Polyline Industries Pty Ltd v Acus Water Pty Ltd
[2016] WADC 69
•30 MAY 2016
POLYLINE INDUSTRIES PTY LTD -v- ACUS WATER PTY LTD [2016] WADC 69
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 69 | |
| Case No: | CIV:3334/2015 | 6 MAY 2016 | |
| Coram: | REGISTRAR KINGSLEY | 30/05/16 | |
| PERTH | |||
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Judgment set aside | ||
| PDF Version |
| Parties: | POLYLINE INDUSTRIES PTY LTD ACUS WATER PTY LTD NIGEL TREVOR WARIN |
Catchwords: | Practice Application to set aside judgment Turns on own facts |
Legislation: | Nil |
Case References: | Starrs v Retravision (WA) Ltd [2012] WASCA 67 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ACUS WATER PTY LTD
First Defendant
NIGEL TREVOR WARIN
Second Defendant
Catchwords:
Practice - Application to set aside judgment - Turns on own facts
Legislation:
Nil
Result:
Judgment set aside
Representation:
Counsel:
Plaintiff : Mr G Lacarenza
First Defendant : Mr G Metaxas
Second Defendant : Mr G Metaxas
Solicitors:
Plaintiff : Lacarenza & Associates
First Defendant : Metaxas & Hager
Second Defendant : Metaxas & Hager
Case(s) referred to in judgment(s):
Starrs v Retravision (WA) Ltd [2012] WASCA 67
1 REGISTRAR KINGSLEY: The plaintiff by counterclaim (ACUS) entered default judgment on 8 February 2016. The defendant by counterclaim (Polyline) now seeks to set aside that judgment.
Background
2 The writ was issued in September 2015 and, by way of a directions hearing, came before a registrar in the commercial list chambers on 18 November 2015. At that hearing orders were made that the plaintiff file and serve its statement of claim by 16 December 2015, the defendant file and serve a defence and counterclaim by 13 January 2016, and the plaintiff file and serve any reply and defence to the counterclaim by 27 January 2016.
3 The orders on 18 November 2015 also provided that, on or before 10 February 2016, each party to make a list of documents verified on oath. The directions hearing was adjourned to 19 February 2016 at 9.30 am.
4 On 8 February 2016 the plaintiff's solicitors filed an application pursuant to O 8 r 7 Rules of the Supreme Court 1971 seeking orders that they have leave to withdraw from the record. The application was listed for hearing on 18 February 2016 at 9.30 am. On 18 February 2016, after hearing the solicitor for Polyline, and David Wilkie (Wilkie), a director of Polyline, the O 8 r 7 application was adjourned to 17 March 2016.
5 On 8 February 2016, ACUS, as plaintiff by counterclaim, entered default judgment in the counterclaim for liquidated damages.
6 On 19 February 2016 at the return of the directions hearing, and after hearing from a solicitor from Park Legal Solutions and the defendant's solicitor, orders were made extending the time for each party to serve a list of documents verified on oath. It does not appear from the court record that any mention was made that judgment in default of defence in the counterclaim had been entered.
7 By a chamber summons dated 17 March 2016, Polyline as the defendant in the counterclaim seeks to set aside the judgment. Wilkie swore an affidavit on 2 March 2016 in support of the application to set aside judgment.
The pleaded case
8 Polyline pleads in its statement of claim that it entered into a contract with the Department of Housing in December 2014 for Polyline to deliver a water storage tank and tower on or before 8 May 2015 to the Department of Housing.
9 In February 2015 Polyline and ACUS entered into a contract whereby ACUS would design, fabricate and deliver to Polyline a water storage tank and tower on or before 8 May 2015. It was a term of the contract that Polyline would pay $132,220 to ACUS of which $39,666 has been paid. Polyline pleads that, in breach of the contract, ACUS has failed to deliver the water tank and tower to the plaintiff on or before 8 May 2015 or at all.
10 By its defence dated 15 January 2016, ACUS admits that it entered into a contract with Polyline on or about 12 February 2015, and then gives particulars of a sequence of variations to that contract. ACUS goes on to plead that the contract was varied by a verbal agreement on 25 March 2015 such that Polyline would immediately pay a 50% deposit in the amount of $66,100 to ACUS.
11 ACUS goes on to plead that 40% of the contract price was to be paid prior to installation of the water tank and tower and the final 10% upon installation. ACUS pleads there were terms incorporated in the contract, relevantly a term pleaded at par 6.4(c) that if Polyline failed to make a payment within seven days from the date of any invoice, then all amounts owing under a purchase order became immediately payable.
12 ACUS admits it did not deliver the water tank and tower to Polyline because of Polyline's failure to pay the amount of $66,110 (including GST) and Polyline's failure to provide a hard stand and suitable concrete footings fit for purpose for the water tank and tower. ACUS goes on to plead that, in any event, the Department of Housing had previously terminated the contract with Polyline such that the water tank and tower were no longer required to be delivered to the Department of Housing.
13 By reason of the breaches, ACUS contends it has suffered loss and damage being the full contract price less the amount paid by Polyline, together with interest at 23% per annum. This is the basis of the counterclaim brought by ACUS in the sum of $112,207.84, and the quantum sought in the default judgment.
