Radiant Nominees Pty Ltd v Australian Crane and Machinery Pty Ltd
[2019] WADC 112
•9 AUGUST 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: RADIANT NOMINEES PTY LTD -v- AUSTRALIAN CRANE AND MACHINERY PTY LTD [2019] WADC 112
CORAM: GLANCY DCJ
HEARD: 7 DECEMBER 2018
DELIVERED : 9 AUGUST 2019
FILE NO/S: CIV 3783 of 2016
BETWEEN: RADIANT NOMINEES PTY LTD
Plaintiff
AND
AUSTRALIAN CRANE AND MACHINERY PTY LTD
Defendant
Catchwords:
Appeal from registrar's decision - Practice and procedure - Whether to set aside judgment entered as result of non‑compliance with a springing order in respect of which the judgment failed to specify three alternatively pleaded causes of action judgment had been obtained - Whether judgment irregular - Whether irregular judgment to be set aside as of right
Whether, if judgment regularly entered, it should be set aside in the court's discretion
Discretion to extend time for compliance with springing order
Appropriate costs orders
Legislation:
District Court Rules 2005
Rules of the Supreme Court 1971
Result:
Appeal dismissed
Representation:
Counsel:
| Plaintiff | : | Mr P J Hannan |
| Defendant | : | Mr J E Ferreira |
Solicitors:
| Plaintiff | : | Hale Legal |
| Defendant | : | Douglas Cheveralls Lawyers |
Case(s) referred to in decision(s):
ACN 076 676 438 Pty Ltd (In Liq) v A-Comms Teledata Pty Ltd [2000] WASC 214
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27
Bank of Credit & Commerce International (Overseas) Ltd (in liq) v Habib Bank Ltd [1998] 4 All ER 753
Brickfield Properties Ltd v Newton [1971] 3 All ER 328
Carron Investments Pty Ltd v Lang [2016] VSCA 287
Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano [2003] WASCA 20
CVW Group Holdings Pty Ltd v Addison [2011] WASC 267
CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 (S)
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Graham Barclay Oysters v Ryan (2002) 211 CLR 540
Hall v Hall [2007] WASC 198
Kertesz v Kessler [1966] VR 453
Mees v Sherwood Nominees Pty Ltd t/as Wovodich Engineering [2009] WADC 65
Miller v M (Murray) Franconi & Associates [2000] WASC 175
MTQ Holdings Pty Ltd v Lynch [2007] WASC 49
National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441
Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] 2 WLR 192
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Radiant Nominees Pty Ltd v Australian Crane and Machinery Pty Ltd [2018] WADC 87
RT Company Pty Ltd v Minister of State for the Interior [1957] HCA 39
Starrs v Retravision (WA) Ltd [2012] WASCA 67
The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64
United Australia Limited v Barclays Bank Limited [1941] AC 1
GLANCY DCJ:
Appeal
The plaintiff[1] has appealed the orders the deputy registrar made 30 August 2018 which gave effect to his reasons for decision delivered 27 July 2018.[2] In those reasons the deputy registrar found that the default judgment which had been entered on 15 August 2017 had been irregularly entered and, therefore, was to be set aside as of right.
[1] For convenience and ease of understanding I shall refer to the appellant as the plaintiff and the respondent as the defendant throughout this judgment.
[2] Radiant Nominees Pty Ltd v Australian Crane and Machinery Pty Ltd [2018] WADC 87.
Nature of the appeal
A party who is dissatisfied with a decision of a registrar may appeal to a judge.[3]
[3] District Court Rules 2005 O 15 r 1.
Appeals of this kind are to be commenced within 10 days or within such further time as the court allows.[4] There is no issue that the appeal was commenced within time.
[4] District Court Rules 2005 O 15 r 2.
An appeal to a judge from the decision of a registrar is to proceed as a hearing de novo.[5]
[5] District Court Rules 2005 O 15 r 6.
Background
The factual background which follows is not in dispute:
1.In early 2014 the plaintiff entered into a contract with the defendant to purchase an elevated work platform attached to a second hand truck (the Unit) for use in its business.
