Nunn v Australian Institute of Trades Pty Ltd
[2018] VCC 38
•2 February 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-17-01210
| ROBYN NUNN | Plaintiff |
| v | |
| AUSTRALIAN INSTITUTE OF TRADES PTY LTD | Defendant |
---
JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 January 2018 | |
DATE OF JUDGMENT: | 2 February 2018 | |
CASE MAY BE CITED AS: | Nunn v Australian Institute of Trades Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 38 | |
REASONS FOR JUDGMENT
---
Subject: PRACTICE AND PROCEDURE
Catchwords: Self-executing orders – Effect of failure to comply – Judgment entered following noncompliance with self-executing order – Subsequent application to extend time for compliance – Matters relevant to exercise of discretion – Whether failure to comply wilful
Legislation Cited: Civil Procedure Act2010 (Vic); Corporations Act2001 (Cth)
Cases Cited:Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110; MTQ Holdings Pty Ltd v Lynch [2007] WASC 49; Re Jokai Holdings Ltd [1993] 1 All ER 630
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr E Batrouney | Willon Legal |
| For the Defendant | Mr C Twidale | NOH Legal |
HIS HONOUR:
Nature of application
1 This is an application by the defendant pursuant to Summons filed 11 December 2017 seeking to set aside a default judgment entered against it, to extend time and to reinstate a Defence filed earlier in the proceeding.
Chronology
2 The proceeding was commenced by Writ filed on 24 March 2017 and initially set down for trial on 14 November 2017.
3 On 25 July 2017, the defendant’s then solicitors were given leave to cease to act. A directions hearing was listed for 10 August 2017. At that directions hearing, Judicial Registrar Burchell made inter alia the following orders:
· by 4.00pm on 18 August 2017, the defendant must answer the plaintiff’s request for further and better particulars dated 26 May 2017;
· the proceeding is referred to mediation by a judicial resolution conference on 21 September 2017 at 10.30am before a Judicial Registrar.
4 At the judicial resolution conference, there was no appearance by or on behalf of the defendant. Judicial Registrar Burchell noted in Other Matters that a notice of settlement conference had been sent to the defendant on 11 August 2017 at its address for service. As a result of the non-attendance at the conference by the defendant, Judicial Registrar Burchell struck out the defendant’s Defence dated 15 May 2017 and gave judgment for the plaintiff against the defendant for damages to be assessed, together with the costs of and incidental to the proceeding (including all reserve costs) and interest to be assessed. The trial assessment was ordered for 25 October 2017.
5 On 24 October 2017 at about 2.39pm, the defendant filed an affidavit seeking to set aside the default judgment entered against it. The affidavit was sworn by Mr Geoffrey Wallace, the sole director of the defendant, and stated:
“I realise now that I should have been more diligent in ascertaining the position, but as there was solicitors acting I thought things were under control and that if anything needed my attention I would be informed of it. It was wrong of me to assume that others would attend to the matter.”
6 The affidavit also contained an apology by Mr Wallace on behalf of the defendant to both the plaintiff and the court for the non-appearance at the judicial resolution conference and in the late production of the affidavit.
7 In view of this new development, Judge Macnamara, who was to hear the trial assessment, made orders as follows:
(1) by 1 November 2017, the defendant must answer the request for further and better particulars dated 26 May 2017;
(2) by 8 November 2017, the defendant must pay the plaintiff’s costs, fixed in the sum of $14,100 plus GST, of and incidental to the defendant’s application dated 25 October 2017 (including for the avoidance of doubt, the cost of attending the judicial resolution conference on 21 September 2017);
(3) if the defendant failed to comply with either order 1 or 2 above, the proceeding shall, upon notification to the Registry, be listed for a trial assessment before a Judicial Registrar;
(4) subject to compliance with both order 1 and 2 above:
§ orders 1-10 of Judicial Registrar Burchell’s orders made on 21 September 2017 are set aside;
§ the defendant’s Defence dated 15 May 2017 is reinstated;
§ orders 5-13 below shall apply.
8 Orders 5-13 dealt with the preparation of the proceeding for a trial. His Honour Judge Macnamara set the matter down for trial on 2 May 2018 on an estimate of four to five sitting days. His Honour provided for the plaintiff to serve a reply, each party to give discovery, the filing of expert reports and a mediation on 9 November 2017 before a Judicial Registrar.
9 It is not disputed that the defendant failed to answer the request for further and better particulars by 1 November 2017. Nor is it disputed that the defendant failed to pay by 8 November 2017 the plaintiff’s costs fixed in the sum of $14,100 plus GST.
