Racovalis v ResCom Mortgages Pty Ltd
[2009] VCC 1530
•7 December 2009
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-02205
| CHRIS RACOVALIS | First-named Plaintiff |
| and | |
| ELIZABETH RACOVALIS | Second-named Plaintiff |
| v | |
| RESCOM MORTGAGES PTY LTD | First-named Defendant |
| (ACN 067 431 912) | |
| MEMNON NIKOLOPOULOS | Second-named Defendant |
| and | |
| JERRY GLENIS | Third-named Defendant |
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| JUDGE: | HIS HONOUR JUDGE GINNANE |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 18 and 23 September 2009 – final written submission received 28 September 2009 |
| DATE OF JUDGMENT: | 7 December 2009 |
| CASE MAY BE CITED AS: | Racovalis & Anor v ResCom Mortgages Pty Ltd & Ors |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 1530 |
REASONS FOR JUDGMENT
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Catchwords: PRACTICE AND PROCEDURE – Default Judgment – second application to set aside – whether first judgment refusing application to set aside was a “judgment and order that was final and conclusive” – Res judicata – whether second application an abuse of process – material in support of second application – whether explanation provided for default judgment – whether defence on merits – County Court Act 1958 - s.73; County Court Civil Procedure Rules - R 21.07
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P Ehrlich | Diakou Faigen |
| For the First Defendant | Mr J Styring | Robert James Lawyers Pty Ltd |
| HIS HONOUR: |
Introduction
1 This is the second application by the first defendant, to which I will also refer as “ResCom Mortgages”, to set aside a judgment entered against it by the plaintiffs on 9 June 2009 in default of appearance. Her Honour Judge Davis dismissed the first application on 3 September 2009, ordering that:
“The first defendant’s application to set aside judgment entered on 9 June
2009 is dismissed.”
2 Twelve days later, the first defendant filed a second application to set aside the default judgment, supported by further affidavits. That second application was listed before me in the Directions List on 18 September 2009. Thereafter the matter was relisted on 23 September 2008 for further submissions. Both parties filed extensive written submissions – the last of which was received on 28 September 2009.
3 The issues to be determined are whether the first defendant is able to make a second application to set aside the default judgment and, if it can, whether it should succeed.
The Plaintiffs’ Claim
4 The proceeding was commenced on 21 May 2009. The plaintiffs’ claim against the first defendant is to recover loss and damage alleged to have been suffered as a result of providing second mortgage finance to two borrowers, in reliance on representations of employees or representatives of ResCom Mortgages about the security of the loans. The causes of action pleaded are for loss and damage suffered as a result of misleading and deceptive conduct in breach of the Trade Practices Act 1974 and the Fair Trading Act 1999 and negligent misstatement.
5 The plaintiffs allege that ResCom Mortgages provides mortgage finance to applicants for a fee. They allege that the third defendant, Jerry Glenis, is an employee or representative of ResCom Mortgages and that he recommended that they should apply a significant part of their funds by providing second mortgage finance through the first defendant to persons, who had applied to it for finance. The plaintiffs allege that they did that on two occasions, by providing finance to persons who had made application to ResCom Mortgages: first, to Mr Hogan, and second, to Mr and Mrs Kafritsas. They allege that the second defendant, Memnon Nikolopoulos, was an employee or representative of ResCom Mortgages and was involved with Mr Glenis in respect of the Hogan loan. They allege that Mr Glenis had an involvement with both loans. They allege that the sums that they advanced were $105,000 and $160,000 respectively, that those sums have not been re-paid in full and that sequestration orders have been made against the assets of the borrowers under the Bankruptcy Act 1966.
6 The Writ has yet to be served on the second and third defendants. No defences have been filed.
7 To understand the arguments that I am required to consider, three separate companies, each containing the word “ResCom” as part of its name, need to be identified. First is ResCom Mortgages Pty Ltd, which is the first defendant. Second is ResCom Commercial Finance Pty Ltd, which ResCom Mortgages says is the appropriate defendant. Third is ResCom Mortgage Corporation Pty Ltd, which was incorporated to act as mortgage originator and manager and is the only shareholder in ResCom Mortgages.
The First Application to Set Aside the Default Judgment
8 The first defendant relied on two affidavits in the application, determined by Her Honour Judge Davis: the first by Brad Matthews and the second by Erin Gardiner, both sworn on 2 September 2009. The affidavit of Mr Matthews contained five paragraphs. Mr Matthews stated that Mr Nikolopoulos and Mr Glenis were not employees or directors of ResCom Mortgages and that ResCom Mortgages at no time gave authority for them to make representations on its behalf. Mr Matthews said that ResCom Mortgages was not a correct defendant. He stated that prior to the issue of the Writ against ResCom Mortgages, he was aware that the “matter”, by which he presumably meant the dispute with the plaintiffs, had been dealt with by ResCom Commercial Finance Pty Ltd, and its insurer, and when the Writ was received it was passed on to ResCom Commercial Finance Pty Ltd to be dealt with. Therefore no further action was taken by ResCom Mortgages.
9 The second affidavit was by Erin Martin who is a lawyer employed by Minter Ellison, who were then the solicitors for ResCom Mortgages, Nikolopoulos, Glenis and ResCom Commercial Finance Pty Ltd. Ms Martin stated that she was instructed that the proceedings were issued against the incorrect entity and the correct entity was ResCom Commercial Finance Pty Ltd. ResCom Mortgages ignored the Writ and Statement of Claim because it understood that ResCom Commercial Finance Pty Ltd was handling the matter. She states that on 17 June 2009, she spoke to Jim Diakou of Diakou Faigen, who are the solicitors for the plaintiffs, and informed him that it was her clients’ position that the incorrect defendant had been named, that she was instructed to enter into correspondence with her clients’ insurer in order to resolve issues pertaining to the correct defendant and that once those issues had been resolved a proposal would be put in relation to “substation”(sic) of the correct defendant, that the first defendant would be seeking to set aside the default judgment, but to avoid unnecessary costs and having regard to the time frame prior to the hearing for the assessment of damages (originally scheduled for November 2009), she expected her clients would await the finalisation of the issues surrounding the correct defendant prior to taking that step. Ms Gardiner states that she thought and understood that she had received an undertaking from Mr Diakou that the plaintiffs would not take any steps adverse to her clients’ interests without giving reasonable notice.
10 On 31 July 2009, Ms Gardiner received a facsimile from Diakou Faigen enclosing a Court Order fixing an assessment of damages for 8 September 2009. On 3 August 2009, she sent a letter to Diakou Faigen stating that her firm was hoping to take steps to set aside the default judgment and substitute the correct name of the first defendant. On 13 August 2009, she received a letter from Diakou Faigen indicating that the plaintiffs would not consent to set aside the default judgment. On the same day she sent Diakou Faigen two letters. The first letter stated:
“We refer to previous correspondence.