2.The purchase price was said to be $154 000.[6]
[6] Statement of claim, par 3.
3.The purchase price was paid and the Unit was delivered to the plaintiff on 11 August 2014.[7]
[7] Statement of claim, pars 7 and 8.
4.The plaintiff claims that the Unit was not fit for purpose or of merchantable quality.
5.On 13 October 2016 the plaintiff commenced an action against the defendant claiming damages for loss and damage incurred as a result of the defendant's breach of contract or breach of the Australian Consumer Law (ACL) or, alternatively negligence.[8]
[8] Endorsement of claim on writ of summons dated 13 October 2016 and statement of claim dated 10 November 2016, par 16.
6.The defendant entered an appearance on 8 November 2016 and filed a defence on 28 November 2016 in which it disputed both liability and quantum.
7.The defendant provided discovery on 24 March 2017. The plaintiff considered the discovery was inadequate. On 27 April 2017 the court made, by consent, an order requiring the defendant to file and serve an affidavit of supplementary discovery and to provide to the plaintiff's solicitors, copies of the documents identified in that affidavit by 12 May 2017.
8.The affidavit of supplementary discovery was not filed by 12 May 2017.
9.On 31 July 2017 the defendant signed a consent order which had been proposed by the plaintiff which extended the time for compliance with the order of 27 April 2017 from 12 May to 4 August 2017. It also provided that if the order was not complied with by 4 August 2017 the defence would be struck out and judgment entered for the plaintiff (the springing order).
10.On 8 August 2017, the court made the springing order by consent. By the time it did so, the date for compliance with it had passed without the affidavit of discovery and the documents identified in it having been filed and served.
11.On 15 August 2017, at the request of the plaintiff, judgment was entered for the plaintiff. The order made was as follows:
Pursuant to the order of Deputy Registrar Kubacz dated the 7 day of August 2017 whereby it was ordered that the Defendant's Defence be struck out and judgment be entered for the plaintiff with costs unless by 4 August 2017 the Defendant complied with the order to:
(a)make a list of any further documents which are or have been in its possession, custody or power relating to any matter in question in the action in the form of RSC Form 17;
(b)file and serve a copy of the document in paragraph (a) on the Plaintiff; and
(c)serve on the Plaintiff a legible photocopy (or PDF image) of each document referred to in Part 1A of the list in paragraph (a), which is not the subject of an objection as set out Part 1B of the list, the cost of provision of which is to be in the cause,
made the 27 April 2017 and default having been made, it is this day adjudged that the defendant do pay the Plaintiff damages to be assessed and costs to be taxed.
12.The parties then prepared for the assessment of damages which was listed for hearing on 27 April 2018. This included the filing of affidavits and submissions by both parties.
13.On 20 April 2018, the defendant applied to set aside the default judgment and on 27 April 2018 her Honour Judge Davis adjourned the assessment of damages so that the hearing of the application to set aside the default judgment could be resolved.
14.On 30 August 2018, orders were made by the deputy registrar setting aside the default judgment which had been entered on 15 August 2017.
Issues in the appeal
There are three issues to be determined in this appeal. They are:
(a)whether the defendant is entitled to have the default judgment set aside as of right on the basis that it was irregularly entered;
(b)if not, whether the court should exercise the discretion to set aside the default judgment and extend time for compliance with the springing order; and
(c)what costs orders are appropriate?
At the hearing of the appeal the parties submitted that I should decide the question of whether the judgment was irregularly entered first, and that only if I find that it was not, should I consider the question of whether it should be set aside in the exercise of discretion. This was said to be because a judgment irregularly entered is to be set aside as of right and because there are different costs consequences depending on the basis upon which the judgment it is set aside (if at all).
Deputy registrar's decision
Given that the appeal is a hearing de novo the court is not required to find error in the deputy registrar's decision before his orders can be set aside. Nevertheless, it is useful to understand the deputy registrar's reasons.
