agreement entered into with the first and second defendants. The evidence established the loan had been made, there had been default, a default notice had issued and the default had not been rectified. All the requirements of O 14 of the Rules of the Supreme Court 1971 (WA) (the Rules) were satisfied and I could see no impediment to entering judgment.
Against that background, it can be seen that the relief sought in the second defendant's chamber summons does not accurately reflect the procedural history. The second defendant has entered an appearance and accordingly there was no judgment in default of appearance. Summary judgment was entered against the second defendant when she did not appear either personally or through a solicitor. What the second defendant was actually seeking by her chamber summons was to set aside the order for summary judgment and for leave to adduce further evidence. Under O 14 r 12 of the Rules summary judgment against an absent party may be set aside.
The proper approach to that rule was considered in Aboyne Pty Ltd v Dixon Homes Pty Ltd [1980] Qd R 142. Kelly J said that it was incumbent on an applicant to set aside the summary judgment to satisfactorily explain the failure to appear and to establish, had there been an appearance, that leave to defend would have been granted. His Honour also determined it was for an applicant to show that any delay in bringing the application was not such as to preclude the applicant from obtaining relief. In the Aboyne case, summary judgment had been granted for specific performance. Although it is not entirely clear from the judgment it seems his Honour was of the view that had relief been granted and some steps taken which meant the parties could not be put back in the position they were in pre‑judgment, then the judgment might not be set aside. In any event, this is not a case where steps have been taken which would make setting aside the judgment either impractical or impossible.
So really then the two issues in this application are these. First, is there an adequate explanation as to why the second defendant did not appear at the hearing of the summary judgment application? Second, should the second defendant be given leave to adduce further evidence and to have the merits of the application for summary judgment determined taking into account the further evidence? In this case there would be no point in setting aside the judgment if the second defendant was not given leave to rely upon the further evidence because there was no evidence in opposition to the application at the time judgment was granted.
The explanation for there being no appearance at the hearing is provided by an affidavit of Gavin Jahn sworn 14 November 2018. Attached to that affidavit is a letter written by Mr Jahn in his capacity as the second defendant's solicitor to the plaintiff's solicitor. There is only one relevant paragraph and it reads as follows:
There appears to have been an administrative oversight in not diarising the court appointment date.[1]
[1] Annexure A to the affidavit of Gavin Jahn sworn 14 November 2018.
While it may have been wise for Mr Jahn to swear an affidavit which addressed directly how his firm overlooked the appointment, the position is, I think, clear. An error was made by the second defendant's solicitors. Having realised on 14 May 2018 an order had been made the application to set aside the judgment was not filed until 18 July 2018 - a delay of approximately two months. Whilst it might have been better if the second defendant's solicitors had acted sooner, this delay was not so egregious as to warrant a refusal to set aside the judgment.
On balance then, I am satisfied there is an adequate explanation for the delay. The decisive factor in reaching this conclusion is the fact it was not the second defendant herself who was responsible for the judgment being entered in default of appearance.
That then leads to the question of whether or not further evidence ought be admitted in opposition to the application. In considering that question, the recent decision of the Court of Appeal in TLJ v Lai [2018] WASCA 201 is relevant. During the course of the hearing, I drew this decision to the attention of both counsel, neither of whom had referred to it in their submissions. I invited each counsel to provide additional written submissions after the hearing and both did so. I have had regard to these submissions in reaching my decision.
For the purposes of this case it is unnecessary for me to give detailed consideration to that decision. Suffice it to say it now seems that while an explanation for the delay is required and the length of the delay is relevant, the overwhelming consideration is whether or not it is in the interests of justice to admit further evidence. Put another way, if the additional evidence might have led to a different outcome, then that evidence should be admitted, all other considerations being secondary. Doubtless over time the proper approach to the Lai decision will be determined by further consideration. But for the present I think the approach I have adopted is consistent with the decision.
The evidence upon which the second defendant seeks to rely is found in an affidavit she swore on 7 June 2018. It is brief and to the point and contains only six relevant paragraphs. Rather than paraphrase these paragraphs I will quote them in full:
It was always my understanding that the mortgage that was taken out was for payment of a block of land that was to be used for investment purposes. I was told by my husband and did verily believe that whilst we had secured most of the finance for the land from one lender, there was a small shortfall. My husband told me he was taking care of this. I have never been given the opportunity to review the loan documents. They were not made available to me by my husband or by any other person prior to the Plaintiff commencing these proceedings.
I have always had complete faith and trust in my husband. He is a finance broker. He has always managed our financial affairs. I have always trusted him implicitly.
I was not aware, until after the commencement of these proceedings that the Plaintiff had taken a mortgage over my matrimonial home, or that the Plaintiff was seeking to sell my matrimonial home. At no point do I recall any person explaining this to me. To the best of my recollection, at no point was I ever told that this was a possibility.
I did not have and have not had independent legal advice.
I was told by Anthony that I needed to sign some documents. I left it to my husband to sort out whatever was required, because I trusted him implicitly.
I was not aware that finance was being obtained nor interest rates. I was not informed that our family home was being used as security, or that in the event of a default it could be used to repay the loan. I would never have agreed to risk the family home. Nobody ever explained this to me until after these proceedings were commenced.[2]
[2] Affidavit of Sara Maria Esposito sworn 7 June 2018 par 4 – 9.
It is clear then the second defendant is relying upon the principles set out in Yerkey v Jones (1939) 63 CLR 649 as they have developed over the years. It was the plaintiff's position the second defendant did not fall within the Yerkey v Jones principles. The plaintiff's submissions were put in this way.
The plaintiff says the second defendant did not sign a guarantee. She is a joint borrower and primarily liable. Further, there is no evidence that the second defendant conferred a voluntary benefit upon the first defendant by entering into the loan agreement. There is no evidence that the plaintiff relied solely upon the first defendant to obtain the second defendant's signature on the loan agreements.[3] Furthermore, the plaintiff says that while the second defendant may not have had independent legal advice she was certainly not precluded from obtaining that advice. Rather she was given adequate warnings and opportunities about the loan documents and she accepted notices to that effect in writing. It is simply the case the second defendant did not take the opportunity to review the documents. The second defendant is not naïve in the sense that she has borrowed money in the past. She is not in a vulnerable position.
[3] Plaintiffs supplementary submissions filed 27 November 2018 par 30.
Summary judgment is reserved for only the clearest of cases. Once a plaintiff has satisfied the requirements of O 14 of the Rules it is for a defendant to satisfy the court there is a serious question to be tried. In determining whether there are circumstances that warrant further investigation the court must accept the version of events which is most favourable to the defendant. Of course if the evidence of the defendant is at odds with the documentation or is untenable then judgment might still be entered. But in every case caution is required.
In my view this is a case where judgment ought be set aside and the second defendant ought be given leave to rely on her affidavit material. I am satisfied there is an adequate explanation for the delay and there is no other good reason why the judgment ought not be set aside. I am also satisfied that on balance the affidavit evidence of the second defendant raises a serious question to be tried. Given there will be a trial of this action it is inappropriate that I make any detailed analysis of the evidence. Suffice it to say I am satisfied, even on the limited material available in the second defendant's affidavit, that it is arguable this transaction may be tainted by unconscionable conduct. I am satisfied the second defendant ought have leave to defend.
Subject to hearing from the parties I would make the following orders:
(1)Judgment entered against the second defendant be set aside.
(2)The second defendant have leave to rely upon her affidavit sworn 6 June 2018.
(3)The application for summary judgment against the second defendant be dismissed.
(4)The second defendant pay the costs of this application including reserved costs, such costs to be taxed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson13 FEBRUARY 2019
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