We confirm that it is our clients’ position that the incorrect company has been named as a party to these proceedings.
We are instructed that the persons involved in the transaction, being Mr Nikolopoulos and Mr Glenis (also named defendants to your clients’ claim) were [at] all times acting for and on behalf of Rescom Commercial Finance Pty Ltd, and had no authority to act on behalf of or make representations on behalf of Rescom Mortgages Pty Ltd. In this regard, we also point out that they are directors of Rescom Commercial Finance Pty Ltd, and not Rescom Mortgages Pty Ltd, nor do they have any other interest in Rescom Mortgages Pty Ltd.
We understand and appreciate that correspondence in relation to the transaction was sent on letterhead bearing the name and company details of Rescom Mortgages Pty Ltd. However, we are instructed that the use of the Rescom Mortgages Pty Ltd letterhead was by way of convenience only, and on the misunderstanding that Rescom Commercial Finance Pty Ltd were to make clear on the correspondence the company on whose behalf the correspondence was being sent. This is something that may not have been done effectively.
Our clients request that your client substitute Rescom Commercial Finance Pty Ltd as the defendant company in place of Rescom Mortgages Pty Ltd. It your client is agreeable to the substitution, Rescom Commercial Finance Pty Ltd will undertake to admit that any representations that were made during the relevant events were made either by or on behalf of Rescom Commercial Finance Pty Ltd. We trust that such an undertaking will ensure that your client is not prejudiced by the substitution, and has no reason not to agree to the substitution.
Please confirm that your client will take steps to substitute Rescom
Commercial Finance Pty Ltd in place of Rescom Mortgages Pty Ltd.If you would like to discuss this matter please contact Erin Martin on the direct line below.”
11 The second letter stated:
“We refer to previous correspondence, and to our facsimile this morning.
The basis for our client seeking an order that the default judgment be set aside is as per our facsimile: namely that the company on whose behalf any representations were made was Rescom Commercial Finance Pty Ltd, and on that basis, it is not only appropriate that the name of the defendant company be substituted, but also that the default judgment against Rescom Mortgages be set aside.
Please let us know by 4pm on Friday 14 August 2009 whether your client will consent to orders to:
ƒ set aside the default judgment; ƒ substitute the name of Rescom Commercial Finance Pty Ltd in
place of Rescom Mortgages Pty Ltd.
If your client is agreeable to both courses, we expect that they could be dealt with in the same process.”
12 Ms Martin states that she received no response from Mr Diakou and was unable to contact him by telephone.
13 Her Honour Judge Davis dismissed the application on the basis that there had not been an adequate explanation for the failure to file an appearance and that she was not satisfied that there was an arguable defence that carried some degree of conviction
The Plaintiffs’ Submissions
14 The plaintiffs argue that this second application is incompetent and an abuse of process because of the dismissal of the first application on 3 September 2009. They submitted that the issues in the proceeding were res judicata. The County Court Act 1958 (“the Act”) and the County Court Civil Procedure Rules 2008 (“the Rules”) do not permit the second application. The effect of s.73 of the Act is to make the Order of 3 September 2009 final and conclusive. The only course open to the first defendant if it wished to defend the substantive proceeding, was to make a successful appeal to the Court of Appeal against the dismissal of the first application.
15 Section 73 of the Act provides:
“(1) Every judgment and order made in any action or matter, except as in this Act provided, shall be final and conclusive between the parties.”
16 The plaintiffs submitted that s.73 barred the making of the second application. They submitted that the clear unambiguous words of s.73 should be read as meaning that the words “every judgment” included every interlocutory order. . They submitted that s.73 made the Order of Her Honour Judge Davis final and conclusive.
17 The plaintiffs relied on the New South Wales Court of Appeal decision of Linprint Pty Ltd v Hexham Textiles Pty Ltd.[1] That case is of interest because the Court was required to consider provisions of the Act and Rules due to the fact that previous, similar proceedings had been brought in this Court. The Court of Appeal decided that where a plaintiff withdrew from a trial, which had occurred in the earlier County Court proceedings, and an order was made in its absence dismissing its claim, then that order was a final order which would, unless set aside or successfully appealed from, ground a later plea of res judicata or issue estoppel, if a later attempt were made to litigate the same case.
[1] (1991) 23 NSWLR 508. The plaintiffs also relied on Mango Boulevard Pty Ltd v Spencer [2008] QSA 117 at [30] to [42]
18 I do not consider that that judgment deals with the issue I have to decide. The essence of that case was identified by Kirby P in the following passage:
“The mere fact that a judgment entered for default of appearance of a party may be set aside if that party moves the court giving judgment to do so, is not a reason, in the meantime, for regarding the judgement so entered as anything but final for the purpose of the law of res judicata.”[2]
[2] (supra), at 515, 518
19 The fact that a judgment may be final for the purposes for the law of res judicata does not prevent an application being made to set it aside if the applicable Act and Rules permit such an application or, a second such application.
20 For the same reasons I do not consider that the Supreme Court decision in Aussie Vic Plant Hire Pty Ltd v County Court of Victoria[3], to which I was referred by both parties, is determinative of the issue that I have to decide. In that case, the Judge at first instance applied Linprint in concluding that s.73 of the Act operated to render a judgment conclusive between the parties, with the result that a fresh claim might be met by successful pleas of res judicata or issue estoppel and struck out as an abuse of process. An application for judicial review of the decision was dismissed.
[3] [2008] VSC 245
21 The first defendant submitted that the order refusing the application to set aside the default judgement was interlocutory and did not finally dispose of the rights of the parties and therefore did not attract the operation of s.73. Reference was made to Carr v Finance Corp of Australia Ltd (No 1)[4] and the authorities that were discussed in that decision. One of those authorities was the decision in Hewitt v Mirror Newspapers Ltd[5] where a second application to set aside a default judgement based on a proper affidavit of merits succeeded.
[4] (1981) 147 CLR 246, 256
[5] (1977) 17 ACTR 1
22 In a later written submission, the first defendant accepted that some interlocutory applications could produce a final order and therefore attract the application of s.73, but only if they decided the substantive rights of the parties. Section 73 was intended to provide certainty that judgments and orders of the court, which finally determine the substantive rights of the parties in the proceeding, are final and conclusive between the parties.[6]
[6] McKenzie v Findlay [1966] VR 3
23 The first defendant submitted that s.73 reflected the authorities that a judgment or order, be it interlocutory or final, must be obeyed unless and until it is overtaken by another judgment or order, either in the same proceeding or on appeal. It submitted that the determination of a summons under Rule 21.07 to set aside a default judgment produced an interlocutory order whether or not the sought-after relief was granted, because the substantive rights of the parties were not determined by the outcome of the application.