Irregularly entered judgment
The deputy registrar set aside the default judgment on the basis that it had been irregularly entered. This was an issue which he raised with the parties at the hearing of the application to set aside the default judgment. His concern was that the judgment may have been irregular because it did not identify in respect of which of the three pleaded alternative causes of action the plaintiff had been successful. He invited the parties to file supplementary submissions in relation to that issue.
Following consideration of those submissions, the deputy registrar found that the basis of the assessment of damages for each of the pleaded causes of action was not necessarily the same. He stated that the basis for the assessment of damages for tort and, usually, breach of the ACL are on the tortious basis, namely that a plaintiff should be compensated for its loss, whereas claims for breach of contract are compensated on the basis of the benefit which would have flowed to a plaintiff had the contract been performed according to its terms. The deputy registrar then found that although the plaintiff had failed to particularise its loss, the affidavits filed indicated that there are items such as the costs of hire of replacement equipment and repairs claimed which would not be recoverable in tort or for breach of the ACL and would only be obtainable if the damages were to be assessed on the basis of contract.[9]
[9] Radiant Nominees Pty Ltd [9].
The deputy registrar also found that the remedies sought by the plaintiff could not be categorised as cumulative. He found that the assessment of damages on a tortious basis would provide a complete remedy for the wrong pursued in the writ, as would the assessment of damages for the contract claim, and that there was no possibility of obtaining a tortious remedy for one part of the claim and a contractual remedy for another part of the claim and calling them cumulative.[10]
[10] Radiant Nominees Pty Ltd [10].
From those matters the deputy registrar concluded that without knowing from the terms of the judgment which claim the plaintiff had elected to pursue, a judicial officer would not know upon which basis to assess damages and, as a consequence, what evidence may or may not be admissible in that process and that the law required the plaintiff to elect which of the alternatives pursued in the writ is to form the basis of the assessment of damages.[11]
[11] Radiant Nominees Pty Ltd [10] ‑ [11].
In coming to that conclusion the deputy registrar relied upon the following passage from the judgment of Brennan J in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (611 ‑ 612):
When the same facts support rights to different remedies against the same defendant, the plaintiff cannot recover a judgment giving remedy in respect of more than one right…he may pursue his remedies concurrently in the same action but he is put to his election before judgment as to which remedy he shall have. And when judgment is entered, all the rights which he might have claimed in that litigation are merged in the judgment.
The deputy registrar found that his view was reinforced by the Privvy Council decision in Personal Representatives of Tang Man Sit v Capacious Investments Ltd[1996] 2 WLR 192 and particularly [19] at which the court said:
Faced with alternative and inconsistent remedies a plaintiff must choose, or elect, between them. He cannot have both. The basic principle governing when a plaintiff must make his choice is simple and clear. He is required to choose when, but not before, judgment is given in his favour ...
Exercise of discretion
The deputy registrar did not decide the application on the basis of the exercise of the discretion. Nevertheless, he made several observations on issues relevant to the exercise of the discretion.
In relation to the reasons for the defendant's failure to comply with the springing order, the deputy registrar said:
As to the failure to comply with the orders the affidavit of material simply alleges the failure of various employees of the company and others to bring to his attention the existence of the springing order and the need to comply with it. The blame for the state of affairs is cast far and wide but I would have thought that the sole director of the defendant company, engaged as that company was in litigation, should have, and would have, paid more attention to the manner in which the action was progressing and his duties and responsibilities in relation to that action.
In short I find the explanation offered by the defendant thin.[12]
[12] Radiant Nominees Pty Ltd [5].
In relation to the merits of the defence, the deputy registrar made the following observation:
As to the defence on the merits it is conceded that there were some defects which required rectification and were rectified but the defendant disputes the fact that the equipment supplied was not of merchantable quality and unfit for the purpose for which it was procured. Again, the evidence advanced is not wholly convincing.[13]
[13] Radiant Nominees Pty Ltd [6].
It is clear that the deputy registrar would have refused the application to set aside the default judgment in the exercise of his discretion.
