Nourse and Walker Nominees Pty Ltd v Fresh Express Australia Pty Ltd and Branir Pty Ltd and Tovehead Pty Ltd

Geoffrey Wayne Nourse & Anor v Fresh Express Australia Pty Ltd & Ors

[2009] NTSC 73

PARTIES:   GEOFFREY WAYNE NOURSE AS
LIQUIDATOR OF WALKER
NOMINEES PTY LTD
(ACN 009 632 311)
And:
WALKER NOMINEES PTY LTD (IN
LIQUIDATION)
(ACN 009 632 311)
v
FRESH EXPRESS AUSTRALIA PTY
LTD
(ACN 065 867 218)
And:
BRANIR PTY LTD
(ACN 061 718 876)
And:
TOVEHEAD PTY LTD
(ACN 003 745 140)
TITLE OF COURT:   SUPREME COURT OF THE
NORTHERN TERRITORY
JURISDICTION:   SUPREME COURT OF THE
NORTHERN TERRITORY
EXERCISING TERRITORY
JURISDICTION
FILE NOS:   153 of 2003 (30320300) consolidated with
30 of 2004 (20405160) and
169 of 2003 (20323231)
DELIVERED:   23 December 2009
HEARING DATES:   2, 6, 7 & 30 April 2009 and 1 & 7 May
2009
JUDGMENT OF:   SOUTHWOOD J
CATCHWORDS:
Corporations Act
Bradvica v Radulovic [1975] VR 434
Broad v Commissioner of Stamp Duties [1980] 2 NSWLR 40
Davies v Pagett (1986) 10 FCR 226
Day v RAC Motoring Services Limited [1999] 1 All ER 1007
Evans v Bartlam [1937] AC 473
Grimshaw v Dunbar [1953] 1 QB 408
Kostokanellis v Allen [1974] VR 596 at 603
Norman v Federal Commissioner of Taxation (1963) 109 CLR 9
Shackell v Howe, Thornton & Palmer (1909) 8 CLR 170
Taylor v Taylor (1979) 143 CLR 1
Woodleigh Nominees Pty Ltd v CBA (1999) 150 FLR 460
REPRESENTATION:
Counsel:

Plaintiffs:   N Christrup
First Defendant:   R K Newton
Second and Third Defendants: J Kelly SC
Solicitors:

Plaintiff:   Minter Ellison
First Defendant:   Halfpennys
Second and Third Defendants: Cridlands
Judgment category classification: B

Judgment ID Number:   Sou0912
Number of pages:   65
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Geoffrey Wayne Nourse & Anor v Fresh Express Australia Pty Ltd & Ors

[2009] NTSC 73

No 153 of 2003 (20320300) consolidated with 30 of 2004 (20405160)
& 169 of 2003 (20323231)
BETWEEN:
GEOFFREY WAYNE NOURSE AS
LIQUIDATOR OF WALKER
NOMINEES
(ACN 009 632 311)
First Plaintiff

AND:
WALKER NOMINEES PTY LTD (IN
LIQUIDATION)
(ACN 009 632 311)
Second Plaintiff

AND:
FRESH EXPRESS AUSTRALIA PTY
LTD
(ACN 065 867 218)
First Defendant

AND:
BRANIR PTY LTD
(ACN 061 718 876)
Second Defendant

AND:
TOVEHEAD PTY LTD
(ACN 003 745 140)
Third Defendant

CORAM: SOUTHWOOD J
REASONS FOR JUDGMENT
(Delivered 23 December 2009)

Introduction

[1]	The first defendant has applied to set aside a judgment in default made
against it in favour of the second and third defendants.
[2]	On 9 October 2008, the Court made the following orders: (1) the first
defendant’s defence to the second and third defendants’ third party notice
dated 6 June 2007 is struck out; (2) judgment in favour of the second and
third defendants in respect of their third party claim against the first
defendant for the amount of $190,199.00 plus interest to be assessed; (3) the
first defendant to pay the second and third defendants’ costs of the third
party proceeding against the first defendant; and (4) liberty to apply to bring
the matter back on short notice to resolve the matter of interest.
[3]	The orders were made because the first defendant failed to comply with an
order of the Court that the first defendant make further and better discovery
to the second and third defendants.
The history of the proceedings and the conduct of the first defendant
[4]	Before dealing with the merits of the first defendant’s application, I have
found it useful to set out the history of the proceedings.

2

[5]	The first defendant is a produce merchant that sells fresh produce including
mangoes from a stand at the Sydney Markets in New South Wales. The
second and third defendants grew mangoes on Tipperary Station in the
Northern Territory as a commercial enterprise. The second plaintiff
operated a business which picked and packed mangoes grown in the
Northern Territory and delivered them interstate for sale. In the mango
season in 2000 the second plaintiff picked and packed the second and third
defendants’ mangoes and delivered them to the first defendant who sold the
mangoes in Sydney.

During 2000 the second plaintiff got into financial difficulty. On 2 March
2001 the administration of the second plaintiff began and on 7 June 2001 the
creditors of the second plaintiff resolved to wind up the company and the
administrators became liquidators of the company.

[7]	On 29 September 2003, the second plaintiff, in liquidation, filed a writ in
proceeding No 153 of 2003 claiming an amount of $374,011 from the second
and third defendants. The gist of the second plaintiff’s claim against the
second and third defendants was that the second and third defendants had
breached a written contract dated 1 September 2000 under which the second
plaintiff picked and packed mangoes on Tipperary Station and delivered
them interstate for sale. The second plaintiff claimed the second and third
defendants had failed to pay for the work done under the contract by the
second plaintiff its servants and agents.

3

[8]	On 3 October 2003, the second and third defendants filed a writ in
proceeding No 169 of 2003 claiming $190,199 plus interest and costs from
the first defendant. The gist of the second and third defendants’ claim
against the first defendant was as follows: between August and November
2000, under an agreement or series of agreements between the second and
third defendants (by their agent, the second plaintiff) and the first defendant,
the second and third defendants agreed to supply mangoes to the first
defendant and the first defendant agreed to purchase mangoes from the
second and third defendants; under the agreement the second and third
defendants delivered mangoes to the first defendant; the first defendant sold
the mangoes and in breach of the agreement the first defendant failed to pay
the second and third defendants the price of the mangoes to the extent of
$190,199.
[9]	On 2 February 2004, the first plaintiff filed a writ in proceeding No 30 of
2004 claiming $190,199 plus interest from the first defendant. The gist of
the first plaintiff’s cause of action was as follows: on or about 13 November
2007 the second plaintiff and the first defendant entered into a transaction
whereby the second plaintiff paid the first defendant $190,199 in relation to
an unsecured debt owed by the second plaintiff to the first defendant; the
payment was a voidable transaction for the purpose of s 588FE(2) of the
Corporations Act because the transaction was an unfair preference within
the meaning of s 588FA(1) of the Corporations Act.

4

[10]	On 16 October 2006, the three proceedings were consolidated and on
20 March 2007 the first and second plaintiffs filed a statement of claim in
the consolidated proceeding. An amended statement of claim was filed on
15 May 2007.
[11]	On 30 May 2007, the second and third defendants filed a defence and
counterclaim in the consolidated proceeding and on 6 June 2007 they filed
an amended defence and counterclaim.

On 6 June 2007, the second and third defendant’s commenced third party
proceedings against the first defendant. They claimed $190,119 plus

interest. The gist of the second and third defendants’ claim against the first
defendant was as follows: the second and third defendants grew mangoes;
the second plaintiff was the agent of the second and third defendants and as
their agent the second plaintiff sold their mangoes, rendering invoices in the
names of the second and third defendants; the second plaintiff delivered
some of the second and third defendants’ mangoes to the first defendant and
rendered invoices to the first defendant in the name of the second and third
defendants; the invoices totalled at least $190,199; the second and third
defendants have not received the sum of $190,119 from the first defendant
and the first defendant is indebted to the second and third defendants for
that amount.

[13]	On 2 November 2007, the first defendant filed its defence against the first
plaintiff’s claim in the consolidated proceeding. By way of defence the first

5

defendant pleaded that on 13 November 2000 the second plaintiff and the
first defendant entered into a transaction whereby the second plaintiff paid
the first defendant $190,199 in relation to an unsecured debt owed by the
second plaintiff to the first defendant. At the time the payment was made by
the second plaintiff to the first defendant, the second plaintiff was not
insolvent within the meaning of s 588FC of the Corporations Act.
Alternatively, the payment is not voidable because the first defendant
became a party to the transaction in good faith and there were no reasonable
grounds which would lead either the first defendant or a reasonable person
in the first defendant’s circumstances to suspect that the second plaintiff
was insolvent. The first defendant denied that the payment of $190,199

occurred by way of set off. The first defendant did not plead in its defence
that it had an equitable charge or lien over the funds which totalled
$190,199.

[14]	On 2 November 2007, the first defendant also filed its defence to the first
and second defendants’ third party notice. Apart from admitting that the
second and third defendants grew mangoes and pleading that the first
defendant sold the mangoes received from the second and third defendants
on consignment for a commission of 12.5 per cent, the defence contained
bare denials of the second and third defendants’ claim.
[15]	On 11 December 2007, the first defendant filed a list of documents in the
consolidated proceeding.

6

[16]	On 18 April 2008, the plaintiffs filed an amended statement of claim in the
consolidated proceeding. In the amended statement of claim the plaintiffs
claim 1 an order under s 588FF(1)(a) or (c) of the Corporations Act directing
the first defendant to repay the sum of $190,199, interest and costs. The gist
of the amended claim against the first defendant is: on 2 March 2001 the
administration of the second plaintiff began; on 7 June 2001 the creditors of
the second plaintiff resolved to wind up the company; on 13 November 2000
the second plaintiff and the first defendant entered into a transaction
whereby the second plaintiff paid the first defendant $190,199 as part
payment of an unsecured debt owed by the second plaintiff to the first
defendant; the payment occurred by way of set off; thereby the second
plaintiff and the first defendant were parties to a transaction within the
meaning of s 588FA(1)(a) of the Corporations Act; the transaction was
entered into during the six months ending 2 March 2001; at the time the
transaction was entered into the company was insolvent; the transaction
resulted in the first defendant receiving more than the first defendant would
receive from the second plaintiff for the debt owed to it by the second
plaintiff if the transaction was set aside and the first defendant were to
prove the debt in the winding up of the company; the transaction is an unfair
preference or insolvent transaction and is voidable under s 588FE(2) of the
Corporations Act.

Alternatively to the relief sought against the second and third defendants.