The Order 8 rule 7 Rules of the Supreme Court 1971 (WA) application
14 On 8 February 2016 Polyline's solicitors brought an application pursuant to O 8 r 7 of the Rules of the Supreme Court seeking orders that Park Legal Solutions has ceased to be the solicitors acting for Polyline. The O 8 r 7 application was listed for hearing in chambers on 18 February 2016. On 18 February 2016 at the return of the O 8 r 7 application, Wilkie appeared disputing the entitlement of the solicitors to get off the record. Wilkie was ordered to file an affidavit on or before 4 March 2016 and the O 8 r 7 application was adjourned to 17 March 2016.
15 Thus at 8 February 2016, Park Legal Solutions were still on the record as the solicitors for Polyline.
Is there a defence
16 ACUS's claim against Polyline by its statement of claim in the counterclaim proceedings suggests that the water tank and tower have not been constructed. There is no plea in the statement of claim that ACUS has done any work on the construction of the water tank or tower. Thus the claim of ACUS is for the entire contractual price, together with interest, on a purported breach of the contract.
17 The affidavit of Wilkie does not go into detail as to a defence to the counterclaim. Wilkie's affidavit goes into the circumstances leading to the dispute between Polyline and Park Legal Solutions, and his attempts to obtain his file.
18 However, the counterclaim would appear to be contrary to the usual authorities in relation to the quantification of damages on a breach of contract. It may well be on an examination of the contract between ACUS and Polyline that such a contractual obligation may arise. In my opinion, that issue does need to be tested and warrants the setting aside of judgment.
The quantum of the default judgment
19 The default judgment has been entered in the sum of $112,207. Wilkie deposes at par 21 of his affidavit that the default judgment seeks the full contract price plus an overpayment of $33,055.
20 In its submissions, ACUS states that where a default judgment has been entered for an excessive amount, the court will not ordinarily set the judgment aside where the defendant has no arguable defence to the claim. ACUS argues that where no arguable defence has been shown, the proper course would be to vary the judgment for the correct amount. Starrs v Retravision (WA) Ltd [2012] WASCA 67 [48] is authority for the proposition that the correct approach is to consider whether there is a defence on the merits. If there is no defence on the merits it would be futile to set aside a judgment. Thus the judgment should be varied by substituting the correct amount.
21 Having regard to the purported contractual claim of ACUS I find that there is an arguable defence. I am not prepared to vary the judgment. This is not to say that I find the judgment has been entered irregularly, such that it should be set aside ex debitae justicae.
The entry of judgment
22 On 22 January 2016, Park Legal Solutions wrote to Wilkie enclosing accounts totalling $20,586.09 and advising that they will not undertake any further work on his matters until outstanding accounts are paid and $15,000 is paid into a trust account. All this was to be done on or before 1 February 2016 otherwise Park Legal Solutions would bring an application pursuant to O 8 r 7.
23 On 4 February 2016, Park Legal Solutions wrote to ACUS's solicitor, advising that they had terminated their retainer with Polyline Industries, that they would be filing an O 8r 7 summons on Monday, 8 February 2016. Park Legal Solutions requested ACUS's solicitors to delay making any application for default judgment for a reasonable period of time considering the circumstances. On 5 February 2016 the solicitors for ACUS advised Park Legal Solutions that unless a reply and defence to counterclaim was filed by 12 noon, Monday, 8 February 2016, ACUS will enter default judgment without further notice.
24 On 5 February 2016, Wilkie, sought to collect Polyline's files from Park Legal Solutions to enable him to instruct another solicitor (which request was declined by Park Legal Solutions). Wilkie noted the correspondence from ACUS's solicitors that they intended to file a default judgment made it much more urgent the files be made available. By this time it appears Wilkie, on behalf of Polyline, had consulted a new solicitor, G Lacerenza, as the reply from Park Legal Solutions dated 8 February 2016 was copied to Lacerenza.
25 Certainly on 8 February 2016, Park Legal Solutions were, at law, the solicitors on the record for Polyline. Noting that the dispute between Park Legal Solutions and Polyline was over a matter of fees, it may well have been cost effective for Park Legal Solutions, and legally effective for Polyline, for Park Legal Solutions to file what is euphemistically called a holding defence to ACUS's counterclaim. This would have protected Polyline's interests at least short term whilst either the issue of fees were resolved, or Lacerenza was able to obtain sufficient instructions to enable an amended defence to the counterclaim to be filed.
26 Having regard to the fact that on the day Polyline's solicitors filed their application pursuant to O 8 r 7 of the Rules of the Supreme Court (which was not granted but adjourned to a later date), that the default judgment was entered on that day, and that Polyline through its director Wilkie, had apparently sought to instruct a fresh solicitor prior to 8 February 2016 in my opinion there is a greater prejudice to Polyline in allowing the judgment to stand.
Conclusion
27 For these reasons the default judgment entered 8 February 2016 is set aside. I will hear counsel on the issue of costs and on the future conduct of the action as a whole.
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