Irregularly entered judgments – principles
The Rules of the Supreme Court 1971 (RSC) apply to proceedings in the District Court by virtue of District Court Rules 2005 (DCR) r 6.
The RSC O 2 deals with setting aside steps taken in proceedings including the entry of judgment. The RSC O 13 r 14 deals with the discretion to set aside a default judgment.
The RSC O 2 r 1(1) and O 2 r 1(2) provide as follows:
(1)where in beginning or purporting to begin any proceeding or at any stage in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.
(2)Subject to subrule (3) the Court may, on the ground that there has been such a failure as is mentioned in subrule (1), and on such terms as to costs or otherwise as it thinks just, set aside wholly or in part the proceedings in which the failure occurred, any step taken in those proceedings, or any document, judgment or orders therein or exercise its powers under these rules to allow such amendments (if any) to be made and to make such order (if any) dealing with the proceedings generally as it think fit.
The RSC O 2 r 2(1) and O 2 r 2(2) provide as follows:
(1)An application to set aside for irregularity any proceedings, any step taken in any proceedings or any document, judgment or order therein shall not be allowed unless it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.
(2)An application under this rule shall be made by summons or motion, as the case may require, and the grounds of objection must be stated in the summons or notice of motion.
The RSC O 13 r 14 provides that the court may on such terms as it thinks just set aside or vary any judgment entered in pursuance of that order. The discretion in this rule is not qualified. But it is to be exercised 'so as to do justice between the parties, having regard to the circumstances of the case': Starrs v Retravision (WA) Ltd [2012] WASCA 67 [36] (Allanson J with Pullin & Murphy JJ agreeing); Hall v Hall [2007] WASC 198 [63] (Newnes J).
As a general rule, where a judgment has been entered irregularly, i.e. without proper compliance with the court's rules, it will be set aside.[14] In such cases there is no need for a court to inquire as to whether or not there is a defence on the merits. So the question of whether a judgment has been regularly entered or irregularly entered may be significant. As the Court of Appeal explained in Starrs v Retravision:[15]
… as a general rule, a judgment regularly entered will not be set aside unless the court is satisfied that there is a defence on the merits. That rule may be departed from in 'rare but appropriate cases': Palmer v Price [1980] WAR 61, 63; Evans v Bartlam (480). A judgment irregularly entered, however, 'ought not to be on the records of the court and therefore if a judgment in default of appearance or pleading has been entered irregularly, it will be set aside ex debito justitiae: Collie v Merlaw Nominees Pty Ltd [2003] VSC 424 [37]; RT Co Pty Ltd v Minister of State for the Interior [1957] HCA 39; (1957) 98 CLR 168, 170. Not every irregularity in the means by which a judgment in default is obtained will necessarily entitle the defendants to have the judgment set aside as of right: ACN 076 676 438 Pty Ltd (In Liq) v A‑Comms Teledata Pty Ltd [2000] WASC 214 [17] ‑ [19]. In an appropriate case, the court may amend an irregularly entered judgment rather than set it aside.
[14] ACN 076 676 438 Pty Ltd (In Liq) v A-Comms Teledata Pty Ltd [2000] WASC 214 [17] (Parker J).
[15] Starrs [36] (Allanson J), [1] – [2] (Pullin & Murphy JJ).
There are many ways in which a judgment can be irregular. Essentially, a judgment to which the party is not entitled for whatever reason is irregular.[16] Clearly a judgment entered without proper compliance with the court's rules will be irregular. A default judgment entered after the defendant fails to enter an appearance but where there had not been compliance with the requirements for service of the originating process will be irregular.[17] A judgment for a sum which is more than that claimed or more than that assessed is irregular.[18] A judgment imposing a joint liability to which the claim did not extend because the claim against each defendant was expressed in the alternative is irregular.[19]
[16] Starrs [36] (Allanson J), [1] – [2] (Pullin & Murphy JJ).
[17] Carron Investments Pty Ltd v Lang [2016] VSCA 287.
[18] Starrs [44].
[19] RT Company Pty Ltd v Minister of State for the Interior [1957] HCA 39; (1957) 98 CLR 168.