7

[17]	The first defendant has not filed a defence to the plaintiffs’ amended
statement of claim.
[18]	In their amended statement of claim, the plaintiffs claim the sum of
$374,011 from the second and third defendants or alternatively, the sum of
$193,812 as a debt due. The gist of the plaintiffs’ claim against the second
and third defendants is as follows: the second and third defendants grew
mangoes for commercial sale; by agreement made between the second
plaintiff and the second and third defendants the second plaintiff agreed to
pick, package, market and freight mangoes owned and grown by the second
and third defendants; it was a term of the contract that the second and third
defendants would pay the second plaintiff an amount fortnightly in arrears
equal to $11 inclusive of GST for each tray of mangoes produced; in about
October, November and December 2000 the second plaintiff performed its
obligations under the agreement by picking, packing, freighting and
marketing 34,001 trays of mangoes in Sydney and Melbourne; the second
plaintiff rendered invoices upon the second and third defendants for its
work; the total value of the invoices was $374,011 inclusive of GST; and the
second and third defendants have not paid any amount to the second
plaintiff. The plaintiffs claim the whole amount of the debt not the balance
of the debt less an assigned book debt.
[19]	On 9 May 2008, there was a case management hearing before Riley J. His
Honour made the following orders: (1) the first defendant is to file and serve
its notice of defence on the plaintiffs on or before 23 May 2008; (2) the first

8

defendant is to file and serve its notice of defence on the second and third
defendants on or before 23 May 2008; (3) the plaintiffs and the first
defendant are to file and serve supplementary lists of documents on or
before 20 May 2008; (4) the plaintiffs and the first defendant are to file and
serve their witness statements on or before 20 June 2008; (5) the second and
third defendants are to file and serve their witness statements on or before
27 June 2008; and (6) the matter is listed for a three day hearing in the
September/October sittings of the Court with a date to be fixed.

[20]

On 4 June 2008, the second and third defendants filed a further amended

defence and counterclaim to the plaintiffs’ amended statement of claim. In

the further amended defence and counterclaim the first and second

defendants plead, among other things, as follows. If the transaction between

the second plaintiff and the first defendant was an unfair preference or an

insolvent or voidable transaction and the sum of $190,199 is repayable by

the first defendant to the first plaintiff, then the first plaintiff holds the sum

on trust for the second and third defendants. The trust arises under a written

agreement between the second plaintiff and the second and third defendants

dated 1 September 2000.

Under the agreement, the second and third

defendants appointed the second plaintiff their agent when arranging

payment for certain produce on behalf of the second and third defendants.

There were terms of the agreement that: (a) the second plaintiff would

ensure all sales of mangoes to purchasers would be accompanied by an

invoice in a form specified by the second and third defendants; (b) the

9

invoice would specify and the second plaintiff would ensure all payments
for the produce were paid directly to the second and third defendants’
specified bank account or otherwise as advised from time to time by the
second and third defendants; (c) any sale of mangoes to a third party
arranged by the second plaintiff would only be made on the condition that
payment would be made to the second and third defendants within 21 days
of delivery of the mangoes to the third party, and at a price specified by the
second and third defendants; (d) the second plaintiff guaranteed payment to
the second and third defendants and was ultimately responsible for ensuring
that all payments were made promptly and directly to the second and third
defendants; (e) the second plaintiff was not entitled to any commission in
respect of the sales of mangoes, and if received, would hold such
commission on trust for the second and third defendants, and would
immediately account to them for such commission. In the circumstances,
any moneys received by the second plaintiff from the sale of the mangoes
were held on trust for the second and third defendants and the first plaintiff
is liable to account to the second and third defendants for any such moneys.
In breach of the agreement the second plaintiff caused and/or permitted
$190,199 to be withheld by the first defendant from the second and third
defendants and set off against moneys owed by the second plaintiff to the
first defendant.

10

[21]	On 12 June 2008, there was an unsuccessful settlement conference and the
first defendant was ordered to pay the second and third defendants’ costs of
the settlement conference that were thrown away.

On 30 June 2008, De Silva Hebron, who were on the record of the Court as
the solicitors for the first defendant, filed a summons seeking an order they

be granted leave to cease to act on behalf of the first defendant. In support
of their application De Silva Hebron relied on three affidavits sworn by
Mr Matthew Garraway on 29 June 2008, 3 July 2008 and 10 July 2008

respectively. Mr Garraway was the solicitor who had the carriage of the
proceeding on behalf of the first defendant.

[23]	In his three affidavits Mr Garraway deposed as follows.
Mr Andrew Musumeci is the sole director of the first defendant. The first
defendant had not complied with the terms of the retainer it had with
De Silva Hebron. On 12 May 2008 De Silva Hebron advised the first
defendant of the orders made by the Court on 9 May 2008. De Silva Hebron
did not have appropriate instructions to comply with the Court’s orders of
9 May 2008. The first defendant’s registered office is ‘Stand 546’ A Shed
Sydney Markets NSW 2129 and its principal place of business is “Stand 56
“A” Shed” Sydney Markets NSW 2129.
[24]	Annexure A to Mr Garraway’s affidavit sworn on 3 July 2008 was a letter
from De Silva Hebron to Mr Musumeci. The letter put the first defendant on

11

notice that after De Silva Hebron ceased to act they would be proceeding to
recover their long outstanding debt from the first defendant.

[25]

On 17 July 2008, Master Coulehan made the following orders: (1) leave is

granted to De Silva Hebron to cease to act for the first defendant; and

(2) the address for service of the first defendant is as stated in the draft

notice of ceasing to act, Stand 546A Shed, Sydney Markets NSW 2128.

On

17 July 2008, De Silva Hebron filed a notice of ceasing to act for the first

defendant.

[26]

On or about 15 August 2008, the solicitors for the second and third

defendant sent a letter to the first defendant. The letter was addressed to the

address given in the notice of ceasing to act filed by De Silva Hebron. The

letter referred to the list of documents filed by the first defendant on

11 December 2007 and it sought further and better discovery of the

following documents within 14 days from the date of the letter:

1. All documentation received or prepared by the first defendant
in the years 2000, 2001 and 2002 concerning the receipt of
mangos from the second plaintiff, whether as trading as Royal
Palms Plantation or otherwise, and from the second and third

defendants as the Tipperary Group of Stations or otherwise,
including all correspondence, notes, emails, receipts, invoices,
delivery dockets, consignment notes, packing notes, load
sheets, delivery schedules, payment calculations, grading
reports, cheques and cheque butts;

2. All financial records of the first defendant for the years
1999/2000, 2000/2001 and 2001/2002, including profit and
loss statements, annual financial reports, tax returns, ledger
records and bank statements;

12

3. All documentation prepared in respect of the claimed
commission of 12.5 per cent purported to have been deducted
from onselling mangos received from the second plaintiff
and/or the second and third defendants.

[27]

On 18 August 2008, there was a callover of civil matters before Angel J.

There was no appearance on behalf of the first defendant.

The Court noted

that first defendant was still in default of the orders made by the Court on

9 May 2008 including the order to provide further discovery. The matter

was put over to the November 2008 list of the Court. It was noted that the

consolidated claims which did not involve the first defendant had settled.

[28]

On 9 September 2008, the unresolved claims between the parties were listed

for trial for five days commencing on 17 November 2008.

On 9 September 2008, the second and third defendants filed a summons
seeking an order that the first defendant make further and better discovery
as requested by the second and third defendants by letter dated 15 August
2008 within seven days. The summons was supported by two affidavits of
Ms Fiona Tillmann sworn on 9 September 2008 and 11 September 2008
respectively and an affidavit of service of Mr Darrell Willenberg sworn on
11 September 2008. In her affidavit of 9 September 2008 Ms Tillman stated
that the first defendant had failed to respond to her letter dated 15 August
2008.

[30]	In his affidavit of service Mr Willenberg stated that at 2.18pm on
10 September 2008 he served a copy of the summons and the affidavit of
Ms Tillman sworn on 9 September 2008 by leaving copies of the documents

13

with an adult female who was present at the first defendant’s registered
place of business, the Sydney Markets, Parramatta Road, Flemington in New
South Wales. At the time of service, Mr Willenberg asked the lady, “Is this
the registered office of Fresh Express Australia Pty Ltd and are you
authorised to accept these documents?” To which she replied “Yes. This is
Fresh Express. I can accept them. My name is Cathy Musumeci. I am the
receptionist.”

[31]	In her affidavit of 11 September 2008 Ms Tillmann stated as follows. She
was informed by Mr Willenberg that he was unable to effect service of the
summons and affidavit on the address noted by the Court as the address for
service of the first defendant. When he arrived at that location the stall was
boarded up. He found another stall at the Sydney Markets, No 189, which
had the first defendant’s name written on it and he served the summons at
that address.

The second and third defendants’ application for further and better
discovery was heard on 11 September 2008. There was no appearance on
behalf of the first defendant and the Court made the following orders:
(1) effective service on the first defendant of all Court documents, other
than those requiring personal service, be made by filing the documents in
the Registry of the Supreme Court; (2) the first defendant make further and
better discovery as requested by the second and third defendants by letter
dated 15 August 2008 within seven days; and (3) the further and better
discovery the subject of order two is to be verified by affidavit.

14

[33]	The order for further and better discovery was served on the first defendant
at 3.43 pm on 12 September 2009. The order was served by Mr Willenberg
who left a copy of the order with Ms Sahar ElAhamad who was present at
the first defendant’s place of business at the Sydney Markets. Ms El
Ahamad told Mr Willenberg she had authority to accept service of the order.
[34]	On 23 September 2008, the second and third defendants filed a summons
seeking the orders referred to in par [2] above. The summons and
supporting affidavit were served on the first defendant at 9.03 am on
24 September 2008. The documents were served by Mr Willenberg who left
copies of the documents with Ms Sahar ElAhamad who was present at the
first defendant’s place of business at the Sydney Markets. Ms ElAhamad
told Mr Willenberg that she had authority to accept service of the
documents.
[35]	On 25 September 2008, the second and third defendants’ application for
judgment in default was mentioned in Court for the first time. There was no
appearance on behalf of the first defendant and the application was
adjourned for one week to give the first defendant more time to respond to
the summons.
[36]	On 29 September 2008, Ms Tillman sent a letter by registered mail to the
first defendant. The letter advised the first defendant that the second and
third defendants’ application for judgment in default had been adjourned to

15

2 October 2008. The letter was addressed to the address stated on the notice
of ceasing to act.

[37]	On 2 October 2008, Mr Musumeci had a meeting with the first defendant’s
Sydney solicitor, Mr David, and with its counsel, Mr Newton.
[38]	On 2 October 2009, the second and third defendants’ application for
judgment in default was mentioned in Court again. The application was
adjourned for a further week. There was no appearance on behalf of the first
defendant.
[39]	On 9 October 2009, the second and third defendants’ application for
judgment in default was heard by the Court. There was no appearance by
the first defendant. In support of the application for judgment the second
and third defendants relied on an affidavit of Ms Tillmann sworn on
24 September 2008. In her affidavit Ms Tillmann deposed that the first
defendant had failed to comply with the order of the Court for further and
better discovery.

On 9 October 2009, the Court made the orders referred to in par [2] above.
The orders were served on the first defendant at 10.35 am on 20 October
2008. The orders were served by giving a copy of the orders to
Mr Musumeci who was present at the first defendant’s registered place of
business at Stall 56 Shed A at the Sydney Markets. When he served the
document Mr Willenberg asked Mr Musumeci “Is this the registered office
of Fresh Express Australia Pty Ltd, and are you authorised to accept these

16

documents that I now show you?” Mr Musumeci replied “Yes this is the
registered office of Fresh Express Australia. I can accept them. My name is
Andrew Musumeci.”

