Northwest Healthcare Australia Re Limited v Solomon
[2024] VSC 494
•27 August 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2024 03116
| NORTHWEST HEALTHCARE AUSTRALIA RE LIMITED (ACN 612 310 148) in its capacity as trustee of the Northwest Healthcare Properties Australia Real Estate Investment Trust ABN 43 451 923 923 and in its capacity as trustee of the Northwest Healthcare Australia Clarendon St Trust ABN 69 759 504 087 (& Ors according to the attached Schedule of Parties) | Plaintiffs |
| v | |
| CLARE ELIZABETH SOLOMON | Defendant |
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JUDGE: | Harris J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 August 2024 |
DATE OF JUDGMENT: | 27 August 2024 |
CASE MAY BE CITED AS: | Northwest Healthcare Australia Re Limited & Ors v Solomon |
MEDIUM NEUTRAL CITATION: | [2024] VSC 494 |
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PRACTICE AND PROCEDURE – Entry of judgment in default – Judgment in default of appearance – Claim for recovery of a debt – Allegations in statement of claim plead cause of action in money had and received – Service by agreement in accordance with r 6.14 of the Supreme Court (General Civil Procedure) Rules 2015 – Supreme Court(General Civil Procedure) Rules 2015, rr 21.01, 21.03.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Ms B Chen | Ashurst Australia |
| For the Defendant | No appearance |
HER HONOUR:
Introduction
The plaintiffs are three entities in a corporate group. They have issued a proceeding against the defendant, alleging that the defendant, as an employee of a related company in the group, authorised payment by the plaintiffs of invoices for services which were never in fact rendered, and paid the amounts to herself.
The defendant has not filed an appearance in accordance with r 8.04 of the Rules. The plaintiffs wish to enter default judgment against her under rr 21.01 and 21.03 of the Supreme Court(General Civil Procedure) Rules 2015.
Before the plaintiffs can enter judgment, they require an order from the Court granting leave.[1] For the reasons that follow, following a hearing on 22 August 2024 I ordered that the plaintiffs have leave to enter judgment in default of appearance against the defendant in this proceeding.
[1]Supreme Court (General Civil Procedure) Rules 2015, r 21.01(2); Supreme Court (Miscellaneous Civil Proceedings) Rules 2018), r 2.07; Victorian WorkCover Authority v White & Anor [2021] VSC 458, [3] (Connock J).
Background
On 19 June 2024, the plaintiffs filed a writ indorsed with a statement of claim, pleading that the defendant breached her fiduciary duties and duties under s 182(1)(a) of the Corporations Act 2001 (Cth), and that she is liable to pay to the defendants the payments she transferred to herself as money had and received. The plaintiffs seek return of the relevant sums, alternatively damages or compensation under the Corporations Act. The writ seeks orders for the payment of amounts totalling $466,043.20 and interest.
The plaintiffs’ position is that the requirements of rr 21.01 and 21.03(1)(a), which are preconditions to entry of judgment in default of appearance, have been met because:
(a) the writ and statement of claim was served on 20 June 2024;
(b) the defendant has not filed a notice of appearance;
(c) the plaintiffs filed a notice to the Prothonotary to search for an appearance in this proceeding on 12 August 2024; and
(d) their claim is for the recovery of a debt.
Following a hearing on 22 August 2024, at which no appearance was made for the defendant,[2] I made orders granting leave to the plaintiffs to enter judgment. The following are my reasons for those orders.
[2]Including after the defendant was called out of court.
Relevant law
A defendant must file an appearance no less than ten days after they have been served with an originating process in Victoria.[3]
[3]Rules, r 8.04(a).
Rule 21.01 of the Rules provides:
21.01 Default of appearance
(1) This Rule applies only to a proceeding commenced by writ.
(2) Where a defendant does not file an appearance within the time limited, the plaintiff may enter or apply for judgment against that defendant in accordance with this Order unless Rule 2.07(1) of Chapter II applies.
Note
Rule 2.07(1) of Chapter II provides that, in a Commercial List that is managed by a Commercial List Judge, an order of a Commercial List Judge is required before judgment in default of appearance can be entered.
