Racovalis v Rescom Mortgages Pty Ltd - [2010] VSCA 55

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 3903 of 2009

CHRIS RACOVALIS & ORS	Applicants
v
RESCOM MORTGAGES PTY LTD & ORS	Respondents

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JUDGES:	HARPER JA and EMERTON AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	5 March 2010
DATE OF JUDGMENT:	5 March 2010
MEDIUM NEUTRAL CITATION:	[2010] VSCA 55

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Application for leave to appeal a decision to set aside default judgment – Default judgment set aside on second application – ‘Final and conclusive’ – Abuse of process – County Court Act 1958 (Vic), s 73(1).

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr P. Ehrlich	Diakou Faigen
For the Respondents	Mr J. Styring	Robert James

HARPER JA:

EMERTON AJA:

This is an application on summons by the applicants pursuant to s 74(2D) of the County Court Act 1958 (Vic), seeking leave to appeal the decision of Judge Ginnane of 7 December 2009 in the County Court of Victoria. His Honour allowed a second application by the first respondent, Rescom Mortgages, to set aside a judgment in default of appearance entered against it by the applicants on 9 June 2009 (‘the default judgment’).

The application arises out of a proceeding commenced by the applicants on 21 May 2009 in the County Court of Victoria to recover loss and damage alleged to have been suffered as a result of the first respondent’s negligent misstatement and misleading and deceptive conduct in breach of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1999 (Vic). The applicants allege that they suffered loss and damage as a result of providing second mortgage finance through the first respondent to two borrowers. They allege that they provided the finance in reliance on representations made by employees or representatives of the first respondent (the second and third respondents) about the security of the loans.

On 9 June 2009, the applicants regularly obtained a default judgment against the first respondent in default of appearance.

On 3 September 2009, the first respondent made an application before Judge Davis to set aside the default judgment, pursuant to r 21.07 of the County Court Civil Procedure Rules 2008.

In the application before Judge Davis, the first respondent relied on two affidavits. In an affidavit sworn on 2 September 2009, a director of the first respondent deposed that the first respondent was not the correct defendant in the proceeding and that when it received the writ, it passed the writ on to the correct defendant, Rescom Commercial Finance Pty Ltd, to be dealt with. In a second affidavit sworn on 2 September 2009, Erin Martin, the solicitor for the first respondent at that time, stated that she had been instructed that proceedings had been issued against the wrong entity and that the first respondent had ignored the writ and statement of claim because it understood that Rescom Commercial Finance Pty Ltd was handling the matter.

Judge Davis dismissed the application on the basis that the first respondent had not given an adequate explanation for its failure…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] VSCA 55
Decision Date: 5 March 2010

CaseChat Overview and Summary

The matter before the court involved an application by Racovalis for leave to appeal against a decision of the County Court to set aside a default judgment. The default judgment had been entered against Racovalis by Rescom Mortgages Pty Ltd. The dispute centred around the interpretation and application of the County Court Act 1958 (Vic), specifically section 73(1), which addresses the setting aside of default judgments. The core issue before the court was whether the phrase "final and conclusive" in section 73(1) meant that once a default judgment was set aside, it could never be reinstated, or if there were circumstances where it could be set aside again on a second application.

The court considered whether the lower court had correctly exercised its discretion in setting aside the default judgment for a second time. It examined the principles of abuse of process and whether the second application to set aside the judgment was an abuse of the court's process. The court also considered the language of the statute and the context in which it was used. Ultimately, the court found that the lower court had correctly applied the relevant legal principles and exercised its discretion appropriately. The court held that the phrase "final and conclusive" did not prevent the lower court from setting aside the default judgment on a second application if it was satisfied that doing so was just and equitable in the circumstances.

As a result, the application for leave to appeal was dismissed. The court found that there were no grounds to interfere with the decision of the lower court to set aside the default judgment for the second time. The court emphasised the importance of ensuring that justice is done in individual cases and that the discretion of the lower court in setting aside default judgments should not be lightly interfered with on appeal. The final orders confirmed the dismissal of the application for leave to appeal and upheld the decision of the lower court to set aside the default judgment.

Orders