[41]	On 24 October 2008, the trial dates were vacated.
[42]	On 17 November 2008, the second and third defendants filed a summons
seeking an order that the first defendant pay the amount of $26,810.24 by
way of prejudgment interest to the second and third defendants. The
question of interest has not been resolved.
[43]	On 2 December 2008, the first defendant filed a summons seeking to set
aside the judgment in default. The summons was supported by an affidavit
of Mr Musumeci sworn on 27 November 2008. The first defendant’s
summons was filed by Halfpennys solicitors who filed a notice of acting on
22 January 2009
[44]	On 4 December 2008, Thomas J made the following directions about the
first defendant’s application to set aside the judgment in default: (1) the
second and third defendants and the first and second plaintiffs have until the
close of business on 30 January 2009 to file and serve any affidavits on
which they intend to rely; (2) the first defendant and the first and second
plaintiffs have until close of business on 13 February 2009 to file and serve
any affidavits in reply; and (3) the matter is adjourned to a date no earlier
than 16 March 2009 and is referred to the Registrar to fix a date.

17

[45]

The first defendant’s application was heard by the Court on 2, 6, 7 and

30 April 2009 and additional written submissions were filed on 1 and 7 May

2009.

[46]

At the time the first defendant’s application was heard, the first defendant

was in default of the orders of the Court made on 9 May 2008.

It had failed

to file and serve its defence to the plaintiffs’ claims on or before 23 May

2008, failed to file and serve its defence to the second and third defendants’

third party claim on or before 23 May 2008, failed to file its supplementary

list of documents on or before 20 May 2008, and failed to file and serve its

witness statements on or before 20 June 2008. The first defendant was also

in default of the order of the Court made on 11 September 2008 that the first

defendant provide further and better discovery within 7 days of that date.

Further, the first defendant failed to file any further affidavit material on

which it sought to rely by 23 February 2009 in accordance with the orders of

Thomas J made on 4 December 2008.

The first defendant’s further affidavit

was not filed until 27 April 2009.

During the entire course of the proceedings prior to filing its application to
set aside the judgment in default, which is a period of more than five years,
the first defendant had only filed two holding defences and an incomplete
list of documents.

18

The principles applicable to setting aside a judgment in default

[48]

The Court has inherent jurisdiction to recall its own judgment where the

judgment has been obtained in default and allow the merits of the

proceeding to be litigated 2 .

Accordingly, the Court has the power to revoke

a judgment obtained by a party’s failure to act in accordance with an order

of the Court 3 .

The circumstances relevant to the Court’s discretion to set aside a judgment
in default include: (a) whether the defendant has a defence on the merits;
(b) the reason for the default of the defendant in consequence of which the
judgment was obtained; (c) whether the defendant has shown a preparedness
to remedy its default; (d) whether the application to set aside the judgment
was made promptly after the judgment came to the knowledge of the
defendant; and (e) whether, if the judgment was set aside, the party in whose
favour the judgment was made would be prejudiced in any respect which
could not be adequately compensated for by a suitable award of costs and
the giving of security 4 .
An applicant who applies to set aside a judgment in default is ordinarily
required to file an affidavit of merits which discloses a defence. It is not
sufficient that the applicant swears as to his belief in the existence of a
defence. The affidavit must set out all of the defences on which the
Taylor v Taylor (1979) 143 CLR 1 at 16; Bradvica v Radulovic [1975] VR 434 at 441.
Evans v Bartlam [1937] AC 473.
Evans v Bartlam [1937] AC 473; Grimshaw v Dunbar [1953] 1 QB 408; Davies v Pagett (1986) 10

FCR 226.

19

defendant intends to rely and the facts by which he or she seeks to establish
them. An affidavit merely exhibiting the defence proposed to be served is
insufficient.

An applicant is not required to show that his or her defence is bound to
succeed.  A prima facie defence is sufficient 5 .  The test is whether the
applicant has raised an arguable defence which carries some degree of
conviction 6 .  However, the Court will not set aside a judgment in default if
the defendant has no possible defence, for then, setting aside the judgment
would serve no useful purpose 7 .  The primary consideration is whether the
defence has merits to which the Court should have regard. Prima facie, the
Court will not let a judgment in default stand if merit is shown 8 .
A defence on the merits and an explanation for the default are neither a
necessary nor sufficient basis for the exercise of the discretion of the Court
to set aside a judgment in default. However, a party who seeks the
indulgence of the Court that the proceedings continue despite its failure to
obey an order of the Court must satisfy the Court that justice requires its
default be overlooked 9 .
Evans v Bartlam [1937] AC 473.
Day v RAC Motoring Services Limited [1999] 1 All ER 1007.
Evans v Bartlam [1937] AC 473 at 481 – 2.
Evans v Bartlam [1937] AC 473 at 489 per Lord Wright; Kostokanellis v Allen [1974] VR 596 at

603.

Woodleigh Nominees Pty Ltd v CBA (1999) 150 FLR 460 at 468.

20

The proposed defence of the first defendant

[53]	In support of its application, the first defendant relies on a defence pleaded
in a proposed amended defence annexed to an affidavit of Mr Musumeci’s
sworn 27 April 2009. The proposed defence pleads as follows:

1. As to paragraph 1 of the statement of claim:
(a) The first defendant admits that the second and third
defendants grew mangoes at all material times.

(b) The first defendant in or about 2000 received mangoes
from the second and third defendants on consignment
whereby the first defendant was entitled to on sell
aforesaid mangoes for a 12.5 per cent commission.

(c) The first defendant otherwise denies the allegations
contained in paragraph 1 and says it was acting as the
agent of the second and third defendants at all material
times.

2. The first defendant admits that mangoes were delivered by
Walker Nominees Pty Ltd (“Walker Nominees”) to the first
defendant but does not admit the balance of the allegations in
paragraph 2.

3. As to paragraph 3 the first defendant denies any indebtedness
to the second and third defendants and says:
(a) Walker Nominees at all material times was a contractor
to the second and third defendants for the purpose of
picking and marketing mangoes in the 2000 mango
season.

(b) The first defendant provided financial accommodation to
Walker Nominees in the sum of $300,000 so as to enable
Walker Nominees to fulfil its contractual obligations to
the second and third defendants on the footing the first
defendant would be reimbursed from the remuneration
Walker Nominees would receive from the second and third
defendants for enhancing the value of the mangoes of the

21

second and third defendants by picking, packing and
consigning them to Sydney.
(c) The first defendant was authorised by the second and third
defendants to deduct $10.50 per carton of mangoes
consigned to it by Walker Nominees on behalf of the
second and third defendants and to hold the money so
deducted to the account of Walker Nominees in payment
of picking, packing and consignment charges owed by the
second and third defendants to Walker Nominees.
Particulars

A facsimile dated 16 October 2000 from the second and
third defendants to Mr Andrew Musumeci of the first
defendant.

(d) Walker Nominees authorised the first defendant to retain
the said sum of $10.50 per carton of the said consigned
mangoes for the purpose of repaying the said financial
accommodation provided by the first defendant to Walker
Nominees.
Particulars

(i) Telephone conversation between Lynn Walker and
Andrew Musumeci on or about 13 November 2000.

(ii) Conversation between Lynn Walker, Andrew
Musumeci and Carmen Attard on or about
31 January 2001.

(e) The first defendant deducted the said sum of $10.50 per
carton pursuant to the authority referred to in (c) and (d)
above and thereafter appropriated such moneys to its own
use in the total sum of $190,199.80 as it was entitled to do
so.

(f) Upon deduction of the sum of $10.50 per tray of mangoes
in accordance with the mandate referred to (c) above the
second and third defendants ceased to have any interest in
the sum so deducted.

22

(g) At all material times the first defendant had the benefit of
an equitable assignment lien or charge in respect of the
entitlements of Walker Nominees for picking, packing and
consequent charges in respect of mangoes of the second
and third defendants consigned to the first defendant.

4. Further and in the alternative the first defendant has against
each of Walker Nominees, the second defendant and the third
defendant, is entitled to an equitable lien or charge over the
proceeds of the sale of the mangoes consigned to the first
defendant by Walker Nominees on behalf of the second and
third defendants by reason of the said financial accommodation
having been applied in and about the picking, packing and
freighting of the said mangoes.

The gist of the defence appears to be as follows. First, the first defendant
sold the second and third defendants’ mangoes on consignment for a
commission of 12.5 per cent. Money which will become payable by an
agent to his principal as purchase money on the sale of goods of the
principal consigned to the agent for sale, constitutes a debt to become due

by the agent to the principal 10 . Secondly, there was an equitable assignment
by the second and third defendants to the second plaintiff of part of the
future debt which would become owing by the first defendant to the second
and third defendants. That is, there was an equitable assignment of part the
net future proceeds of the sale of the second and third defendants’ mangoes
which would otherwise become payable by the first defendant to the second
and third defendants upon the receipt of the purchase price for their
mangoes. Thirdly, upon receipt of the proceeds of sale by the first
defendant the assignment of the relevant part of the proceeds of sale to the
second plaintiff became effective. Fourthly, the second plaintiff released

Shackell v Howe, Thornton & Palmer (1909) 8 CLR 170.

23

the first defendant from payment of that part of the first defendant’s debt
which was assigned to the second plaintiff by the second and third
defendants 11 and the first defendant became entitled to payment of that part
of the proceeds of sale which had otherwise been assigned to the second
plaintiff. So far as it goes, this aspect of the proposed amended defence is
consistent with the defence of the first defendant filed on 2 November 2007
in response to the plaintiffs’ claim.

[55]

However, the pleading of the proposed amended defence is defective. No

consideration is pleaded for the assignment by the second and third

defendants to the second plaintiff of the relevant part of the future debt

which would be owed by the first defendant to the second and third

defendants.

An equitable assignment of part of a future chose in action must

be supported by consideration since such an assignment only operates as a

contract to assign when the subject matter comes into existence 12 .

[56]

Further, the relevance to any ground of defence of the matters pleaded in

subparagraphs 3(a) and (b) of the proposed amended defence is not

specified. If the matters pleaded in those paragraphs are material matters

then the significance of those matters to any ground of defence should be

pleaded. Further still, no material facts are pleaded which would support

the allegations of an equitable lien or charge that are pleaded in paragraphs

3(g) and 4 of the proposed amended defence.

Broad v Commissioner of Stamp Duties [1980] 2 NSWLR 40.
Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 24.

24

The facts by which the first defendant seeks to establish its defence

[57]

As to the merits of the proposed amended defence, the first defendant relies

on two affidavits of Mr Musumeci sworn on 27 November 2008 and 27 April

2009 respectively.