24 The plaintiffs argued in reply that this submission by the first defendant was at odds with the words of s.73. Section 73, particularly when read with s.74, meant that every judgment and order of the court, whether final or interlocutory, is final and conclusive between the parties, subject to the outcome of any appeal which might be brought. They submitted that reliance could be placed on Carr’s Case only where the original order was not a final order, that was determinative of the rights between the parties
History of Section 73 of the County Court Act
25 The first defendant traced the history of the legislation providing for County Courts in England and in Victoria to support a submission that the words “judgment and order” in s.73 meant a judgment and order at the trial of a proceeding.[7] It was submitted that decisions such as Rosing v Ben Shemesh[8] and D A Christie Pty Ltd v Baker[9] supported this interpretation, because if s.73 had any wider operation, it would have been of relevance to, and been referred to, in the determination of those cases.
[7] The cases to which the first defendant referred included Rosing v Ben Shemesh [1960] VR 173; Hudson v Victorian Railways Commissioners (1900) 26 VLR 269, 286-287; Brown v Lizars (1905) 2 CLR 837, 849 and Caffyn v W Howard Smith & Sons Ltd (1892) 18 VLR 245,247
[8] (supra)
[9] [1996] 2 VR 582
26 The plaintiffs submitted that s.73 dealt with both judgments and orders and that the orders made by Her Honour Judge Davis were final and conclusive between the parties. They submitted that the first defendant’s submissions ignored the wording of s.73, particularly the use of the adjective “every” and the term “proceeding”, which is defined by s.3 of the Act to mean “any matter in the Court”. Section 73(1) therefore applied to every judgement and order whether made at trial or as a result of an interlocutory application or by default. The County Court (Amendment) Act 1989 made it clear that s.73 applied to interlocutory orders, as did the use of the word “order” in other provisions of Part VI of the Act.
27 In my opinion, a judgment or order of the Court, whether interlocutory or final, is final and conclusive, in that except as provided by the Act or the Rules of the Court, such a judgment and order cannot be varied, re-opened or set aside by the Court. A judgment of the Court, whether made as result of a default or otherwise, is binding on the parties. That, however, is a separate issue from the question of whether the Court can exercise its jurisdiction on more than one occasion to entertain an application to set aside a default judgment.
28 I do not consider that the history of the Act to which I was taken leads to the result that s.73 precludes a second application to set aside a judgment entered in default of appearance.
29 In my opinion, that issue is to be determined by applying the principles of abuse of process, which I now proceed to consider.
Abuse of Process
30 The Court has power and a duty to prevent any step in a proceeding being taken that would be an abuse of process. The principles relating to abuse of process have been considered by the Court of Appeal on at least two occasions of relevance to the present issues. The first occasion was in D A Christie Pty Ltd v Baker.[10] The Court, by majority, decided that the principles of abuse of process were applicable to prevent a second application for an extension of time in which to commence proceedings under s.23A of the Limitation of Actions Act 1958. Two members of the Court, Brooking and Hayne JJ.A., considered that a second application, in itself, would be an abuse of process. Charles J.A. dissented and concluded that the judge at first instance had not erred, in allowing a second application, where new material was presented.
[10] (supra)
31 Brooking J.A. stated:
“The present case does not require us to decide whether the determination on the merits of an interlocutory application in a pending action such as a matter of practice and procedure will or may give rise to an issue estoppel. It is arguable and I refer to what Barwick C.J. said in his dissenting judgement in Hall’s case at 429- that, questions of practice and procedure being under the control and generally within the discretion of the court in which the action is brought, it is, generally speaking at all events, open to the court to exercise a wide discretion in the interest of justice in considering whether an applicant who has failed on the merits may none the less succeed on a second application.
…
If the principle of issue estoppel was inapplicable, then it was for the judge to consider whether it was an abuse or process for the respondent to apply again when he had failed on the merits and when he had vouchsafed no explanation for his omission to put forward at the time of the first application the additional material on which he now relied. If the decisions I have cited do not lead to the conclusion that an issue estoppel arose here, then in my view they at least support the conclusion that on the facts of this case the respondent, having not ‘come fully prepared with proper materials in the first instance’, and having not sought any adjournment once the gap in his case became apparent, and having offered no explanation of his failure to put forward the material which was later provided, should not be allowed to vex the appellant with a second application.”[11]
[11] (supra) at 597-598
32 Hayne JA stated:
“As Brooking JA has demonstrated in his reasons for judgement… there are many cases which have examined questions of issue estoppel or res judicata in relation to applications of widely varying kinds. Clearly, the weight of that authority favours the conclusion that a party may not succeed in a second application save in exceptional circumstances. As Brooking JA points out, some decisions have applied principles of abuse of process. In my view it is the latter principles that lead to the conclusion that this appeal should succeed.[12]
….
Nevertheless, I am of the view that the second application was properly classed as an abuse of process. The additional material which it was sought to put forward was all material which was available to Baker at the time of the first application. No explanation was proffered for why that material was not put forward at the time of the first application and for present purposes I assume that it was omitted through oversight or neglect.”[13]
[12] (supra) at 602
[13] (supra) at 604
33 Charles J.A., in dissent, stated:
“For these reasons I conclude that it is not possible for this court to adopt a rule which would preclude an unsuccessful applicant for interlocutory orders from repeating the application, on the ground of abuse of process, simply because the applicant sought to rely on additional relevant facts which did not amount to fresh evidence. Some other factor must, in my view, be present before an abuse of process is established, although, since the respondent is being faced a second time with an application for extension of time to bring proceedings, the potential for the second application to amount to a abuse of process is readily apparent.”[14]
…
It should be said that while, in my view, the making of a second interlocutory application for an extension of time upon additional relevant facts would not of itself amount to abuse of process, the making of a third or subsequent application after a second rejection would almost inevitably amount to an abuse of process.[15]
…
For the reasons I have given, I do not think that an abuse of process was constituted simply by the fact that the unsuccessful applicant made a second application supported by additional relevant facts which did not amount to fresh evidence. It has not been suggested by the appellant that any other factor caused the second application to become an abuse of process.[16]”
[14] (supra) at 611
[15] (supra) at 611
[16] (supra) at 612
34 It is important to note that the Court of Appeal did not intend to state a general rule applicable to all interlocutory applications[17]. Hayne JA stated:
“Whether the same considerations apply to interlocutory applications of the kind I have mentioned earlier – those under the control of and generally within the discretion of the court in which the action is brought –is not a matter which I have to decide. Nothing I say here should be read as deciding whether the renewal of such an application is an abuse of process.