(3) Judgment shall not be entered or given for the plaintiff unless there is filed—
(a) a notice to the Prothonotary requesting the Prothonotary to search for an appearance by the defendant;
(b) an affidavit proving service of the writ on the defendant; and
(c) where the plaintiff applies for judgment in accordance with Rule 21.04 and the indorsement of claim on the writ does not constitute a statement of claim in accordance with Rule 5.04, a statement of claim.
Rule 2.07(1) of Chapter II (the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018) provides:
2.07 Judgment in default and summary judgment
(1)Judgment in default of appearance or pleading shall not be entered in a proceeding in a Commercial List that is managed by a Commercial List Judge unless a Commercial List Judge so orders.
The effect of r 21.01(2) and r 2.07 of Chapter II is that, in a proceeding in the Commercial List, a judge must grant leave before the Prothonotary can administratively enter judgment in default of appearance.[4]
[4]See White, [3] (Connock J); Moonwalk Pty Ltd v Assetta Developments Pty Ltd [2024] VSC 468, [17] (Cosgrave J).
Rule 21.03 of the Rules provides, relevantly:
Judgment for recovery of debt, damages or property
(1)Where a claim is made for the recovery of a debt, damages or any property, whether or not another claim is also made in the proceeding, and the plaintiff is entitled to judgment on that claim against any defendant in accordance with Rule 21.01 or Rule 21.02, the plaintiff may—
(a)for the recovery of a debt, enter final judgment against that defendant for an amount not exceeding the amount claimed in the writ or, if the plaintiff has served a statement of claim, the amount claimed in the statement of claim, together with interest from the commencement of the proceeding to the date of the judgment—
(i) on any debt which carries interest, at the rate it carries;
(ii)on any other debt, at the rates payable on judgment debts during that time; …
A ‘debt’ for the purpose of r 21.03 is a fixed and specific pecuniary demand or a demand that can ‘readily be reduced to certainty by a mathematical calculation’.[5]
[5]Foris GFS Australia Pty Ltd v Manivel [2022] VSC 482, [27] (Elliott J).
The statement of claim must plead all the material facts necessary to establish the plaintiff’s cause of action.[6] The allegations in a statement of claim (with the exception of an allegation that a party has suffered damage and as to the amount of damages) are taken to be admitted if the defendant fails to file a defence.[7]
Consideration
[6]See Yang v Finder Earth Pty Ltd [2019] VSCA 22, [24] (Maxwell P, Tate and Emerton JJA) and Kirk v PBP Accounting Solutions Pty Ltd [2015] VSC 173, [20] (Macaulay J), cited with approval in White, [13] (Connock J); Moonwalk, [20] (Cosgrave J). See also Rules, r 13.12.
[7]Yang, [7] (Maxwell P, Tate and Emerton JJA); Kirk, [20] (Macaulay J); Moonwalk, [20] (Cosgrave J).
Service
Rule 21.01(3)(b) provides that judgment shall not be entered or given for the plaintiff unless an affidavit is filed proving service of the writ on the defendant.
Except as otherwise provided by the Rules, an originating process must be personally served.[8]
[8]Rules, r 6.02(1).
The plaintiffs relied on the affidavit of Jacqueline Chan, senior associate at Ashurst Australia, the solicitors for the plaintiffs, in which Ms Chan stated that:
(a) By email on 17 May 2024, the plaintiffs requested that Holding Redlich solicitors confirm that they had instructions to accept service on behalf of the defendant.[9]
(b) By letter dated 20 May 2024, Holding Redlich informed the plaintiffs that they had instructions to accept service.[10]
(c) On 20 June 2024, the plaintiffs emailed the writ, statement of claim, proper basis certificate and overarching obligations certificate filed in this proceeding to Holding Redlich.[11]
[9]Affidavit of Jacqueline Chan sworn 12 August 2024 2024 (First Chan Affidavit), Exhibit A (Email from Ashurst Australia to Holding Redlich on 17 May 2024).
[10]First Chan Affidavit, Exhibit B (Letter from Holding Redlich to Ashurst Australia dated 20 May 2024).
[11]First Chan Affidavit, Exhibit C (Email from Ashurst Australia to Holding Redlich on 20 June 2024).
The affidavit did not give any evidence as to any response or absence of a response to the email of 20 June 2024.
Noting that the defendant had not been personally served, on 15 August 2024, through my chambers I invited the plaintiffs to file any submissions and further evidence as to the service of the writ on the defendant and as to the application for default judgment having been brought to the notice of the defendant.