The contents of Mr Musumeci’s affidavit sworn on

27 November 2008 are summarised in pars [58] to [92] below.

Mr Musumeci is the sole director and secretary of the first defendant. Since
1997 the first defendant has operated a produce stand from the Sydney
Market in New South Wales from which the first defendant sells fresh
produce including mangoes supplied from the Northern Territory.
The first defendant had a practice of buying fruit crops from growers and
then engaging third parties such as the second plaintiff to pick and pack
those crops on behalf of the first defendant and despatch them to the first
defendant in Sydney. In about February 2000 the first defendant engaged
the second plaintiff to pick mango crops owned by the first defendant and
pack and freight them. The second plaintiff’s agreed charge was $10.50 per
tray of mangoes.
On or about 14 February 2000, Mr Musumeci received a telephone call from
Ms Lynn Walker, the managing director of the second plaintiff. They had a
conversation to the following effect:
MS WALKER: Andrew, money is tight for me at the moment
because we are owed a lot of money. I was
wondering if you could advance me some money
on account [emphasis added] and you could get it

25

back as we do the work.  If you do that I will be
able to guarantee you some additional supply.
MR MUSUMECI: It depends.
MS WALKER: Royal Palms can supply you over 120,000 trays of
mangoes in addition to the ones you already own
and which we are picking for you.  The sources of
supply are: Tipperary, from whom I have obtained
a pick and pack contract; my existing growers; and
Royal Palms.  I need $205,000 to pay out some of
[the second plaintiff’s] existing debts.  I am
chasing some of my debtors who owe me in excess
of $225,000.  I have engaged the services of a
lawyer and to give you comfort, I have asked my
accountant to prepare some financial records for
you to consider.

MR MUSUMECI: Lynn, I’m happy to consider, can you please put
together a letter of your proposal and I will get
back to you.

[61]

On 14 February 2000, Ms Walker sent the first defendant a letter in support

of her request to be advanced some money on account on the basis the

second plaintiff could supply the first defendant with more than 120,000

trays of mangoes in the 2000 mango season. The letter contained

information about: the second plaintiff’s proposal to supply further mangoes

to the first defendant, debts owed to the second plaintiff by third parties, the

steps the second plaintiff was taking to recover those debts, a debt of

$204,295.37 owed by the second plaintiff to TPFM (Territory Produce

Freight Management), and the equipment needs of the second plaintiff.

Of

the 120,000 additional trays of mangoes that Ms Walker stated the second

plaintiff could supply the first defendant, only 20,000 to 40,000 trays of

mangoes were to be supplied by the second and third defendants.

26

[62]	Ms Walker made no suggestion in her letter that any loan monies that were
loaned to the second plaintiff by the first defendant could be recovered by
the first defendant deducting the second plaintiff’s fees of $10.50 per tray of
mangoes for work done from the net proceeds of sale of the second and third
defendants mangoes which would become payable by the first defendant to
the second and third defendants. This is not surprising as no arrangements
had been made at this time for the first defendant to sell the second and third
defendants’ mangoes.

At about the same time Ms Walker invited Mr Musumeci to a meeting in
Darwin with Mr Sanjeev Gupta, a director of the second and third
defendants.

[64]	On 17 February 2000, the solicitor for the first defendant, Mr Fred David,
sent a facsimile to Ms Walker outlining the terms on which the first
defendant was prepared to lend the second plaintiff the sum of $205,000.
The terms and conditions of the loan were as follows:

1. The first defendant is prepared to advance the sum of $205,000
to the second plaintiff.

2. The period of the loan is 12 months. The 12 months shall
commence from the date that the monies have been advanced to
you. The loan can be repaid earlier within the said period
without any penalty to the borrower.

27

3. Interest shall accrue from the date that the money shall be
advanced to the second plaintiff at 10 per cent per annum. The
borrower shall be the second plaintiff trading as Royal Palms
Plantation.

4. The guarantor shall be the directors of the second plaintiff at
the time.
5. For the advancement of the monies to the second plaintiff, the
company shall guarantee to the first defendant approximately
120,000 trays of mangoes in the mango season for the year
2000.
6. The first defendant during this period shall have the exclusive
right over the Royal Palms brand name and packaging. This
will ensure that the 120,000 trays will be delivered to the first
defendant as agreed.

7. All costs incidental to any legal fees to be paid by the first
defendant at the time of the drawing these documents and
thereafter shall be incurred by the second plaintiff. The initial
legal fees and appropriate disbursement shall be deducted from
the moneys being advanced to the second plaintiff.

On or about 23 February 2000, Ms Walker sent a facsimile to the solicitor
for the first defendant accepting the first defendant’s loan terms save for the

28

ownership of the Royal Palms brand name.  Subsequently, a written loan
agreement and deed of guarantee was prepared by the solicitors for the first
defendant and sent to Ms Walker.  A few days after 9 March 2000
Ms Walker executed the loan agreement and the deed of guarantee on behalf
of the second plaintiff.  Neither the loan agreement nor the deed of
guarantee was annexed to the affidavits sworn by Mr Musumeci.  The loan
monies were subsequently forwarded to the second plaintiff by the first
defendant.

[66]

The disclosed terms of the loan by the first defendant to the second plaintiff

make no mention of any requirement for the first defendant to be able to

deduct $10.50 per tray of mangoes for work done by the second plaintiff

from the net proceeds of the sale of the second and third defendants

mangoes which would become payable by the first defendant to the second

and third defendants.

There is no mention whatsoever of the second and

third defendants in the terms of the loan.

During the Course of the 2000 mango season the first defendant received
numerous requests from the second plaintiff for additional financial
assistance to allow it to continue to fulfil its pick, pack and freight contracts
with the first defendant in respect of fruit owned by the first defendant. The
subject matter of these requests was usually money paid for wages and
repairs or purchase of equipment. The first defendant paid those monies as
an advance payment with the objective of ensuring the continued provision
by the second plaintiff of picking packing and freighting services for the

29

first defendant.  On numerous occasions those requests took the form of
Ms Walker telephoning Mr Musumeci and requesting money for a particular
purpose connected with picking packing and freighting for the first
defendant.  The conversations were generally to the following effect:
“Andrew I need more money for [whatever the expense was].  You can get it
back out of our charges for picking, packing and freight.”  The first
defendant would then make arrangements to pay the requested funds to the
second plaintiff.  In making the additional payments Mr Musumeci was
ensuring the ongoing ability of the second plaintiff to handle the first
defendant’s mangoes.

In April 2000, Mr Musumeci attended a meeting with Mr Sanjeev Gupta and
Ms Walker.  At the time Mr Gupta was a director of the second and third
defendants.  At the meeting Mr Musumeci, Mr Gupta and Ms Walker had the
following conversation:
MS WALKER: Sanjeev, Andrew is a wholesale merchant
operating out of Sydney Markets under the
company of Fresh Express Australia Pty Limited.
I have informed Andrew that you have provided
my company with the rights to pick pack and
market your mangoes.  I have also informed
Andrew that you’ve estimated that you can supply
approximately between 20,000 to 40,000 trays.

SANJEEV: Yes and I have received a fax proposal. Thank
you.
MS WALKER: I also want to clarify one thing, my company
charges $10.50 per tray for picking, packing and
freight and will be deducted by Fresh Express
[emphasis added], and the balance of the net price

30

will be paid directly to you and the reason for this
Sanjeev, I have been burnt in the past. People owe
me a lot of money, which I am suing to collect and
I don’t want any problems with our relationship.

SANJEEV: I can’t see a problem with that.

[69]	Before the start of the 2000 mango season Mr Musumeci sent a proposal to
the second and third defendants to receive mangoes on consignment for sale
in either Sydney or Melbourne and to be paid a commission for doing so.
The proposal was for the first defendant to market and sell the mangoes
produced by the second and third defendants on consignment. The trade
terms proposed by the first defendant involved a handling fee of 12.5 per
cent for produce sold and marketed in Sydney. Mr Musumeci states that the
proposal was accepted by the second and third defendants.

The proposal contained no requirement that the first defendant be authorised
to deduct from the proceeds of sale of the second and third defendants’
mangoes any money that was payable by the second and third defendants to
the second plaintiff for the picking, packing and freight of the mangoes.
The only charge mentioned is the payment of the handling fee or
commission of 12.5 per cent.
The pleadings of the second and third defendants reveal that on 1 September
2000 a written agreement was made between the second plaintiff and the
second and third defendants. Under the agreement the second plaintiff was
to pick and pack the second and third defendants’ mangoes and freight them
interstate.

31

[72]	Consignments of mangoes from the second and third defendants to the first
defendant commenced shortly after 3 October 2000. The first defendant
sold the mangoes and credited the account of the second and third
defendants with the purchase price of the mangoes less the agreed sale
commission of 12.5 per cent.

In paragraph 20 of his affidavit sworn on 27 November 2008 Mr Musumeci
deposes that, acting in reliance upon the acceptance of the first defendant’s
proposal to the second and third defendants and the authority to retain the
second plaintiff’s charges referred to in par [68] above, the first defendant
advanced the Tipperary Group $200,000 on 3 October 2000 and another
$100,000 on 24 October 2000.

[74]	On or about 16 October 2000, the first defendant received a letter by
facsimile. The letter appears to be on the letter head of the Tipperary Group
of companies which include the second and third defendants. The letter was
not signed by Mr Gupta but by Mr Gaurav Malhotra, a manager who was
employed by the Tipperary Group of Stations. The letter states as follows:

As per discussions with Sanjeev and Lyn Walker we would like to
confirm that we authorize Fresh Express to deduct $10.50 per carton
for the picking, packing and freight to be deducted from Tipperary
Group of Station’s Mangoes that are delivered to Fresh Express in
Sydney on behalf of Royal Palms.

[75]	The second and third defendants dispute the authenticity of the letter dated
16 October 2000. The letter appears to have been facsimiled to the first

32

defendant from the offices of the second plaintiff not the offices of the
second and third defendants.

There is no evidence the second plaintiff provided any consideration for the
authorisation contained in the letter.

[77]	The authority contained in the letter dated 16 October 2000 relates to the
proceeds of future sales of the second and third defendants’ mangoes. At
tab 7 of annexure AM1 to the affidavit of Mr Musumeci sworn on
27 November 2009 is a copy of the first defendant’s creditor’s transaction
report in relation to the second and third defendants. The transaction report
shows that as at 16 October 2000 the second and third defendants were
indebted to the first defendant in the amount of $196,378.30. All receipts
from the sale of mangoes up to that time were applied in payment of the first
defendant’s commission of 12.5 per cent and in repayment of the money
advanced to the second and third defendants by the first defendant. As at
16 October 2000 no deductions of $10.50 per tray of mangoes for the second
plaintiff’s charges for picking, packing and freighting the second and third
defendants’ mangoes had been made by the first defendant from the
proceeds of sale of the second and third defendants’ mangoes.
[78]	The document at tab 7 of annexure AM1 further reveals that at no stage after
16 October 2000 did the first defendant deduct the sum of $10.50 from the
proceeds of sale of the second and third defendants’ mangoes. The proceeds
of sale of the second and third defendants’ were applied first in the

33

repayment of moneys advanced by the first defendant to the second and third
defendants and secondly in payment of the commission charged by the first
defendant. The balance of the money was then held to the account of the
second and third defendants.

In paragraph 22 of the his affidavit sworn on 27 November 2008
Mr Musumeci states:
On or about 13 November 2000 I received a telephone call from
Ms Walker during which words to the following effect were spoken:
MR MUSUMECI: I need your authority to retain your charges to
Tipperary from the sale proceeds.