Moreover, given the breadth of possible application of the principles of abuse of process, I do not intend in what I say to attempt some definition of the circumstances properly to be regarded as constituting an abuse of process or to say that it is only upon proof of fraud or the adducing of fresh evidence that a second application of the kind now under consideration can be said not to amount to an abuse. The hazards of attempting some general definition of such broad and discretionary principles as are encompassed in the simple expression ‘abuse of process’ are well known and need not be restated.”[18]
[17] as Mandie J, in Global Realty Development Corp v Dominion Wines Ltd (in liq) [2005] VSC 474 and Hargrave J in Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2006] VSC 170 noted.
[18] [1996] 2 VR 582, 605-606 and see Brooking J.A. at 597
35 The present application is one “under the control of and generally within the discretion of the court in which the action is brought”.
36 Mandie J, in Global Realty Development Corp v Dominion Wines Ltd (in Liq)[19] noted the particular context in which the observations in D A Christie Pty Ltd v Baker were made. After quoting the passage from the judgment of Hayne J.A. set out in paragraph 34 above, Mandie J. rejected the submission that D A Christie Pty Ltd v Baker was “direct authority” preventing a second attempt to obtain the same interlocutory relief and stated:
“No doubt the Court has a discretion to prevent what in its view is an abuse of process in all the circumstances, but the case is not authority that there is the same rule of practice in relation to all interlocutory applications. Nevertheless, a litigant making such a second application is taking serious and self- created risks of an adverse exercise of judicial discretion.”[20]
[19] [2005] VSC 478
[20] ( supra ) at [21]
37 The second Court of Appeal judgment, which considered the scope of the abuse of process principles, was Phillip Morris Ltd v Attorney-General (Vic) and Lindsey.[21] In that case, the Court dismissed an application for leave to appeal against an order granting a vexatious litigant, on his ninth attempt, leave to commence proceedings. Each member of the Court referred to the fact that D A Christie Pty Ltd v Baker dealt with applications under the Limitation of Actions Act.[22] Maxwell P. noted the distinction of relevance in that case between whether the application for leave to commence proceedings was an abuse of process and whether the proceeding that it was desired to commence was an abuse of process itself.[23]
[21] (2006) 14 VR 538
[22] Maxwell P. [61], Ormiston J.A. [120], Eames J.A. [154]
[23] (supra) at [48]-[49]
38 In contrast to the approach of Mandie J in the Global Realty Development Corp. Case and of the Court of Appeal in the Phillip Morris Case, two decisions of Judges of the Supreme Court of Victoria: Guss v Magistrates’ Court of Victoria[24] and Stragan & Co Pty Ltd v Christodolou[25] appeared to regard D A Christie Pty Ltd v Baker as establishing a principle having wider effect than in applications under s.23A of the Limitation of Actions Act and having the effect that a second application could not be made to set aside a default judgement..
[24] [1998] 2 VR 113
[25] [2002] VSC 78
39 Hargrave J. considered the authorities in Tenth Vandy Pty Ltd v NatWest Markets Australia Pty Ltd[26] and decided that a second application for reinstatement of proceedings, based on changed circumstances did not per se, constitute, an abuse of process. His Honour stated:
“As a result, it is my view that the correct approach to apply to second or subsequent interlocutory applications is that stated in Manning and Pierson that ‘the overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case’. As I have said, this statement was referred to with apparent approval by Maxwell P in Philip Morris. Further, this approach is consistent with the statement of Brooking JA in Christie quoted above in respect of interlocutory applications concerning questions of practice and procedure that:
‘… it is, generally speaking at all events, open to the court to exercise a wide discretion in the interests of justice in considering whether an applicant who has failed on the merits may none the less succeed on a second application.’”
[26] [2006] VSC 170
40 Hargrave J. considered that he was not bound to follow the decisions in Guss and Stragan.
41 In my opinion, I should follow the approach of Hargrave J and determine the question of whether there is an abuse of process by deciding whether it is in the interests of justice to permit the first defendant to make a second application to set aside the default judgement.
42 The considerations relevant to the determination of whether a second application to set aside a default judgment is an abuse of process will vary from case to case. They will usually include the effect on a party who, having been successful in opposing an application, is faced with a second application, particularly soon after the dismissal of the first; whether there was an explanation for new material being provided to the Court, the nature of the material provided to the Court and whether a fair trial can be held. The evils of permitting a second application were identified by Hayne J.A. in D A Christie Pty Ltd v Baker[27] as including the risk of conflicting decisions, the unnecessary vexing of respondents, judge-shopping and the diminution of certainty in the conduct by litigants of their affairs and unacceptable consequences to the administration of justice.
[27] (supra) at 602- 604
43 The plaintiffs submitted that they should not be vexed by subsequent applications, which might continue to be made until the applicant either produced sufficient material to warrant the setting aside of the default judgment or, tired of the task.
44 The plaintiffs are individuals who had some money to invest. It is therefore likely that the personal impact of renewed litigation will be greater on them than might be the case if the plaintiffs were a large corporation that was engaged in the business of investment.
45 However, where a defendant demonstrates, although on a second attempt, an arguable defence, a refusal to entertain a second application will mean that the substantive defence will never be determined and, in some cases a party will obtain a judgment, which would never have been obtained if the proceedings had been defended.
46 The right balance must be struck between preventing a party from defending a case, which may have arguable prospects, and protecting a party from unfairness by reason of re-litigation in the light of the principle of preserving the integrity of the administration of justice.[28]
[28] Mango Boulevard Pty Ltd v Spencer [2008] QSC 117[48] per Chesterman J. referring to State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Tort Reports 81- 423 at 64,089.
47 A party who does not put its entire case forward on a first application runs a grave risk that it will not be given a second opportunity.
48 In this case, the second application was made soon after the first. I was not asked, in effect, to sit in review of the first application, nor would I have had the power to. The substance of the first defendant’s argument before me was largely based on the new affidavits, although reliance was still placed on some aspects of the earlier affidavits. There is therefore no great risk of conflicting decisions, as that term should be properly understood, nor is there any suggestion of judge-shopping.
49 The award of costs to the plaintiffs might compensate them partially for the expenditure of time and money, but it will not compensate them for the fact that they will be faced again with the need to pursue the proceeding and prove their case.
50 It is difficult to determine whether a second application is an abuse of process without having regard to the material filed in support of the second application. Either an inflexible rule is adopted that there can be no second application or in cases where new material is filed, it needs to be examined to see if it might have any weight. This examination is for a different purpose than occurs when the Court exercises the discretion to determine whether a default judgment should be set aside.