10 Following an email to the court on 1 November 2017 at 4.48pm and provision of an affidavit on 2 November 2017 at 10.29am, both of which were copied to the defendant’s solicitors, the court made orders listing the proceeding for a trial assessment and the judicial resolution conference was vacated administratively. Relevant orders were emailed to all parties at 1.17pm on 2 November 2017.
11 On 9 November 2017 at 10.28am, the defendant filed a summons seeking an extension of the times fixed in Judge Macnamara’s orders. No affidavit was formally filed, although an affidavit was handed to Judicial Registrar Tran in court on 9 November 2017. In the opinion of the Judicial Registrar, the affidavit did not provide a satisfactory explanation for the defendant’s defaults and delays, particularly in light of the previous failure by the defendant to attend the judicial resolution conference and statements contained in the affidavit of Mr Wallace sworn 24 October 2017.
12 In any event, at the hearing before Judicial Registrar Tran on 9 November 2017, the defendant informed the court that it sought to withdraw its summons.
13 In her order made on 9 November 2017, Judicial Registrar Tran noted in Other Matters that she understood Mr Wallace was presently overseas and had been since at least 1 November 2017, and intended to remain overseas until December 2017. In that context, she said it was difficult to see how the defendant was going to comply with the court order for a judicial resolution conference. She said that the court noted, as it was entitled to do under the Civil Procedure Act2010 (Vic), that it was not only the plaintiff’s resources that were wasted by non-compliance with court orders, but also the resources of the court.
14 Judicial Registrar Tran provided a timetable in her orders for any application to set aside default judgment. Her aim was to provide, insofar as it was within the jurisdiction of the court, a line in the sand after which the plaintiff could have some certainty about the judgment obtained in the matter. Accordingly, Judicial Registrar Tran ordered:
(1) the defendant’s summons filed on 9 November 2017 is struck out with no order as to the defendant’s costs;
(2) the defendant pay the plaintiff’s costs of its summons dated 9 November 2017 on an indemnity basis fixed in the sum of $1,500;
(3) any application to set aside the default judgment of Judicial Registrar Burchell made on 21 September 2017, or the default judgment made by me today, or to extend the time compliance with orders 1 and 2 of His Honour Judge Macnamara’s orders made on 25 November 2017, is to be made by summons and supporting affidavit to be filed and served by 4.00pm on 30 November 2017. The affidavit in support must:
(a) explain or provide a satisfactory explanation for any default or delay by the defendant in complying with court orders and in bringing the application;
(b) provide evidence, including detailed calculations, and by exhibiting supporting documents, that the defendant has a defence with a real prospect of success;
(c) provide evidence that any prejudice suffered by the plaintiff by reason of the defendant’s defaults or delays, or by reason of any order setting aside the default judgment, can be ameliorated. It is the expectation of the court that this will include evidence as to the defendant’s capacity to meet any adverse costs orders against it.
15 Also on 9 November 2017, Judicial Registrar Tran gave judgment in favour of the plaintiff against the defendant ordering damages in the sum of $241,376.87 plus interest pursuant to statute from 24 March 2017 to 9 November 2017 fixed in the sum of $15,149.60. Further, she ordered that the defendant pay, in addition to existing costs orders against it, the plaintiff’s costs of the proceeding, on a standard basis, fixed in the sum of $20,000.
16 As noted previously, the defendant filed a summons on 11 December 2017 seeking, amongst other things, to set aside the default judgment. The defendant relied upon an affidavit of Geoffrey Wallace sworn 30 November 2017. In that affidavit, Mr Wallace referred to his delay in providing particulars as due to illness experienced in India and the need to visit a hospital and convalesce to recover from the poisoning. He also referred to difficulties experienced with the National Australia Bank in making the necessary payments by the due date. He said that he had some difficulties as a result of the $5,000 daily limit on external transfers and not having his Australian phone with him. He was unable to effect any new arrangement with the National Australia Bank while he was in India.
17 Mr Wallace also provided some reasonably detailed evidence regarding the merits of the case and the plaintiff’s entitlement to the amount claimed. On the basis of the analysis which he provided, he effectively contended that the quantum of the plaintiff’s claim was overstated by approximately 40 per cent and that an amount of approximately $84,000 should be deducted from the claim.
18 During the hearing, there was a dispute as to the extent to which the defendant should be able to rely on a further affidavit sworn only on 25 January 2018. This affidavit provided some further background material. However, it was in part a summary of the earlier affidavit and repeated a number of the same points. I ruled that the defendant could rely upon the affidavit as I did not consider there was any, or any significant, prejudice to the plaintiff. Of particular interest in the affidavit was the open offer by the defendant to pay into court the sum of $20,000 to be made available to the plaintiff on account of her costs of the proceeding in the event that the defendant was granted leave to defend the proceeding.