The plaintiffs filed a further affidavit of Ms Jacqueline Chan sworn on 19 August 2024 which gave further evidence as to service and that the hearing had been brought to the attention of the defendant by email to Holding Redlich.[12] The plaintiffs also filed an outline of submissions in support of the plaintiffs’ application. The plaintiffs submitted that the defendant had been served pursuant to r 6.14 of the Rules.
[12]Affidavit of Jacqueline Chan sworn 19 August 2024 (Second Chan Affidavit).
Rule 6.14 provides:
Where the parties to any proceeding have, before or after the commencement of the proceeding, agreed that originating process or any other document in the proceeding may be served on a party or on a person on behalf of a party in a manner or at a place (whether within or outside Victoria) specified in the agreement, service in accordance with the agreement shall be sufficient service.
The plaintiffs submitted that an agreement between solicitors as to acceptance of service was a sufficient agreement for the purposes of r 6.14.
Authorities on rule 6.14 and service by agreement
In Timbercorp Finance Pty Ltd (in liq) v Allan,[13] Derham AsJ held that the plaintiff had served a writ and statement of claim on the defendant within r 6.14 of the Rules in circumstances where the evidence was that:
[13](2016) 312 FLR 359.
(a) the plaintiff had attempted to serve documents on the defendant who was not at home at the time but who informed the process server by telephone that he did not want to accept documents as his solicitor was handling the matter, and the plaintiffs had his solicitor’s details;[14]
[14]Timbercorp, [24].
(b) the plaintiff’s solicitor emailed the defendant’s solicitor to inquire whether he was instructed to accept service on behalf of the defendant;
(c) the defendant’s solicitor replied confirming ‘I remain instructed by [the defendant] and I am authorised to accept service of the above proceeding an interstate defendant) required under s 16 of the Service and Execution of Process Act 1992 (Cth). However his Honour rejected the argument that there had not otherwise been compliance with r 6.14, as the acknowledgement of the defendant’s solicitor that on his behalf’;[15] and
(d) the defendant, at a hearing on a summary judgment application, appeared and did not dispute the receipt of the documents by email, but did dispute that it was service in accordance with r 6.14.[16]
[15]Timbercorp, [25]-[26] and [66]. His Honour held, however, that service was defective because it was not accompanied by a notices required under the Service and Execution of Process Act 1992 (Cth).
[16]Timbercorp, [44].
Associate Justice Derham concluded that service was ineffective as the writ did not include a notice which was (in the case of an interstate defendant) required under s 16 of the Service and Execution of Process Act 1992 (Cth). However his Honour rejected the argument that there had not otherwise been compliance with r 6.14, as the acknowledgement of the defendant’s solicitor that he was instructed to accept service of the pleadings was sufficient to constitute an agreement to accept service for the purposes of that rule.[17]
[17]Timbercorp, [69]. His Honour rejected a submission that the agreement to accept service of the pleadings did not encompass service of the writ, as this would be inconsistent with a fair minded reading of the email in the context of the obligations of legal practitioners to act cooperatively.
In Mulvaney (liquidator), in the matter of Skymax Group Pty Ltd (in liq) v Wen,[18] Charlesworth J considered the analogue to this rule in r 10.28 of the Federal Court Rules2011. The plaintiff contended that, pursuant to r 10.28, they had served an originating process under an agreement that the defendant could be served by sending documents to his solicitor. The evidence was that the plaintiff’s solicitor had emailed a solicitor known to act for the defendant to ask whether he had instructions to act for the defendant in the proceeding. On the same day, the defendant’s solicitor confirmed by reply email that he had instructions to accept service on behalf of the defendant. The plaintiff’s solicitor then emailed the defendant’s solicitor a copy of the originating application and other material.[19]
[18][2021] FCA 1644.
[19]Skymax, [31] (Charlesworth J).
Justice Charlesworth held that this exchange constituted an agreement under which the defendant could be served by emailing the originating process to his solicitor.[20]
[20]Skymax, [61] (Charlesworth J).
Was there service in this case?
Turning to the present case, applying these principles I accept that an agreement between solicitors for the parties to accept service may constitute an agreement for the purposes of r 6.14.