51 If the new material is to be examined, then it is appropriate to consider why it was not previously filed and what strength it has. This question may overlap with the considerations usually taken into account in determining whether a first application to set aside a default judgment should succeed.
52 The first defendant now relies on affidavits of the second and third defendants, who swear that they did not make the representations that are alleged. That defence in the ordinary way would lead to a trial of the issue of whether representations were made, and if so, whether they were made on behalf of the first defendant. The effect of the dismissal of this second application would mean that this defence would never be determined. This consideration has to be taken into account in determining how the interests of justice are best served in this case.
53 No specific explanation has been advanced for the fact that the new affidavit material was not presented to support the first application. Bradley Matthews, in his affidavit of 16 September 2009, states:
“…
7 I have read the Erin Martin affidavit. I did not know that Erin Martin had made an affidavit until after ResCom Mortgages retained its current solicitors in this proceeding. On the grounds set out below (paragraph 34 in particular), I reject paragraph 6 of that affidavit. I do not know the source of Erin Martin’s instructions for the matters contained in that paragraph. The instructions did not come from me.
8 I have read the affidavits sworn by Glenis and by Nikolopoulos in support of the application. Apart from the particular responses of the respective deponents to the specific ‘representation’ allegations made by the plaintiffs in their Statement of Claim (about which I do not have any direct knowledge), I agree with the matters deposed to by them.
9 I do not know why Minter Ellison prepared affidavits for the first application confined to the matters and material disclosed in those affidavits. The matters and material in this affidavit and in the affidavits respectively of Glenis and Nikolopoulos were available to Minter Ellison. I did not seek to confine Minter Ellison to the matters and material in the first affidavits. Paragraph 6 of my first affidavit did not satisfactorily reveal the efforts set out below to protect the interests of ResCom Mortgages. I relied on Minter Ellison in regard to the content of my first affidavit.”
54 Mr Matthew’s reference to paragraph 6 of his first affidavit appears to be intended to be a reference to paragraph 4. His rejection of paragraph 6 of Ms Gardiner’s affidavit is a reference to the following paragraph:
“I am instructed that the First Defendant ignored the writ and statement of claim because it understood that ResCom Commercial Finance Pty Ltd was handling the matter.”
55 Mr Matthews does not state how it could be that, as sole director and secretary of ResCom Mortgages, he did not know that Ms Martin had sworn an affidavit on its behalf in support of the first application.
56 The plaintiffs submitted that this was not a case of new evidence being discovered because, as Mr Matthews stated:
“The matters and material in this affidavit and in the affidavits respectively of Glenis and by Nikolopoulos were available to Minter Ellison. I did not seek to confine Minter Ellison to the matters and material in the first affidavits.”
57 Mr Matthews goes on to say:
“Paragraph 6 (sic) of my first affidavit in particular did not satisfactorily reveal the efforts set out below to protect the interests of ResCom Mortgages. I relied on Minter Ellison in regard to the content of my first affidavit.”
58 I should record that I do not have Minter Ellison’s account of how the affidavits in support of the first application came to be prepared. Any findings on that issue which I make in these reasons are made for the purposes of this application only, in circumstances where Minter Ellison has not had the opportunity of being heard.
59 An explanation for the failure to file available evidence on the first application was also absent in D A Christie Pty Ltd v Baker, where Hayne JA stated:
“No explanation was proffered for why that material was not put forward at the time of the first application and for present purposes I assume that it was omitted through oversight or neglect.” [29]
[29] (supra) at 604
60 I make the same assumption in this case.
61 Opinions differ about the consequences for the client in an interlocutory application of the failure of lawyers to advance fully the details of their client’s case. The range of views were considered by the New South Wales Court of Appeal in Nominal Defendant v Manning.[30]
[30] (2000) 50 NSWLR 139
62 I do not consider that in the circumstances of this case, it would be an abuse of process to permit this second application to be made. My reasons for that conclusion are as follows.
63 The second application was made soon after the first. It does not seek to reargue the matter as it was argued before Her Honour Judge Davis. Rather, it seeks to rely in substantial measure on new material. There is no question of Judge-shopping. As I decide later in these reasons, the defence sought to be relied on is a prima facie arguable defence. If this second application is determined to be an abuse of process, the effect of the sworn evidence the second and third defendants, that they did not do what the plaintiffs allege they did, will never be determined by a trial.
64 I have taken into account that there is no explanation of why the new material was not filed in support of the first application, other than the reliance placed on the lawyers who previously acted. It is certainly the case, and I have taken into account that the grant of this second application means that the plaintiffs are deprived not just of the default judgment, but of the fruits of successfully defending the first application. To some extent, this factor is met by the fact that the second application was made soon after the first application was dismissed.
65 However after considering all of these matters, I do not regard the second application as an abuse of process. In my opinion it would be in the interests of justice to allow the second application to proceed and be determined and it would not be in the interests of justice to dismiss it without hearing and determining it.
66 I therefore proceed to consider whether the default judgment should be set aside by applying the usual considerations that govern the exercise of the discretion conferred by Rule 21.07.
Explanation for Default in Filing an Appearance
67 Mr Matthews swears that a copy of the Writ was provided by email on 22 May 2009 and was served by ordinary mail on 25 May 2009. He states that between 22 May and 29 May 2009, efforts were made to have the insurer respond to the claims made by the plaintiffs, in circumstances where ResCom Mortgages contended that it was the incorrect party and ResCom Commercial contended that it was the proper party to be sued. Mr Matthews swears that he was aware of the time-frame for ResCom Mortgages to file a defence, but did not know by the date by which the defence was required, nor that a notice of appearance ought to have been filed within ten days after service of the Writ. He did not know that the plaintiffs could enter judgment against ResCom Mortgages in default of filing an appearance. He did not know that the plaintiffs had entered judgment against ResCom Mortgages on 9 June 2009, and the plaintiffs gave no warning that they would do so. [31]
[31] Affidavit of Bradley James Matthews of 16 September 2009 - paragraph 35
68 Mr Matthews does not explain how he came to have knowledge of the need for filing of a defence, but not for an appearance, bearing in mind that the time for filing a defence runs from the date when an appearance is filed.