MS WALKER: Andrew, I am authorising you from the net price of
Tipperary mangoes for this season, as indicated to
your previously in my letter of 14 February 2000,
being part of the picking, packing and freight costs
that Walker Nominees has incurred on behalf of
Tipperary Farm to be paid to Fresh Express as part
of the money that Walker Nominees owes to Fresh
Express.
MR MUSUMECI: That’s fine. Can you please send me a letter of

authorisation to do that?

MS WALKER: Fine I will do that.

[80]	Contrary to the statement of Ms Walker referred to in par [79] above,
Ms Walker’s letter of 14 February 2000 makes no mention of any authority
to deduct any funds from the net price of the second and third defendants’
mangoes. Nor would you expect it to as even on the first defendant’s case
there had been no discussion with Mr Gupta at that time about the matter.

34

On 13 November 2000, Mr Musumeci received a letter from Ms Walker.
The letter makes no mention of any previous arrangement. It simply states:
I authorise you as my agent to deduct the money that is still owed by
you to Tipperary Group of Stations.
This money is part of the picking, packing and freight costs I have
incurred since I have been picking fruit at Tipperary Farm.
Whatever money you hold is to be offset against the money that you
have advanced to me.

[82]	The document at tab 7 of annexure AM1 to Mr Musumeci’s affidavit shows
that as at 13 and 14 November 2000 the first defendant owed the second and
third defendant’s the sum of $48,994.05.
[83]	At the end of the 2000 mango season the first defendant had received a total
of 28,230 trays of mangoes from the second and third defendants. The total
amount the first defendant should have deducted in accordance with the
purported authorisation granted to it by the second plaintiff was $296,415.
However, after the $300,000 advancement to the second and third
defendants by the first defendant was taken into account, the balance
remaining otherwise payable to the second and third defendants was only
$190,199.80.
[84]	On 31 January 2001, Mr Musumeci had a meeting with Ms Walker and
Ms Carmen Attard in Sydney. During that meeting the Ms Walker said,
“You will recall when you came to Darwin we met Sanjeev and it was
agreed at the meeting I could charge $10.50 per tray for the picking, packing

35

and marketing of [the second and third defendants’] produce.  I note you
have sold approximately 28,000 trays for [the second and third defendants]
and out of that [the second and third defendants] owe me $294,000.  Please
adjust that from Walker Nominees account.”  Mr Musumeci replied “That’s
fine, I will do that.” The statement of Ms Walker which is deposed to by
Mr Musumeci is not corroborated by Ms Attard’s fax at tab 11 of annexure
AM1.

On 2 February 2001 Mr Fred David, the solicitor for the first defendant,
caused a facsimile to be sent to Mr Sanjeev Gupta. In the facsimile
Mr David stated:
We act on behalf of Fresh Express (Australia) Pty Limited.
We understand that you have a business relationship with our client
particularly the sole director and shareholder of our client’s
company, Mr Musumeci.
Ms Lynn Walker and Graham Walker, who are the directors and
shareholders of Walker Nominees Pty Ltd, approached our client
approximately over a year ago seeking funds to continue their
business activities in picking and packing mangoes.
As you are aware Walker Nominees operates in the Northern
Territory and has a substantial exposure in the mango industry and
has connections in bringing about supplies of mangoes to companies
like our client.
On the assurance that our client would receive a substantial supply of
mango, our client advanced Walker Nominees the sum of $205,000.
After the first initial advancement our client advanced further sums
of money amounting to approximately $750,000. The only security
that our client received was a personal guarantee from the directors
of Walker.

36

The $750,000 advanced to Walker Nominees we understand was used
to pay the following at Tipperary:
(a) wages for picking and packing;
(b) purchase of second hand spray blaster used to spray
mango trees;

(c) purchase of six picking aids, four of which are at
Tipperary;

(d) $10,000 was used to rewire the electrical grader.

It should be noted that while visiting Sydney Ms Walker instructed
Mr Andrew Musumeci that our client could retain the sum of
$190,199 being the monies owed to her by Tipperary.
We have been instructed by our client that the only amount
remaining by Walker Nominees is approximately the sum of
$265,000.
We understand from our client’s instructions they are holding the
sum of $190,000 in their account to be paid to you. We are further
made to understand that you in turn will be passing the said sum to
Walker Nominees for the work that they have carried out for you.

We have advised our client that if you are in agreement our office
can prepare a dead of assignment of the debt from Fresh Express
(Australia) Pty Limited to you for the sum that has been held by our
client in your favour. This is quite legal and companies always
arrange this between each other.
In your case you will be buying the debt for the sum $190,199 and
the balance of the debt our client will pursue on a personal level with
Walker Nominees and its guarantors. We would appreciate if you
would be kind enough to pass this letter to your legal representatives
and should they have any further questions please do not hesitate to
contact our Mr Fred David who is a partner of this firm and works
exclusively on the accounts of Fresh Express (Australia) Pty Limited.

[86]	The contents of the letter dated 2 February 2001 are a little ambiguous.
However, the solicitor’s for the first defendant appear to have offered to
assign $190,199 of the total debt of $265,000, which the second plaintiff

37

owed the first defendant, to the second and third defendants in consideration
for the second and third defendants allowing the first defendant to retain the
sum of $190,199 being the balance of the proceeds of sale the first
defendant held on their behalf. If the proposal was accepted it was
suggested the second and third defendants could then set off the assigned
debt against any amount the second and third defendants owed the second
plaintiff for picking and packing their mangoes and freighting them
interstate.

The proposal was inconsistent with the defence now sought to be relied on
by the first defendant. It is also an admission that as at 2 February 2000 the
whole of the sum of $190.199 was being held by the first defendant to the
benefit of the second and third defendants and that none of the second
plaintiff’s charges of $10.50 per tray of mangoes had been deducted from
the proceeds of sale of the second and third defendants’ mangoes.

[88]	On 28 March 2002, Mr Neville Henwood, the solicitor for the second and
third defendants, replied by letter to the letter from Mr David. In his letter
Mr Neville Henwood stated the second and third defendants declined the
first defendant’s offer that they buy the debt due to the first defendant as
outlined in Mr David’s facsimile and he requested that payment of the
$190,199 be forwarded to the second and third defendants within 7 days.

On 7 May 2001, Mr David sent a further facsimile to Cridlands Lawyers. In
his facsimile he stated:

38

We refer to the above matter and to your letter dated 28 March 2001
received by this office on 2 April 2001.  We apologise that we have
not corresponded with you earlier.
As you are aware on 2 February 2001 we were instructed to write to
your client by facsimile putting out client’s case to your client for
the moneys that have been advanced by our client’s company to
Walker Nominees.  Moreover, you will further note that your client
had the sum of $190,199 in our client’s account to be paid to your
client.  Our client had previously an authority from Walker Nominees
in writing confirming that our client could take the said money and
accordingly Walker Nominees would adjust its debt against your
client.  Unfortunately our client had misplaced the said authority and
on that basis we were instructed to intervene and obtain your client’s
consent by way of a proposal put in our letter to your client on
2 February 2001.
Since your letter our client has made all efforts to locate the
authority that Walker Nominees had forwarded to our client and
accordingly it has now been discovered which was forwarded on
14 November 2000.  For your reference we enclose a copy of the said
letter.
You will note, that the letter was facsimiled on 14 November 2000
from Royal Palms Plantation to our client authorising our client to
take the $190,199 against the debt that is due and payable to our
client in the sum of $265,000.  We are made to understand that your
client had previously consented to this arrangement should our client
receive those instructions from Walker Nominees in writing.  On that
basis our client now wishes to withdraw the said money that is held
in your client’s account for the adjustments that need to be paid to
our client.
Should your instructions be otherwise please forward your concerns
to this office and we shall obtain our client’s further instructions
about this matter.  Should we not receive a response from you with
14 days we assume that his matter is resolved and on that basis we
will close our file without any further correspondence with your
office.

The contents of this letter are more consistent with the matters pleaded in
the first defendant’s proposed amended defence.

39

On 25 June 2001, Cridlands replied to the facsimile of Mr David dated
17 May 2001. Of relevance, in his reply Mr Henwood stated:
….
We note your comments in relation to the written authority from
Walker Nominees to your client regarding the sum of $190,199 held
by your client for the benefit of Tipperary and thank you for
providing a copy of that document to us.
Our client’s position is that it was not within Walker Nominees
capacity to provide that authority in relation to moneys due to our
client.  Further, the appointment of an administrator to Walker
Nominees Pty Ltd means that our client’s position will be prejudiced
by accepting your client’s proposition since, as we understand it, our
client cannot be in a better position in the administration (or any
subsequent winding up) than your client now is.  In particular, we do
not believe our client is entitled to set off the relevant amount even if
the debt is assigned as you have suggested.  Rather, it will be limited
to proving and ranking in the administration on the same basis as
your client would. Unless creditors are paid in full (which we
understand will not occur), our client will suffer a loss.
In those circumstances, we again request that the sum of $190,199 be
forwarded to our client.  To the extent Fresh Express will experience
some shortfall in what it will recover, our client hopes that an
ongoing business relationship between Fresh Express and the
Tipperary Group will go some way towards compensating for that
shortfall.
….
In paragraph 29 of his affidavit sworn on 27 November 2008 Mr Musumeci
deposes that in early 2001 the second and third defendants demanded
payment of the sum of $190,199 and the first defendant declined to make
that payment because the sum represented a debt owed by the second and
third defendants which the second plaintiff with the consent of the second

40

and third defendants had agreed could be collected by the first defendant
from the proceeds of consignment sales by the first defendant.

As to the merits of the proposed defence of the first defendant,
Mr Musumeci deposes as follows in his affidavit of 27 April 2009.
The facts alleged in the proposed amended defence are true and correct. No
denials are made therein other than in respect of matters which are not
correct. No nonadmissions have been made in respect of matters or facts
known by Mr Musumeci to be true.
Further in paragraph 12 of his affidavit sworn on 27 April 2009
Mr Musumeci states “I respectfully say the first defendant has a good
defence on the merits and ought to be let in to file an amended defence and
to have a hearing on the merits. The first defendant now seeks to amend its
previous defence to rely on additional documentary material located in
October 2008 and certain legal advice which has now been given to the first
defendant. The Court did not have the benefit of that additional material
when it decided to strike out the defence and give judgment in favour of the
second and third defendants.”

[96]	On the evidence contained in the affidavits of Mr Musumeci, counsel for the
first defendant, Mr Newton, submits the following factual position is
reasonably arguable:

(1) Walker Nominees had a contract to pick and pack mangoes
grown by the second and third defendants.

41

(2) Walker Nominees requested the first defendant to provide
financial assistance to carry out that contract and to repay debts
owed by Walker Nominees to the second and third defendants.

(3) $205,000 was initially advanced by the first defendant to Walker
Nominees. During the course of the 2000 mango season the first
defendant received numerous additional requests to fund the
picking, packing and freighting obligations of Walker Nominees
and made additional advances. It is to be inferred that
repayment was to occur from revenue raised by Walker
Nominees for picking and packing activities for the second and
third defendants.