Rule 6.14 refers, relevantly, to an agreement between the parties that originating process ‘may be served on a party or on a person on behalf of a party in a manner or at a place … specified in the agreement’.
As to the requirement that the agreement be between the parties, in the present case, unlike Timbercorp, there was no evidence that the defendant had acknowledged that Holding Redlich were acting for her as solicitors. The Holding Redlich correspondence did, however, refer to having ‘instructions to accept service’. Although the evidence is hearsay, in an interlocutory application of this nature I accept it can be relied on for the truth of its contents.[21] I also accept that as a substantive matter, this statement can be relied on, coming from a solicitor who is subject to professional obligations and in the absence of any reason to doubt its veracity, to demonstrate that the plaintiff herself gave authority to accept service. The agreement to accept service can be regarded as being between the parties, as required by r 6.14.
[21]Evidence Act, s 75; See also Mulvaney, [60] (Charlesworth J).
The statement by Holding Redlich that it had instructions to accept service also did not specify the manner or place of service. In circumstances where the evidence established that the legal representatives of the plaintiffs had been corresponding with Holding Redlich by email for some time,[22] I accept that it can be inferred from the letter of 20 May 2024 that the agreement was to accept service of documents by email.
[22]Second Chan Affidavit, [3], Exhibit D (Email from Holding Redlich to Ashurst dated 28 March 2024).
The agreement to accept service of the documents by email would entail not only that the documents were sent but that they were received. In this case there was also no evidence that the documents had been received by Holding Redlich, nor (given that there was no appearance from the defendant) an acknowledgment from the solicitors that the documents had been received. Although the plaintiffs had supplemented their evidence with correspondence dated 28 March 2024 in which Holding Redlich had stated that they acted for the defendant in relation to the claims that were the subject of this proceeding,[23] there was no evidence as to whether there had been any response to the email of 20 June 2024.[24]
[23]Second Chan Affidavit, [3], Exhibit D (Email from Holding Redlich to Ashurst dated 28 March 2024).
[24]Cf Re Canungra Foodworks Pty Ltd [2024] VSC 234, [207], [216] (Gardiner AsJ).
At the hearing of this application, counsel for the plaintiffs submitted that I could accept that had there been any response in the nature of a ‘bounce-back’ email notifying that the 20 June 2024 email and documents had not been received, the solicitor was obliged to have referred to that in her affidavit and that I could infer in the absence of any such evidence that no ‘bounce-back’ had been received. She also confirmed that she had instructions to that effect.[25]
[25]Transcript 22/08/24, T2.08-.29.
Section 161(1)(d) of the Evidence Act 2008 (Vic) assists the plaintiffs more directly. It provides that ‘[i]f a document purports to contain a record of an electronic communication other than one referred to in section 162, it is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that the communication … was received at the destination to which it appears from the document to have been sent’. Section 162 refers to lettergrams and telegrams so is not relevant for present purposes. There is no evidence before me that displaces the presumption in s 161(1)(d) of the Evidence Act, so I accept that the writ, statement of claim and other documents were received by Holding Redlich and the agreement for service was effected.
In summary, I am satisfied that:
(a) The correspondence between solicitors for the plaintiffs and Holding Redlich establishes an agreement between the plaintiffs and the defendant that the defendant could be served with originating process by sending documents by email to Holding Redlich.
(b) On 20 June 2024, the plaintiffs served the writ, statement of claim, proper basis certificate and overarching obligations certificate, in accordance with the agreement by sending them to Holding Redlich by email, which email was received by Holding Redlich.
Default by the defendant
The plaintiffs’ evidence as at 12 August 2024 is that as at that date, neither the plaintiffs nor their solicitors had been served with an appearance.[26]
[26]First Chan Affidavit, [6].
On 12 August 2024, the plaintiffs filed a notice to the Prothonotary requesting a search for an appearance by the defendant. This notice will require the Prothonotary to search for any appearance before default judgment can be entered.[27]
[27]Rules, r 21.01(3)(a).
The statement of claim pleads sufficient material facts
As noted above at [13], the Court does not need to go behind the statement of claim to determine whether the plaintiffs’ case is made out. Rather, it is sufficient that the statement of claim pleads the material facts which make out the cause of action against the defendant.