69 On 15 June 2009, Moray & Agnew, who apparently were the solicitors acting for the insurer, wrote to ResCom Commercial informing it that it was preferable for the defendants to retain their own solicitors pending an “indemnity decision”.[32] Mr Matthews states that the third defendant informed him that Minter Ellison was subsequently retained in the proceeding at the behest of ResCom Commercial and as a result of his efforts, and that it was only after Minter Ellison was retained on or about 22 June 2009, that he learned that judgment had been entered by the plaintiffs on 9 June 2009.[33]
[32] (supra) at paragraph 37
[33] (supra) at paragraphs 38-39
70 The first defendant has provided an explanation for its failure to file an appearance. It consists in asserting that time elapsed because Mr Matthews considered that ResCom Commercial should be the defendant, the adoption of an approach of waiting for the insurer to decide whether it would indemnify the defendants and a lack of understanding of the time permitted for the filing of an appearance. These matters demonstrate a lack of prudent behaviour on the part of the first defendant, but they do reveal reasons and an explanation for the failure to file an appearance.
71 The first defendant relied on the following observations of Gillard J in Linkenholt Pty Ltd v Quirk,[34] which in my opinion are applicable in this case:
“The authorities establish that the court should be informed of the reason why the defendant failed to enter an appearance. However, in the absence of any prejudice to the other side which could not be overcome, I do not see how a court could refuse an application to set aside a judgement because there has not been sufficient explanation given for failing to enter an appearance.”
[34] [2000] VSC 166, [17]
72 I will deal next to another argument relevant to this part of the case. The first defendant submitted that the default judgment should not have been entered without warning to the first defendant. Views differ about the appropriateness of warning a party before a default judgment is entered. I am not persuaded in this case that the judgment should be set aside because of fact that no warning was given.
Delay in Making the Application
73 I do not consider that delay is a significant factor telling against the first or second applications as the second application was made twelve days after the dismissal of the first. The first application was filed on 28 August 2009, when the judgment had been entered on 9 June 2009. It is not clear on what date, the first defendant, or its lawyers first became aware of the default judgement. There had been correspondence from solicitors acting on behalf of the first defendant before the proceeding was commenced, which stated that the plaintiffs’ claims were denied.[35]
[35] Letter of HWL Ebsworth of 2 July 2008, Exhibit DJD 10 to the affidavit of Dimitrios Jimmy Daikou of 17 September 2009
74 In Linkenholt Pty Ltd v Quirk, Gillard J stated:
“In my opinion a delay in bringing the application is a factor to take into account but must be accorded very little weight in the absence of prejudice which cannot be overcome and in the presence of a defence on the merits. In my view no court doing justice between the parties could deny a litigant’s right to contest a claim against him on the ground that he had delayed in bringing an application to set aside a default judgement where there was no prejudice that could not be overcome by a suitable order.”[36]
[36] [2000] VSC 166 [46]
75 This statement of Gillard J. again has relevance to this application.
76 I have considered again the prejudices to the plaintiffs from setting aside the default judgement. These are set out above in the section of these reasons dealing with abuse of process and I will not repeat them in this part of the reasons. However, I do not consider that the delay in this case is of sufficient degree to justify a refusal to set aside the default judgement.
Prima Facie Defence
77 The prima facie defence relied on by ResCom Mortgages is first, that it is not responsible for the words attributed to the plaintiffs; second, that the representations alleged were not in fact made. I will summarise the relevant parts of the three affidavits filed in support of the application and the affidavit filed on behalf of the plaintiffs in response[37] that bear on the defences that the first defendant seeks to raise.
[37] Affidavit of 16 September 2009
Affidavit of Bradley James Matthews
(a)
Mr Matthews swears that he is the sole director and secretary of ResCom Mortgages and of ResCom Insurance. He states that: “ResCom Corporation is the only shareholder in ResCom Mortgages, of which I am its sole director and shareholder”. He was a director of ResCom Commercial. Neither the second or third-named defendants have been directors of ResCom Mortgages.
(b)
ResCom Mortgage Corporation was incorporated to act as mortgage originator and mortgage manager in respect of first registered mortgages.[38]
(c)
The first defendant, ResCom Mortgages, was incorporated after ResCom Corporation, and conducts a business similar to ResCom Mortgage Corporation. Neither ResCom Mortgage Corporation nor ResCom Mortgages is involved in procuring loan funds based on second registered mortgages.[39]
(d)
There are currently more than thirty-three companies entitled to trade under the name ResCom, pursuant to a franchise, or licence agreement.[40]
(e)
On 10 July 2003, ResCom Commercial was incorporated with Messrs. Matthews, Glenis, Nikolopoulos and Batzios as directors and shareholders. Mr Matthews assisted Glenis, Nikolopoulos and Batzios, through the ResCom group of companies, in starting the ResCom Commercial business by providing offices, support staff, goodwill, referral sources and contacts by way of the ResCom brand and franchise list.[41] He did not have any involvement in the business, or day-to-day dealings, of ResCom Commercial. Batzios, Glenis and Nikolopoulos are not shareholders or directors of any other ResCom company.[42]
(f)
ResCom Commercial acts as a mortgage originator, dealing with persons seeking loan funds on the security of registered mortgages over commercial property. From time to time borrowers approach ResCom Commercial to borrow money on the security of a second mortgage or against residential property on first mortgage security. These borrowers are referred by ResCom Commercial to an appropriate residential mortgage lender, such as ResCom Mortgages.[43]
(g)
On 10 May 2007, the plaintiffs sent a demand to ResCom Mortgages and made on Batzios, Glenis and Nikolopoulos. The letter was withdrawn following an email from Nikolopoulos of ResCom Commercial and replaced by a second letter of demand addressed to ResCom Mortgages but emailed only to Batzios, Glenis and Nikolopoulos.[44]
(h)
On 4 June 2007, the plaintiffs first made a demand addressed to ResCom Mortgages, relating to the Kafritsas transaction. Ebsworth & Ebsworth, lawyers, were later appointed by the insurers of ResCom Commercial to communicate with the plaintiffs’ solicitors and to respond to the plaintiffs’ demands. ResCom Commercial, and not ResCom Mortgages, provided instructions to Ebsworth & Ebsworth. The communications are not exhibited to Mr Matthews’ affidavit but he states, in respect of them:
[38] (supra) at paragraph 16
[39] (supra) at paragraphs 17 -18
[40] (supra) at paragraph 21
[41] (supra) at paragraph 24
[42] (supra) at paragraph 25
[43] (supra) at paragraphs 26-27
[44] (supra) at paragraph 30
“I have read communications between the plaintiffs’ lawyers and Ebsworth & Ebsworth, including up to 2 July 2008. By those communications the plaintiffs’ solicitors well knew that the plaintiffs’ claims and contentions were disputed. I an unaware of any written communication between the respective firms after 2 July 2008.”[45]
[45] (supra) at paragraph 32
(i) ResCom Mortgages may be exposed to significant prejudice under its lending arrangements, if the default judgment is not set aside. Mr Matthews gives no reason why this might be the case and as a result I am unable to give that assertion any weight.