(4) In April 2000 the first defendant made a proposal to the second
and third defendants that the mangoes being picked and packed
for them by Walker Nominees should be sold by the first
defendant on consignment for which commission would be
charged. That proposal was accepted.

(5) Various consignment sales were carried out by the first
defendant for the second and third defendants and moneys being
proceeds of sale totalling $300,000 were remitted to the second
and third defendants.

(6) On 16 October 2000 by prior arrangement between Ms L Walker
of Walker Nominees and Mr Sanjeev Gupta of the second and
third defendants the second and third defendants authorised the
first defendant to retain $10.50 per carton of mangoes sold by
the first defendant being the picking and packing charges
payable by the second and third defendants for each such carton.
Ms Walker then directed and authorised the first defendant to
retain those same moneys by way of reduction of the amounts
advanced by the first defendant to enable it to carry on picking
and packing activities for the second and third defendants. The
inference to be drawn is that this was a manifestation of an
intention that the first defendant would have the benefit of the
amount deducted pro tanto the indebtedness of Walker
Nominees to the first defendant and that this was not some form
of revocable mandate.

(7) In January 2001 Walker Nominees indicated to the first
defendant it was owed $294,000 by the second and third
defendants and that the first defendant should apply to adjust for
that amount obviously in reference to the funds payable to
Walker Nominees at the rate of $10.50 per carton and retained

42

by the first defendant with the authority of the second and third
defendants.

Are the facts contended for by the first defendant reasonably arguable?

[97]

A number of significant facts sought to be relied on by the first defendant in

support of the proposed amended defence are not reasonably arguable on the

evidence adduced by the first defendant.

[98]

The evidence of Mr Musumeci does not reasonably arguably establish the

second plaintiff requested the first defendant to provide financial assistance

to the second plaintiff so it could carry out its contract with the second and

third defendants. Nor does it reasonably arguably establish that the second

plaintiff requested financial assistance to repay debts it owed to the second

and third defendants. There is no evidence the second plaintiff was indebted

to the second and third defendants. The second plaintiff initially requested

financial assistance to pay a debt of $204,295.37 which it owed to TPFM for

freight charges incurred during the 1999 mango season.

As to why the other

advances were sought by the second plaintiff, the evidence of Mr Musumeci

is as set out in par [67] above. The additional advances had nothing to do

with the second plaintiff’s contract with the second and third defendants.

[99]

It cannot reasonably arguably be inferred that the second plaintiff was to

repay the monies advanced to it by the first defendant from revenue raised

by the second plaintiff in return for picking and packing the second and

third defendants’ mangoes. According to Mr David’s letter dated 2 February

2001, the first defendant loaned or advanced the second plaintiff in excess

43

of $950,000 which is more than 150 per cent of the gross proceeds of sale of
the second and third defendants’ mangoes. The first defendant and the
second plaintiff only ever contemplated that the mangoes supplied by the
second and third defendants would make up about 25 per cent of the total
amount of mangoes to be delivered by the second plaintiff to the first
defendant. There is no evidence to suggest the second and third defendants
had any knowledge of the financial assistance the first defendant provided to
the second plaintiff. The first defendant’s proposal which was accepted by
the second and third defendants made no mention of any such arrangements.
There was no mention of the loans that the first defendant made to the
second plaintiff or the nomination of a fund for the repayment of the loan
moneys in the alleged discussions between the Mr Musumeci, Ms Walker

and Mr Gupta in April 2000. The loan of $205,000 was unsecured and not
repayable for 12 months and therefore not repayable during the 2000 mango

season. The loans were made for the principal purpose of enabling the
second plaintiff to fulfil its contractual obligations to the first defendant.
The loans were to be repaid and indeed the vast proportion of the loans was
repaid by the second plaintiff as it did the work it was contracted to do for
the first defendant. The letters of the solicitors for the first defendant
referred to in pars [85] and [89] above reveal that at the end of the 2000
mango season of the $955,000 or thereabouts loaned to the second plaintiff
only $296,000 remained outstanding. Despite the contents of the letter
dated 16 October 2000 the first defendant did not deduct $10.50 per tray

44

from the proceeds of the sale of the second and third defendants’ mangoes.
It was not until 13 November 2000 that Mr Musumeci sought repayment out
of the proceeds of sale of second and third defendants’ mangoes.  There is
no evidence to suggest that the second and third defendants were notified of
this request by the first defendant.  No contact or communication was made
with the second and third defendants about such matters until Mr David’s
letter of 2 February 2001.
[100] The evidence as to the date when the first defendant made its proposal to the
second and third defendants is contradictory.  Mr Musumeci deposes that he
sent the first defendant’s proposal to the second and third defendants at the
beginning of the 2000 mango season which is September 2000 not April
2000.  The proposal makes not mention of the second plaintiff whatsoever.
[101] It is not reasonably arguable that moneys being the proceeds of sale totalling
$300,000 were remitted to the second and third defendants by the first
defendant.  It is the evidence of Mr Musumeci that the first defendant
advanced $300,000 to the second and third defendants.  $200,000 was
advanced on 3 October 2000 and a further $100,000 was advanced on
24 October 2000.  The purpose of these advance payments was clear enough.
During the 2000 mango season the first defendant would take delivery of the
second and third defendants’ mangoes and have custody of the proceeds of
sale.  The advance payments were payments by way of security for those
proceeds.  The proceeds of sale of the second and third defendants’ mangoes
were then applied in repayment of the advances.

45

[102] It is not reasonably arguable that there was a prior arrangement made
between Ms Walker and Mr Gupta that the second and third defendants
authorised the first defendant to retain $10.50 per tray of mangoes sold by
the first defendant being the picking and packing charges payable by the
second and third defendants to the second plaintiff for each tray of mangoes.
At the time of the meeting between Ms Walker, Mr Musumeci and Mr Gupta
in April 2000 the contract between the second plaintiff and the second and
third defendants had not been finalised; nor had the consignment
arrangements between the first defendant and the second and third
defendants.  The words spoken by the parties during the meeting in April
2000, which are referred to in par [68] above, do not establish that the
second and third defendants accepted the first defendant’s proposal and they
do not establish the prior arrangement sought to be relied upon.  The words
attributed to Mr Gupta, “I can’t see a problem with that”, are not a clear and
unequivocal acceptance of the proposition that “[the second plaintiff’s]
charges $10.50 per tray for picking, packing and freight and will be
deducted by [the first defendant] and the balance of the net price will be
paid directly to you”.  The discussions are self evidently preliminary
discussions of a nonbinding nature. The discussion is not referred to in the
first defendant’s proposed amended defence.
[103] It is not reasonably arguable that the letter dated 16 October 2000 from the
second and third defendants to the first defendant is the manifestation of an
intention that the first defendant was to have the benefit of the amounts of

46

$10.50 deducted from the proceeds of sale of the second and third
defendants’ mangoes.  There is no evidence that as at 16 October 2000 the
second and third defendants knew that the second plaintiff was indebted to
the first defendant or that the second and third defendants were aware the
second plaintiff had instructed the first defendant to retain such amounts of
money.  The letter itself does not state that the first defendant may retain the
$10.50 per carton of mangoes that is to be deducted from the proceeds of
sale.  The first time any consideration was given to the first defendant
retaining the amount of $10.50 per carton from the proceeds of sale of the
second and third defendants’ mangoes was on 13 November 2000 when
Mr Musumeci asked Ms Walker for her authority for the first defendant to
retain the second plaintiff’s charges from the proceeds of sale of the
mangoes.
[104] Further, it is not reasonably arguable that the evidence of Mr Musumeci
establishes the matters pleaded in par 3(b) and par 3(e) of the proposed
amended statement of claim. The evidence does not establish that the first
defendant provided financial accommodation to the second plaintiff so as to
enable the second plaintiff to fulfil its contractual obligations to the second
and third defendants on the footing the first defendant would be reimbursed
from the remuneration the second plaintiff would receive from the second
and third defendants.  The first defendant provided financial accommodation
to the second plaintiff so that the second plaintiff could supply the first
defendant with 120,000 trays of mangoes and for the reasons set out in

47

par [67] above. At no stage prior to or during the year 2000 mango season
were the second and third defendants advised that the first defendant had
provided financial accommodation to the second plaintiff nor were the
second and third defendants advised of any requirement for the first
defendant to be reimbursed from the remuneration the second plaintiff
would receive for picking and packing the second and third defendants’
mangoes.
[105] There is no evidence that the first defendant deducted the sum of $10.50 per
tray from the proceeds of sale of the second and third defendants’ mangoes.

To the contrary, the evidence of Mr Musumeci establishes that at all
material times the only amounts deducted from the proceeds of sale of the
second and third defendants’ mangoes was the sum of $12.50 being the first
defendant’s commission and money for repayment of the advances that the
first defendant made to the second and third defendants. The balance of the
proceeds of sale was held in the first defendant’s account to be paid to the
second and third defendants.
[106] There is no evidence the second and third defendants received any
consideration from the second plaintiff for the authorisation contained in the
letter dated 16 October 2000. The plaintiffs have sued the second and third
defendants for the whole of their outstanding debt.
[107] I do not accept the evidence of Mr Musumeci that, acting in reliance upon
both the second and third defendants acceptance of the first defendant’s

48

proposal and the authority to retain the second plaintiff’s charges of $10.50
per tray of mangoes, the first defendant advanced the second and third
defendants $200,000 on 3 October 2000 and another $100,000 on 24 October
2000. Nor do I accept that Mr Musumeci acted in reliance upon the
authority to retain the second plaintiff’s charges. The sum of $200,000 was
advanced before the letter dated 16 October 2000 was received by the first
defendant and the second plaintiff did not authorise the first defendant to
retain their charges of $10.50 per tray of mangoes until 13 November 2000.
The unsecured advance or prepayment of the sum of $300,000 is utterly
inconsistent with any such reliance.  Once the first defendant made those
payments to the second and third defendants it lost any security that it
otherwise may have obtained by deducting the second plaintiffs charges of
$10.50 per tray from the proceeds of sale to be paid to the second and third
defendants.  Further, at no stage did the first defendant deduct the first
second plaintiff’s charges from the proceeds of sale of the second and third
defendants’ mangoes.
Consideration of the merits of the proposed amended defence
[108] Mr Newton made three arguments in support of the proposed defence of the
first defendant.  First, Mr Newton submitted to the Court that, given the
circumstances in which the $10.50 was deducted by the first defendant with
the approval of second plaintiff and the second and third defendants, an
equitable assignment arose in favour of the first defendant on each occasion
the proceeds of sale of a tray of mangoes came into the hands of the first

49

defendant. The authorisation by the second and third defendants to deduct
the $10.50 per tray of mangoes and the corresponding authority by the
second plaintiff to appropriate those sums pro tanto the indebtedness of the
second plaintiff amounted to an irrevocable appropriation of those monies in
favour of the first defendant. The assignment was not of a presently
existing chose in action and could not operate as an assignment at law.
[109] The submission cannot be sustained.  It conflates and mischaracterises each
of the steps that is said to have occurred. There was no equitable
assignment in favour of the first defendant.  The second plaintiff could not
assign the debt, which the second and third defendants are alleged to have
assigned to it, to the first defendant.  A creditor cannot assign a debt to the
debtor 13 ; and in any event no amount of $10.50 was deducted from the
proceeds of sale of each tray of mangoes.
[110] Further, because the alleged assignment from the second and third
defendants to the second plaintiff was an equitable assignment of future
debts it had to be supported by valuable consideration and no consideration
is pleaded in the proposed amended defence and no evidence was adduced of
any such consideration.
[111] Secondly, Mr Newton argued that the provision of the finance by the first
defendant to the second plaintiff to enable it to carry out picking and
packing services for the second and third defendants and the derivation of

Broad v Commissioner of Stamp Duties [1980] 2 NSWLR 40.