Legal principles
19 The Court of Appeal in Jorgensen v Slater & Gordon Pty Ltd[1] discussed applicable principles regarding applications by a party to be relieved from the consequences of a self-executing order. The court said that the power to relieve a party must be exercised with care.[2] The court said that it respectfully agreed with the views of Newnes J in the Western Australian Supreme Court in MTQ Holdings Pty Ltd v Lynch & Ors,[3] where he said:[4]
“The authority of the court will equally be undermined and the quality of justice for the innocent party eroded if the ultimate sanction effected by the operation of the self-executing order can be avoided by showing that non-compliance with that order came about by the same sort of inattention or laxity that caused the order to be made in the first place.”
[1][2008] VSCA 110.
[2]Ibid at [10].
[3][2007] WASC 49.
[4]Ibid at [51].
20 The court went on to say that it further adopted what Newnes J said regarding considerations which should ordinarily be brought into account in considering the exercise of the court’s discretion. The following matters should be amongst the matters taken into account:
(a) the circumstances in which the self-executing order was made;
(b) the reasons for non-compliance with it;
(c) the prejudice to the defaulting party if relief were not granted;
(d) the prejudice to the innocent party if relief were granted.
21 In considering the circumstances in which the self-executing order was made, the plaintiff (the respondent to the application) drew the court’s attention to what were alleged to be a series of defaults by the defendant applicant in addressing its obligations in connection with this action. The plaintiff referred to the fact that the defendant failed to provide particulars of its Defence initially, and then again in response to the court order made on 10 August 2017. The defendant then failed to appear at the judicial resolution conference and then, on 2 November 2017, served particulars which were not only late but deficient. These matters were in addition to the defendant’s failure to act within the time limit imposed in respect of the self-executing order made by His Honour Judge Macnamara.
22 The gist of the plaintiff’s argument was that the defendant had an extensive history of non-compliance and ought not be granted any further indulgences. It was said that the defendant and its director had repeatedly flouted court orders and treated the court and its processes with complete disregard.
23 With respect to the matter of particulars, I note that the particulars of defence provided by the defendant refer to the fact that the business records of the defendant are in the possession of its former landlord and the defendant is unable to give her the particulars until it has obtained those records by subpoena.
24 Accordingly, the defendant said it was unable to provide further particulars of various matters requested until relevant records were recovered. It is troubling that the defendant has had the request for particulars since approximately late May 2017, and has thus far failed to take any effective steps to obtain the records necessary to provide the particulars sought.
25 In connection with the reasons for non-compliance, the Court of Appeal said that it was of first importance to ascertain whether the failure to comply was wilful and evidenced deliberate disregard of, or indifference to, the court’s order.[5]
[5]Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110 at [12].
26 Reference was made to the Judgment of Brown-Wilkinson VC in Re Jokai Holdings Ltd,[6] where he said:
“The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation upon which its authority is founded. But, if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed.”
[6][1993] 1 All ER 630, 637.
27 I have referred above to evidence given by the defendant for its failure to comply with the self-executing order. Whilst there was argument about the matter, and the plaintiff was critical of the defendant, I am satisfied from the material that this was not a case in which the defendant intended to ignore or deliberately flout the order of the court.
28 While the defendant could plainly have acted more quickly, and carried out the requisite tasks with greater speed and skill, I am satisfied that the defendant removed, or attempted to remove money from his account in sufficient time to pay the plaintiff and that the plaintiff was indisposed in India by ill-health, which affected his ability to comply with the order.
29 In connection with the particulars, I do note, however, that I see no good reason why the defendant should not (if it has not already done so) take immediate steps to procure the records it requires to provide particulars of its Defence.
30 In terms of prejudice, if no relief is granted to the defendant, then the judgment will remain on foot and the defendant will have a continuing liability for damages, costs and interest of approximately $260,000. I was told during the hearing that the plaintiff has already issued a statutory demand under the Corporations Act2001 (Cth) against the defendant.
31 It appears from the defendant’s material that while the defendant’s business is profitable and, in the last year or two, a profit of approximately $100,000 has been made, it does not have the immediate resources to meet such a demand for the moneys owing to the plaintiff. Accordingly, it may well be that the defendant company might be wound up. This is a serious prejudice.