Affidavit of Jerry Glenis
(a)
Mr Glenis swears that he is a director of ResCom Commercial and that he is not and never has been an officer, shareholder, employee or representative of ResCom Mortgages.
(b)
The business of ResCom Commercial, of mortgage originator, is and was conducted independently of ResCom Mortgages.
(c)
He was involved in both the Hogan and Kafritsas transactions, acting on behalf of ResCom Commercial and not on behalf of ResCom Mortgages.
(d)
He told the plaintiffs early in his dealings with them that lending on a second mortgage was a “high risk and return” and that they ranked behind the first mortgage.
(e)
He did not participate in the Hogan conference; Nikolopoulos had conduct of it.
(f)
He denies saying the things attributed to him in paragraph 7 of the Statement of Claim. That paragraph alleges that he made representations, which had the effect that there would not be any problems with the repayment of the proposed Hogan loan by Mr Hogan. He admits that he did say at an earlier meeting, which did not involve Nikolopoulos, that the Hogan property had a valuation of $700,000, but that differs from the representation alleged.
(g)
He says that may have said during discussions with the plaintiffs that the borrower was expecting a tax refund, but he did not say that the refund “would” be used “to repay some or all of the proposed Hogan loan”.
(h)
He refers to the allegation that he made the representation pleaded in paragraph 8 of the Statement of Claim, which was that a particular property had a market value of $700,000. He does not deny that he communicated a market value of the property of $700,000 to the plaintiffs, based on a written valuation of a valuer.
(i) The Karfritsas’ representations are pleaded in paragraph 25 (b) of the Statement of Claim, in which it is alleged that Mr Glenis made various statements and representations, which amounted to a representation that there would not be any problems with the repayment of the proposed loan by Mr Kafritsas. Mr Glenis denies the representations pleaded. He admits that he said that he had a real estate agent’s appraisal of $ 750,000 for the property that was to secure the Kafritsas loan, but denies the allegation pleaded in paragraph 25(b)(i) of the Statement of Claim that he represented to the plaintiffs in words to the effect that:
“the Gordon Street property had a market value of $750,000, which would more than cover the combined amount secured against the Gordon Street property by the current first ranking mortgage and the proposed Kafritsas loan.”
(j)
Paragraph 25 (a)(i) of the Statement of Claim alleges that Mr Glenis told the plaintiffs that Mr Kafritsas owned and conducted a commercial bus line business through a company named Olympic Coaches Pty Ltd. Paragraph 26 (b)(iii) alleges that Mr Glenis made representations that the revenues of that bus line would be used to repay the proposed Kafritsas loan. He admits that he said that Olympic Coaches Pty Ltd, had a bus contract with Crown Casino for $400,000 per year, but not that it was worth $1,000,000 per annum in revenues. He admits that he did say that Mr Kafritsas had a business called “Melbourne on the Move”, but denies the representation alleged in respect of Mr Kafritsas’ ownership of that business “Melbourne on the Move”, or that he used the language pleaded in the Statement of Claim, that the revenues of that business would otherwise be used to repay the proposed Kafritsas loan.
(k)
He states that Diakou Faigen was engaged by ResCom Commercial to prepare documents for the Kafritsas’ mortgage and gave advice to ResCom Commercial about a deed of priority. All communications from Diakou Faigen about the Hogan and Kafritsas’ transactions were dealt with by him, or Mr Nikolopoulos, as officers of ResCom Commercial, including commencing proceedings against Mr Hogan following his default under the second mortgage to the plaintiffs.
(l)
During 2004 and 2007, he believes that ResCom Commercial provided instructions to Diakou Faigen on several occasions to open files for the preparation of mortgage documents in respect of which ResCom Commercial was a mortgage manager or introducer.
Affidavit of Agamemnon Nikolopoulos[46]
[46] sworn 16 September 2009
(a)
Between 10 July 2003 and 16 June 2008, he was a director of ResCom Commercial, the business of which was conducted independently of ResCom Mortgages. He has never been an officer, shareholder, employee or representative of ResCom Mortgages.[47]
(b)
ResCom Commercial acts as a mortgage originator, but if a borrower required a loan for residential purposes on first mortgage security, ResCom Commercial referred them to an appropriate residential mortgage lender such as ResCom Mortgages.[48]
(c)
He was involved in the Hogan transaction, but acted on behalf of ResCom Commercial and not ResCom Mortgages.[49]
(d)
He had the conduct of that conference or meeting relating to the Hogan loan not Mr Glenis, who did not participate in it. He denies the allegations contained in paragraphs 7 of the Statement of Claim, save that he admits that he did say that the property over which the second mortgage was to be taken had a market valuation of $700,000, which was based on a written valuation of a valuer. I have stated the effect of paragraph 7 of the Statement of Claim previously.
(e)
In respect of paragraph 8 of the Statement of Claim, he states that he did make it clear to the plaintiffs in the meeting that the borrower was expecting a taxation refund, but did not say that the refund “would” be used “to repay some or all of the proposed Hogan loan”.[50]
(f)
That an email referred to in particulars to paragraph 8 of the Statement of Claim was part of an email chain in which, on two occasions, he stated:
[47] (supra) at paragraphs 2, 5-6
[48] (supra)at paragraph 7
[49] (supra) at paragraph 7
[50] (supra) at paragraph 14
“The Manager for the [second mortgage] loan will be ResCom
Commercial Finance who will receive all Interest payment.” [51]
[51] (supra) at paragraph 20
The Plaintiffs’ Affidavit of Dimitrios Jimmy Diakou[52]
[52] Affidavit of 17 September 2009
78 Mr Diakou is the plaintiffs’ solicitor. His affidavit of 17 September 2009 was made in response to the affidavits filed on behalf of the first defendant. In his affidavit he exhibits in respect of the Hogan transaction :
(a) the following documents sent on the “letterhead” of ResCom Mortgages:
ƒ a letter of offer of second mortgage finance; ƒ a facsimile “concerning various fees payable as accepted by Mr
Hogan”;ƒ an original letter sent from Mr Nikolopoulos to the plaintiffs; and
(b)
a letter sent from Mr Nikolopoulos to Mr Hogan, and copied to the plaintiffs, advising that settlement of the loan had been effected on 16 August 2004.[53]
[53] (supra) at paragraph 4
79 In respect of the Kafritsas loan, Mr Diakou exhibits the following documents:
ƒ a letter of offer of second mortgage finance sent on the letterhead of ResCom Mortgages to Mr Kafritsas dated 11 February 2005 as signed and accepted by Mr and Mrs Kafritsas ƒ a 5-page facsimile sent by Mr Glenis to Diakou Faigen on 18 February 2005 enclosing the letter of offer and other documents.[54][54] (supra)
80 Mr Diakou states that these documents were relied on as providing a proper factual foundation for the allegations made in the Statement of Claim.[55]
[55] (supra) at paragraph 5
81 Mr Diakou also exhibited to his affidavit solicitors’ correspondence concerning the plaintiffs’ claims which are described as “solicitors’ correspondence concerning the subpoena issued by the first defendant”. This correspondence included a letter from Diakou Faigen of 9 September 2009, in which Mr Faigen states that previous solicitors had not asserted that first defendant was the incorrect defendant to sue.