50

income from the provisions of such services with a concurrent understanding
that the first defendant could recoup its loan from that income makes it
unconscionable for the second plaintiff to depart from that understanding.
Equity will uphold the position of the first defendant by treating the subject
income as subject to an equitable charge or lien.
[112] The second argument of Mr Newton cannot be sustained. The evidence of
the first defendant does not reasonably arguably establish that the first
defendant provided finance to the second plaintiff to enable it to carry out
picking and packing services for the second and third defendants or that
there was a concurrent understanding that the first defendant could recoup
its loan from the income that the second plaintiff made by picking and
packing the second and third defendants’ mangoes. According to the
evidence of Mr Musumeci: the first defendant loaned money to the second
plaintiff so that it could obtain access to 120,000 trays of mangoes and so
that the second plaintiff could fulfil its contractual obligations to the first
defendant; and it was only on 13 November 2000 that the first defendant
first requested it be permitted to recoup its loan from the moneys payable by
the second and third defendants to the second plaintiff and, more
specifically, out of the proceeds of sale of the second and third defendants’

mangoes that were held by the first defendant. Further, there is no evidence
that the first defendant deducted the second plaintiff’s charges of $10.50 per
tray of mangoes from the proceeds of sale of the second and third

51

defendants’ mangoes. There is no reasonably arguable factual foundation
for the equitable charge or lien contended for by Mr Newton.
[113] The third argument of Mr Newton is that the first defendant has acted to its
detriment on a common understanding or assumption with both the second
plaintiff and the second and third defendants as to the right of the first
defendant to be repaid out of the service charges deducted from the proceeds
of the sale of mangoes sold by the first defendant on consignment for the
second and third defendants. Equity will come to the relief of a party who
has acted to his detriment on the basis of an assumption in relation to which
the other party to the transaction has played such a part in the adoption of
the transaction that it would be unfair or unjust if he were left free to ignore.
[114] Before dealing with Mr Newton’s third argument it is to be noted that,
despite the additional time which was allowed so the first defendant could
draft its proposed amended defence and file its further affidavit material, the

defence is not pleaded in the proposed amended defence. Further, the
following elements usually need to be established by the party alleging an
estoppel 14 : (1) a false assumption or expectation by an ‘innocent’ party as to
a fact, event, relationship or entitlement; (2) the ‘guilty’ party has induced
the ‘innocent’ party to form or act on the assumption or expectation whether
by making a representation or a promise or by acquiescence or otherwise;
(3) the ‘innocent’ party acts or abstains from acting on the assumption or

These elements are usefully summarised in A Leopold “Estoppel: Recent Developments” (1991) 7

Aust Bar Rev 49 at 60 – 61.

52

expectation; (4) the guilty party ought to have known or it was within his
reasonable expectation that the ‘innocent’ party would so act; (5) an attempt
by the ‘guilty party’ to act contrary to the assumption or expectation; and
(6) injustice or unconscionability arsing from the conduct of the guilty
party.
[115] The third argument of Mr Newton is again misconceived. The evidence of
Mr Musumeci does not reasonably arguably establish any material facts
upon which the allegations of an estoppel may be maintained. There is no
evidence that: the first defendant acted on a false assumption; or that the
second and third defendants induced the first defendant to form such an
assumption or played a part in the adoption of such an assumption; or that
the second and third defendants ought to have known about any such
assumption. The second and third defendants played no part in the first
defendant’s decision to loan money to the second plaintiff. The reasons the
loans were made by the first defendant to the second plaintiff are set out in

par [60], [61], [64] and [67] above. There is no evidence which establishes
that the second and third defendants were aware of the fact that the first
defendant had provided finance to the second plaintiff. The evidence of
Mr Musumeci does not reasonably arguably establish that the first defendant
relied on any common understanding with both the second plaintiff and the
second and third defendants as to the right of the first defendant to be repaid
out of the second plaintiff’s service charges which were to be deducted from
the proceeds of the sale of mangoes sold by the first defendant on

53

consignment for the second and third defendants. It does not even establish
that such an understanding was in place before the first defendant made the
loans to the second plaintiff. The second plaintiff’s creditors transaction
report which is at tab 5 of annexure AM1 to the affidavit of Mr Musumeci
sworn on 27 November 2000 shows that the first defendant had loaned the
second plaintiff in excess of $700,000 before the first defendant received the
letter dated 16 October 2000; and that the first defendant loaned the second
plaintiff in excess of a further $150,000 before 13 November 2000 when
Mr Musumeci asked the second plaintiff for its authority for the first
defendant to deduct loan repayments from the proceeds of sale of the second
and third defendants mangoes. Any understanding as to the rights of the
first defendant to be repaid its loans out of the second plaintiff’s service
charges which were to be deducted from the proceeds of sale of the second
and third defendants’ mangoes could have only come into existence after
13 November 2000 by which time most of the loan money had already been
advanced to the second plaintiff. The first defendant did not make any
deductions for the second plaintiff’s service charges for picking and packing
mangoes from the proceeds of sale of the second and third defendants’
mangoes.
The evidence about the other discretionary factors
[116] As to the other discretionary factors, Mr Musumeci deposes as follows in his
affidavit of 27 November 2008.

54

[117] On or about 14 September 2007, the first defendant instructed Mr David
De Silva from De Silva Hebron to act on behalf of the first defendant. On
7 May 2008 the parties attended mediation before Master Coulehan. An
application for costs of the mediation was made by both the first and second
plaintiffs and the second and the third defendants against the first defendant
and costs were awarded against the first defendant. As a result of the
outcome of the costs application Mr Musumeci felt his Darwin solicitors
were not acting in the best interests of the first defendant and he was in the
process of terminating their services when he was informed that the
solicitors had ceased to act on behalf of the first defendant.
[118] On or about 12 September 2008, unknown to Mr Musumeci some documents
were left at the offices of the first defendant on behalf of the second and
third defendants in support of an application for judgment against the first
defendant.
[119] In paragraph 58 of his affidavit sworn on 27 November 2008 Mr Musumeci
stated that on or about 2 October 2008 Mr Musumeci had a conversation
with Mr David and with Mr Robert Newton of counsel in Sydney.
Mr Musumeci then requested Mr John Stewart of Ward Keller to act on
behalf of the first defendant.
[120] The contents of an email from Mr Stewart to Mr David dated 24 October,
which is at tab 25 to annexure AM1 of Mr Musumeci’s affidavit sworn on
27 November 2008, reveal a different scenario. The email reveals that: Mr

55

Stewart was contacted on 2 October 2008; Mr Stewart sent an email to Mr
David on 2 October 2008; there was a further discussion between Mr
Stewart and Mr David on 3 October 2008 during which Mr David informed
Mr Stewart that Mr David expected the first defendant would instruct Ward
Keller directly; and Mr Stewart heard nothing further from either Mr
Musumeci or Mr David between 3 October 2008 and 24 October 2008.
[121] Following Mr Musumeci’s meeting on 2 October 2008, Mr David attempted
to contact De Silva Hebron to obtain copies of various documents so those
documents could be forwarded to Mr Stewart. On 24 October 2008
Mr David received an email from Mr Stewart advising him that default
judgment may have been obtained against the first defendant.
[122] As a result of Mr Stewart’s advice, at 3.05 pm on 24 October 2008 Mr David
sent a facsimile to Cridlands advising them that the first defendant was in
the process of obtaining their file from De Silva Hebron and should any
default judgment be obtained an application would be made to set aside the
judgment. At the time Mr David sent the facsimile, he was in possession of

a letter from Cridlands to the first defendant dated 16 October 2008. In his
facsimile, Mr David states “We act on behalf of Fresh Express Australia Pty
Ltd in Sydney. We have been provided with a copy of your letter dated

16 October 2008.” The letter and a copy of the default judgment of the
Court were served on Mr Musumeci by Mr Willenberg at 10.35 am on
20 October 2008.

56

[123] On 24 October 2008, Ms Tillman sent a facsimile to Mr David confirming
that judgment had already been obtained and stating that all relevant
documents had been served on the first defendant.
[124] In paragraph 63 of his affidavit sworn on 27 November 2008 Mr Musumeci
deposes:
“On or about 25 October 2008 I was asked by Mr David to see
whether I had received any correspondence from Cridlands. After a
number of days of searching I discovered that a letter from Cridlands
was delivered to the office of the first defendant in the Sydney
Markets dated 16 October 2008 making reference to a judgment
obtained on 9 October 2008. In that letter it attached a number of
documents which I later passed on to Mr David.”

[125] Mr Musumeci goes onto state as follows. The period between September
and April is the busiest period in the year for the first defendant as it is the
mango and rockmelon season.  During this season I am frequently absent
from the first defendant’s office visiting growers or customers in various
parts of the country.  It was not until Mr Musumeci instigated a thorough
search of the first defendant’s office that Mr Musumeci discovered the letter
dated 16 October 2008.  The judgment was obtained in circumstances which
did not come to the attention of the first defendant.
[126] In his affidavit of 27 April 2009 Mr Musumeci deposes as follows about the
other matters going to the exercise of the Court’s discretion to set aside the
judgment in default.

57

[127] He instructed his legal representatives to prepare the proposed amended
defence and further list of documents which are annexed to the affidavit of
27 April 2009. In early October 2008, after he was requested to do so by
Mr David, Mr Musumeci instigated a thorough search of the first
defendant’s offices with a view to locating additional documents relating to
this matter.  In the course of that search he located a number of documents
which had been misfiled.  Those documents are discovered in the further list
of documents which is annexure B to the affidavit of 27 April 2009.
[128] Mr Musumeci did not read the letter of 15 August 2008 until early January
2009 when he located and read affidavit of Fiona Tillman of 9 September
2008.  The letter is incorrectly addressed.  As at 15 August 2008 the address
for the first defendant was Stand 189 – 190 Shed B.  Stands 5 & 6 at Shed
A, Sydney markets was a previous address of the first defendant.  The first
defendant moved back to Stands 5 & 6 at Shed A in about November 2008.
Mr Musumeci did not receive any telephone calls that might have alerted
him to the contents of the letter.
[129] At all times during 2007 and 2008 Mr Musumeci was the principal manager
of the first defendant.  At the time the first defendant conducted a
substantial wholesale produce business at the Sydney Markets.  The day to
day operations of the business were carried on by administrative sales staff.
At the same time Mr Musumeci was also engaged in the management of a
multisite franchised fruit juice station business.  His commitments in the
two businesses kept him away from the first defendant’s offices a great deal

58

of the time. In mid 2008 Mr Musumeci was also very preoccupied with
major litigation in Sydney affecting the first defendant.
[130] During his absences from the offices of the first defendant Mr Musumeci
relied heavily on the first defendant’s administrative staff to draw his
attention to important correspondence or other documents coming to their
attention.  He is quite certain the letter of 15 August 2008 was not drawn to
his attention before January 2009 when he read the affidavit of Ms Tillman.
He discovered additional documents during searches he and other staff
carried out from October 2008.
[131] Mr Musumeci states that it did not come to his attention until about October
2008 that there was any sense of urgency in connection with these
proceedings or that there had been any kind of serious default by the first
defendant in compliance with the orders or directions of the Court.  Any
noncompliance was inadvertent on the part of the first defendant. It was
not the intention of the first defendant to be disobedient, obstructive or
disrespectful towards the court.
[132] Mr Musumeci states the he was completely unaware of the pending
application by the second and third defendants to strike out the first
defendant’s defence and obtain judgment in default.  He received no
telephone calls or correspondence which alerted him to the existence of that
application. Had he been aware of the application he would have instructed
the first defendant’s lawyers to oppose the application.