At the hearing, counsel for the plaintiffs submitted that their primary claim for relief is that the defendant is liable pay to the plaintiffs’ money had and received,[28] and that they do not press their alternative claims that the defendant is liable to account by reason of a breach of fiduciary duties and the defendant is liable to pay damages under s 1317H(1) of the Corporations Act.[29] Accordingly, they only press the relief identified at paragraphs A, F and K of the statement of claim, claiming repayment of the amounts, and interest on those amounts.
[28]Second Chan Affidavit, Exhibit C (Statement of Claim dated 19 June 2024), [20].
[29]Transcript 22/08/24, T5.16-6.14; Statement of Claim, [19] and [21].
I am satisfied that the statement of claim pleads all the material facts necessary to make out the cause of action for money had and received.[30] Relevantly, the statement of claim alleges the following.
[30]Shaw Building Group Pty Ltd v Narayan (No 2) [2015] FCA 585, [36]-[39] (Foster J).
(a) Between March 2019 and 14 February 2024, the defendant was an employee of Northwest Healthcare Properties Management Pty Ltd (ACN 116 881 559) (NHPM). NHPM and the plaintiffs are part of the same group of companies (Northwest Group) and are subsidiaries of a Canadian limited partnership, NWI Healthcare Properties LP.
(b) Between March 2019 and December 2023, the defendant:
(i) caused 41 invoices totalling $466,043.20 to be issued to Northwest Group for services that were never rendered and which were payable to her own personal bank account (the Invoices);
(ii) purported to authorise the payment of the Invoices by the plaintiffs on behalf of Northwest Group; and
(iii) received payments from the plaintiffs to which she was not entitled and thereby gained an advantage for herself.
(c) By reason of those matters, the defendant is liable to pay money had and received.
As discussed above, allegations in a Statement of Claim which are not denied are taken to be admitted. Further, the plaintiffs’ solicitor has certified, pursuant to s 42 of the Civil Procedure Act 2010 (Vic) that each allegation in the Statement of Claim has a proper basis.[31]
[31]Proper Basis Certification filed by the Plaintiffs on 19 June 2024.
Claim for debt (r 23.03(1)(a))
The amounts claimed in the Statement of Claim are properly characterised as ‘debts’ for the purposes of r 21.03(1)(a): they are fixed and specific pecuniary demands.[32]
[32]Foris GFS Australia Pty Ltd v Manivel [2022] VSC 482, [27] (Elliot J).
The plaintiffs also claim interest on the debt pursuant to r 21.03(1)(a)(ii), at the statutory rate. The penalty interest rate presently payable on a judgment debt is 10%.[33]
[33]Penalty Interest Rates Act 1983 (Vic), s 2(1); Victorian Government Gazette, No G1 (5 January 2017) 9.
Orders
For the above reasons, the plaintiffs have established that it is appropriate to grant leave to enter judgment in default of appearance under rr 21.01 and 21.03(1)(a) of the Rules.
On the day of the hearing, I gave the plaintiffs the leave required, which enables them to take the administrative step of entering judgment in default through the Prothonotary.[34] That administrative step will involve the Prothonotary conducting the formal search for an appearance in accordance with the notice filed under r 21.01(3)(a). My orders were that:
[34]White, [2] (Connock J).
(a) The plaintiffs have leave to apply to enter judgment in default of appearance against the defendant pursuant to rr 21.01 and 21.03(1)(a) of the Rules for:
(iv) the amounts claimed in Paragraphs A, F and K of the Statement of Claim filed on 19 June 2024;
(v) interests on those amounts; and
(vi) costs in accordance with r 21.03(2) of the Rules.
SCHEDULE OF PARTIES
NORTHWEST HEALTHCARE AUSTRALIA RE LIMITED (ACN 612 310 148) in its capacity as trustee of the Northwest Healthcare Properties Australia Real Estate Investment Trust ABN 43 451 923 923 and in its capacity as trustee of the Northwest Healthcare Australia Clarendon St Trust ABN 69 759 504 087 First Plaintiff NWHA INVESTMENT MANAGEMENT PTY LTD (ACN 627 281 654) Second Plaintiff NORTHWEST HEALTHCARE AUSTRALIAN PROPERTY LIMITED (ACN 083 065 034) in its capacity as trustee of the Vital Healthcare Australian Property Trust ABN 47 653 746 419 Third Plaintiff -and- CLARE ELIZABETH SOLOMON Defendant
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