82 Mr Diakou refers to his firm’s instructions to recover monies due under the Hogan loan and to relevant correspondence. The first letter in the chain is dated 15 March 2005, addressed to Mr Nikolopoulos at ResCom Mortgages, and states:
“We confirm that you have instructed our office to proceed with all necessary legal action to recoup outstanding monies owed to C& E Racovalis pursuant to a second mortgage loan agreement to Michael Robert Hogan.”
83 Mr Diakou also refers to a letter of 6 April 2005 addressed to the plaintiffs, care of Mr Memnon Nikolopoulos, ResCom Mortgages Pty Ltd, stating that “We refer to instructions received from ResCom Mortgages Pty Ltd to commence proceedings on your behalf”. He states that having searched the file, he has found no letter or file note, which indicated that Mr Nikolopoulos ever stated or denied, that those instructions were received from ResCom Mortgages Pty Ltd.[56]
[56] (supra) at paragraph 9
Consideration of Affidavits and Submissions Relating to Prima Facie Defence
84 The first matter that the first defendant raises is that the wrong defendant has been sued, in that another company in the ResCom Group, ResCom Commercial Finance Pty Ltd, was handling the dealings between the plaintiffs and Mr Hogan and Mr and Mrs Kafritsas. The affidavit material relied on before me on this point is considerably more extensive than the material that was before Her Honour Judge Davis.
85 This may appear to be a technical defence, but if it is made out on the evidence, it may provide an answer to the claims against the first defendant.
86 The plaintiffs relied particularly on the following paragraph in Ms Martin’s affidavit :
“I am instructed that the first defendant ignored the written Statement of Claim because it understood that ResCom Commercial Finance Pty Ltd was handling the matter.”[57]
[57] Affidavit of Erin Martin of 2 September 2009 - paragraph 5
87 They also relied on the following part of the letter from Minter Ellison to Diakou Faigen on 13 August 2009, the full terms of which are set out above:
“We understand and appreciate that correspondence in relation to the transaction was sent on letterhead bearing the name and company details of ResCom Mortgages Pty Ltd. However, we are instructed that the use of the ResCom Mortgages Pty Ltd letterhead was by way of convenience only, and on the understanding that ResCom Commercial Finance Pty Ltd were to make clear on the correspondence the company on whose behalf the correspondence was being sent. This is something they may not have done effectively.”
88 The plaintiffs submit that this is an admission. These comments in the Minter Ellison letter, and the matters set out below, are relied on by the plaintiffs to establish that the plaintiffs were dealing with the first defendant and not with ResCom Commercial. The additional matters are:
(i) correspondence in relation to the transaction which used the letterhead of ResCom Mortgages Pty Ltd; (ii) the letters of offer which were made on terms published on the letterhead of ResCom Mortgages Pty Ltd; (iii) the fact that establishment fees were payable to ResCom Mortgages because the offers were made on terms published on its letterhead. 89 The documents which are said to use the letterhead of the first plaintiff feature prominently in their top left corner, the name “ResCom” underneath which appears a logo and the words “Residential & Commercial”. The name of the first defendant appears in small type at the bottom left corner of the letter.
90 The plaintiffs submitted that these documents established that ResCom Mortgages was involved in procuring loan funds based on second registered mortgages.
91 In my opinion, the defence sought to be raised by the first defendant about the identity of the correct defendant is arguable. The first defendants’ affidavit evidence raises an arguable issue, based on the nature of and limits of the first defendant’s business, which if accepted make it unlikely that a Court would conclude that it was the corporation involved with the plaintiffs, or on whose behalf Mr Glenis or Mr Nikolopoulos acted. The affidavits describing the roles of Mr Glenis and Mr Nikolopoulos, if accepted, give support to an argument that they were not acting on behalf of the first defendant.
92 The weight to be given to this defence depends on an examination of the evidence relating to the dealings between the plaintiffs and the defendants and, the context in which the documents relied on by the plaintiffs were created and delivered to them.
93 The second defence argued is that the representations relied on by the plaintiffs, were either not made, or were made in a different context than the plaintiffs allege.
94 The plaintiffs submitted that this was the only new defence on the merits and was based on no more than the bare denials of representations which are contained in the Glenis and Nikolopoulos affidavits.
95 I consider that it is particularly important that there are now before the Court, and were not before Her Honour Judge Davis, affidavits from Mr Nikolopoulos and Mr Glenis denying that the representations, on which the plaintiffs’ claims are based, were made.
96 The plaintiffs criticised the form in which these denials are expressed and submitted that the first defendant should have set out all the defences on which it intended to rely, and the facts by which it sought to establish them. The form of the affidavits that will be required will vary from case to case. The following passage in Rosing v Ben Shemesh[58] is an illustration of this proposition:
“… [the defendant] has taken his oath upon the matter and has sworn that he does not owe the plaintiff one penny of the moneys claimed. Until the issue is tried, the parties and witnesses examined and cross- examined, it is impossible to say where the truth lies. It is difficult to see what more the defendant could do to establish at this stage, that there is a bona fide issue to be tried.”
[58] [1960] VR 173, 176
97 It will not always be the case, as the plaintiffs submitted, that the Court will require affidavits containing chapter and verse of the relevant events and meetings. In this case, now that there are sworn denials of much of the representations pleaded in the Statement of Claim, or a different emphasis placed on words that are admitted to have been said, there is an arguable defence that should be determined at trial.
98 The arguments of the plaintiffs about the form of the evidence relied on by the first defendant may turn out to be powerful considerations at the trial of the proceeding. However it is inappropriate that I attempt to resolve disputed questions of fact based on affidavits.[59] These are issues to be determined at trial by a Judge after a trial, at which evidence relating to the dealings between the plaintiffs and the defendants is led.
[59] Lau v Citic Australia Commodity Trading Pty Ltd [1999] VSCA 34
99 The affidavits filed on behalf of the first defendant in this application make out, in my opinion, an arguable defence that the first defendant is not the party that entered into negotiations with the plaintiffs and further, or alternatively, that the representations relied on by the plaintiffs were not in fact made.
Conclusion
100 For the foregoing reasons, I set aside the default judgment entered by the plaintiffs on 9 June 2009.
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