59

Consideration of the other discretionary factors
[133] Mr Musumeci’s evidence about the reasons for the first defendant’s default
and the preparedness of the first defendant to remedy its default is most
unsatisfactory. The facts deposed to in the various affidavits of service have
not been denied.
[134] Mr Musumeci does not depose that he was unaware of the orders the Court
made on 9 May 2008. Mr Garraway deposes that on 12 May 2008 De Silva
Hebron advised the first defendant of those orders. The orders included an
order that the first defendant provide further and better discovery, an order
that the first defendant file its witness statements by 20 June 2008 and an
order that the matter be listed for a three day hearing in the
September/October 2008 sittings. Those orders should have given him a
sense of urgency in relation to these proceedings.
[135] Mr Musumeci does not depose to any steps the first defendant took to retain
other solicitors in Darwin between the date when De Silva Hebron ceased to

act and the date when he requested Mr Stewart to act for the first defendant.
Further, Mr Musumeci failed to take steps to retain Ward Keller following
his meeting with Mr David and Mr Newton on 2 October 2008.
[136] Mr Musumeci’s statement that “On or about 12 September 2008, unknown to
me, some documents were left at the offices of the first defendant on behalf
of the second and third defendants in support of an application for judgment
against the first defendant” is a peculiar statement. He does not state how it

60

is he knows that the documents were served at the offices of the first
defendant on 12 September 2008 and the statement is incorrect. On
12 September 2009 Mr Willenberg served the order of the Court that the
first defendant make the further and better discovery requested by the
second and third defendants in their letter dated 15 August 2008.  He did so
by handing the documents to Ms Sahar ElAhamad.  I find Mr Musumeci is
dissembling in this regard.
[137] Mr Musmeci does not depose how it was that he came to meet with
Mr David and Mr Newton on 2 October 2008.  However, as at that date the
first defendant had been served with the second and third defendant’s
application for further and better discovery, the order of the Court that the
first defendant provide further and better discovery and the second and third
defendants’ application for judgment in default; and a letter advising the
first defendant that the application for judgment had been adjourned to 2
October 2008 had been sent by registered post on 29 September 2008.
Further, at the meeting on 2 October 2008 he was advised by his lawyers to

locate any additional documents relating to this matter. That is, he was
advised to take steps so that further and better discovery could be provided
by the first defendant.  He was advised to do so before judgement was
entered.
[138] Mr Musumeci does not state why Mr David did not contact the solicitors for
the second and third defendant on 2 October 2008 or why he and his Sydney
solicitors did not respond to the solicitors for the second and third

61

defendants before 24 October 2008. It seems the reason for this is that it
was left to Mr Musumeci to contact Mr Stewart and he elected not to do so.
[139] I do not accept Mr Musumeci’s evidence that it was only after 25 October
2008 that Mr Musumeci found Cridlands letter dated 16 October 2008.
Mr Musumeci provided the letter to Mr David on or before 24 October 2008.
Mr David refers to the letter in the facsimile he sent to Cridlands on
24 October 2008. The letter was served on Mr Musumeci by Mr Willenberg
on 20 October 2008.

In the letter of 16 October 2008 Ms Tillman stated:
We refer to previous correspondence sent to you concerning our
client’s application to strike out the defence of Fresh Express and
obtain default judgment.
Please find by way of service a copy of a general form of order dated
9 October 2008 containing the orders made by Justice Southwood in
this matter.
You will see that our client has obtained judgement against Fresh
Express Australia Pty Ltd (Fresh Express) in the amount of $190,199.
Our client seeks payment of this amount within 14 days from the date
of this letter.
Please note that pursuant to Supreme Court Order 59, the amount of
$190,199 carries interest from the date of judgment (9 October 2008)

at a rate of 10.5 per cent per annum. According to our calculations
this amounts to a daily interest amount of $54.70.  Our client also
seeks payment of interest on the judgment amount of $190,199 until
such time as it is paid by Fresh Express.
Our client has also obtained an order for Fresh Express to pay its
costs in relation to the pursuit of the third party notice dated 6 June
2007.  We will write to you shortly providing detail of our client’s
costs.  Please note that if an agreement as to the amount and payment
of client’s costs cannot be reached, our client will be forced to

62

commence additional proceedings in the Supreme Court of the
Northern Territory for what is referred to as a taxation of its costs.
It is therefore in the interests of Fresh Express to pay the judgement
sum of $190,199 as soon as possible in addition to the interest
component. If fresh express fails to pay the judgment sum and the
interest thereon within the 14 days specified above, we will seek
instruction from our client to take recovery action accordingly.
Reaching an agreement as to our client’s costs is also in the interests
of Fresh Express, as whatever amount is ultimately agreed upon or
determined by the Court will attract interest from 9 October 2008 at
the rate of 10.5 per cent per annum.

[141] By 24 October 2008 both Mr Musumeci and Mr David knew that the second
and third defendants had obtained judgment in default against the first
defendant.
[142] I do not accept Mr Musumeci’s evidence that it was not until he instigated a
thorough search of the first defendant’s office that he discovered the letter
dated 16 October 2008. The letter and the judgment of the Court were
served on Mr Musumeci by Mr Willenberg on 20 October 2008 and
Mr Musumeci gave the letter to Mr David on or before 24 October 2008.
Nor do I accept Mr Musumeci’s evidence that the judgment in default was
obtained in circumstances which did not come to the attention of the first
defendant. Even on his own evidence, Mr Musumeci knew by 2 October
2008 that the first defendant was being pressed to provide further and better
discovery to the second and third defendants. He had met with his Sydney
lawyers to obtain advice about the matter and arrangements had been made
for him to instruct Ward Keller in Darwin.

63

[143] Mr Musumeci’s evidence about his absences from the offices of the first
defendant is also most unsatisfactory. I do not accept it. His evidence is
vague and lacking in detail. Mr Musumeci does not specifically depose that
both Ms Sahar ElAhamad and Ms Cathy Musumeci failed to bring the
various Court documents which were served on the first defendant to his
attention; nor has he produced any evidence about what they did with the
documents after they received them. He does not explain how it is that the
various documents did not come to his attention; nor does he explain how it
is that he being busy led to the Court documents being ignored despite the
fact that employees of the first defendant had accepted service of the
documents.
[144] Mr Musumeci does not state why the first defendant has failed to provide
full and adequate discovery or why the first defendant failed to comply with
the orders of the Court dated 9 May 2009.
[145] Mr Musumeci’s affidavit of 27 November 2008 did not have a proposed
further and better list of documents attached to it. In his affidavit sworn on
27 April 2009, Mr Musumeci does not state the proposed further list of
documents, which is annexure B to the affidavit, comprises all of the
documents in the first defendant’s possession that fall within the description
of documents contained in the letter dated 15 August 2008. The further list
of documents does not list any invoices supplied by or on behalf of the
second and third defendants, profit and loss statements, annual financial
reports, tax returns, ledger records or bank statements and Mr Musumeci

64

does not depose that no such documents were in the possession of the first
defendant.
Conclusion
[146] In all of the circumstances I am not satisfied the first defendant has raised
an arguable defence which carries some degree of conviction.  The proposed
amended defence does not have any merits to which the Court should have
regard.  The first defendant has provided no good reason for the first
defendant’s default in complying with the order of the Court that the first
defendant provide further and better discovery to the second and third
defendants.  The first defendant has not shown a true preparedness to
remedy its default.  It has still not done so. Justice does not require that the
first defendant’s default be overlooked.  The first defendant has
contumeliously disregarded the orders of the court.
[147] The first defendant’s application to set aside the judgment in default should
be dismissed.  I will hear the parties further as to costs.

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Citations

Nourse and Walker Nominees Pty Ltd v Fresh Express Australia Pty Ltd and Branir Pty Ltd and Tovehead Pty Ltd [2009] NTSC 73

Cases Citing This Decision

0

Cases Cited

3

Statutory Material Cited

0

Taylor v Taylor [1979] HCA 38

Shackell v Howe, Thornton and Palmer [1909] HCA 14

Norman v Federal Commissioner of Taxation [1963] HCA 21

PARTIES:	GEOFFREY WAYNE NOURSE AS
LIQUIDATOR OF WALKER
NOMINEES PTY LTD
(ACN 009 632 311)
And:
WALKER NOMINEES PTY LTD (IN
LIQUIDATION)
(ACN 009 632 311)
v
FRESH EXPRESS AUSTRALIA PTY
LTD
(ACN 065 867 218)
And:
BRANIR PTY LTD
(ACN 061 718 876)
And:
TOVEHEAD PTY LTD
(ACN 003 745 140)
TITLE OF COURT:	SUPREME COURT OF THE
NORTHERN TERRITORY
JURISDICTION:	SUPREME COURT OF THE
NORTHERN TERRITORY
EXERCISING TERRITORY
JURISDICTION
FILE NOS:	153 of 2003 (30320300) consolidated with
30 of 2004 (20405160) and
169 of 2003 (20323231)
DELIVERED:	23 December 2009
HEARING DATES:	2, 6, 7 & 30 April 2009 and 1 & 7 May
2009
JUDGMENT OF:	SOUTHWOOD J
CATCHWORDS:
Corporations Act

Judgment ID Number:	Sou0912
Number of pages:	65
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

3.	As to paragraph 3 the first defendant denies any indebtedness
to the second and third defendants and says:
(a) Walker Nominees at all material times was a contractor

4.	The guarantor shall be the directors of the second plaintiff at
the time.
5.	For the advancement of the monies to the second plaintiff, the
company shall guarantee to the first defendant approximately
120,000 trays of mangoes in the mango season for the year
2000.

MS WALKER:	Andrew, I am authorising you from the net price of
Tipperary mangoes for this season, as indicated to
your previously in my letter of 14 February 2000,
being part of the picking, packing and freight costs
that Walker Nominees has incurred on behalf of
Tipperary Farm to be paid to Fresh Express as part
of the money that Walker Nominees owes to Fresh
Express.

[2009] NTSC 73

23/12/2009