32 If relief were granted to the defendant, the plaintiff contends that it would suffer irreparable prejudice because the plaintiff is an individual of limited means and the primary carer for her husband who suffers from a serious heart condition. It was also said that the plaintiff has limited funds available to her. She is not able to work full-time because she needs attend to her husband’s needs as required. Thus, she is limited to earning $50 per hour and is often unable to work any more than four or five hours per day.
33 Given that the court has a wide discretion in deciding whether or not to relieve a party of the consequences of its non-compliance with a self-executing order, the governing consideration is the requirements of justice.[7]
[7]Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110 at [9].
34 While I do not doubt that the plaintiff is suffering from the strain of this litigation and her husband’s poor health, she would have had to deal with these matters in any event if the defendant had complied better with its obligations in connection with the litigation. The trial can still proceed on 2 May 2018, which is not too long to wait in connection with a proceeding which began only in March last year.
35 In my view, having regard to the consequences for the defendant, the explanation provided regarding its non-compliance and the relatively lesser prejudice suffered by the plaintiff, the interests of justice are best served by granting the defendant relief subject to certain conditions. As part of the grant of relief, the defendant is to pay the plaintiff’s costs thrown away in respect of the creditor’s petition, the trial assessment, and this application. In addition, the defendant is to provide $20,000 in effect as security for the plaintiff’s costs for the balance of the proceeding. It will also be necessary for the defendant to provide detailed further and better particulars by a nominated date. If the defendant fails to comply with these orders, then the default judgment will not be set aside and the proposed trial will not proceed.
Conclusion
36 In the circumstances, I make the following orders:
(1) By 4:00pm on 19 February 2018, the defendant must pay the plaintiff’s costs fixed in the sum of $25,000, comprising the costs of and incidental to the creditor’s statutory demand in the amount of $7,000, the trial assessment proceeding in the amount of $10,000, and the present application in the amount of $8,000.
(2) By 4:00pm on 19 February 2018, the defendant must give security for costs of the plaintiff up to and including the conclusion of the trial in the sum of $20,000.
(3) By 4:00pm on 19 February 2018, the defendant must provide proper further and better particulars of the defence consistent with the usual requirements of the County Court Civil Procedure Rules 2008.
(4) By 4:00pm on 16 March 2018 the defendant must file and serve an affidavit setting out:
(a) the grounds of defence to the plaintiff’s claim;
(b) all the relevant facts relied upon to make good the grounds of defence; and
(c) all the relevant documents relied upon to support the grounds of defence
and a position paper setting out the defendant’s factual and legal submissions regarding the defence against the plaintiff’s allegation.
(5) If the defendant fails to comply with any of minutes 1 to 4 above, then the judgment currently held by the plaintiff against the defendant is not set aside and remains in force against the defendant.
(6) Subject to the defendant complying with each of minutes 1 to 4,
(a) the defendant shall have relief from the self-executing orders of Judge Macnamara made on 25 October 2017.
(b) the defendant’s defence shall be reinstated.
(c) by 4:00pm on 2 March 2018, each party must make full discovery (including full inspection) of the following documents:
(i) each document referred to in the party’s pleadings or the particulars of the pleadings;
(ii) any document which may be produced by the party during the evidence at the trial;
(iii) any document which may harm the party’s case;
(iv) any document or class of documents which any other party reasonably requests the party to discovery.
(d) by 4:00pm on 6 April 2018, all parties are to file and serve all expert reports as to damages and liability upon which they intend to rely together with all supporting documentation.
(e) by 11 April 2018, each party must have issued any subpoenas under Order 42A.
(f) any application to vacate the trial date must be made to the Commercial Division Duty Judge at least 30 days before the trial date.
(g) the parties must notify the Court if the action settles.
(h) by 4:00pm on 11 April 2018 the plaintiff must serve a proposed court book index on the defendant.
(i) by 4:00pm on 18 April 2018 the defendant must respond with any requested additions to the court book.
(j) by 4:00pm on 26 April 2018, the plaintiff must file and serve an electronic PDF copy of the court book and a separate electronic PDF copy of the court book index. The plaintiff is required to have paper copies of the court book and court book index available for use by any witness and for provision to the trial judge upon request.
(k) by 4:00pm on 30 April 2018, the parties must cooperate to prepare the following documents, in consultation with trial counsel, and file them with the Court:
(i) a chronology identifying agreed and disputed facts and documents, with court book references;
(ii) a summary of the key issues in the case (including references to key authorities); and
(iii) a trial running sheet.
(l) reserve liberty to the parties to apply to the Commercial Division Duty Judge for further directions upon giving reasonable notice to all other parties.
0
2
0