The general rule in relation to irregularly entered judgments is not, however, immutable. Where the party seeking to set aside an irregular judgment has taken fresh steps in the proceedings, he will have waived the irregularity and fairness dictates that he not be permitted to later have it set aside for irregularity.[20] There may also be circumstances in which it would be open to the court to amend the judgment rather than set it aside. In ACN 076 676 438 Pty Ltd (In Liq) v A-Comms Teledata Pty Ltd his Honour Justice Parker gave examples of situations where an error in a judgment could be corrected.[21] They included first, where the precise amount for which judgment has been entered has been incorrectly stated in the judgment but was known to the court[22] and second, where the irregularity had not caused any prejudice to the defendant and had not led to the defendant changing its position in any way.[23]
[20] Rules of the Supreme Court 1971 O 2 r 2(1). Brickfield Properties Ltd v Newton [1971] 3 All ER 328, [339] - [340]; [1971] 1 WLR 862 [877] (Edmund Davies LJ).
[21] ACN 076 676 438 Pty Ltd (In Liq) [17] ‑ [19].
[22] This was the approach adopted in Bank of Credit & Commerce International (Overseas) Ltd (in liq) v Habib Bank Ltd [1998] 4 All ER 753, 757; [1999] 1 WLR 42 [46].
[23] This was the situation that arose in Clarey v Permenant Trustee Co Ltd [2005] VSCA 128.
Was the default judgment irregularly entered in this case?
It should be noted that at the hearing and in their written submissions, the parties proceeded on the basis that if the judgment was required to specify in respect of which of the three pleaded causes of action the plaintiff had been successful, the judgment would have been entered irregularly. The plaintiff did not urge upon the court the amendment of the judgment to specify a cause of action rather than its setting aside in the event that it were found to be irregularly entered.[24]
[24] Amendment of an irregular judgment is provided for in RSC O 2.
The RSC themselves do not specifically deal with entering judgment where alternative causes of action have been pleaded. Nor does Form 27, the Common Form for default judgment for the plaintiff for failure to comply with an order, indicate any need to specify the basis upon which a plaintiff's action has been successful. Indeed, the judgment entered by the deputy registrar on 15 August 2017 accords with the wording of Form 27.
The plaintiff submitted that the deputy registrar erred in regarding the passage relied upon from Port of Melbourne v Anshun Pty Ltd (611 – 612) as determinative for the following three reasons:
1.the principle did not form part of the other judgments of the members of the High Court who sat in that case and so the passage quoted is persuasive rather than binding;
2.the passage applies only to different remedies and not to the different causes of action;
3.the passage is inconsistent with the later decision of the High Court in The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 in which a plaintiff suing for breach of contract was not required to elect between damages for expectation loss and damages for reliance loss.
The plaintiff submitted that in those circumstances it was not required to make an election between damages for breach of contract, tort or misleading conduct. It was said that having had already elected the remedy sought in respect of each right (damages), even though the damages might be assessed on a different basis in each case, no election was required to be made.
In the alternative, the plaintiff submitted that if an election was required to be made, it would only be required to make an election between damages in tort, contract or misleading conduct after the evidence had been adduced at the assessment of damages hearing. In support of that submission the plaintiff relied on Tang Man Sit at (521 [F]) – (522 [C]).
It is accepted that the passage from Port of Melbourne v Anshun was not the ratio of that decision. But I do not accept the two other bases upon which the plaintiff says the deputy registrar erred (to which I have referred at [26] above). Port of Melbourne v Anshun is not the only authority in relation to the issue of election where different causes of action are pleaded.
The general rule is that where a plaintiff pleads and is successful in alternative causes of action the plaintiff must elect which cause of action it seeks to enter judgment upon. In Graham Barclay Oysters v Ryan (2002) 211 CLR 540 [591] (Gummow & Hayne JJ) expressed the position as follows:
The relationship between claims made for relief in respect of the contravention of provisions of the Trade Practices Act and common law claims, whether in negligence, deceit or otherwise, has not been examined in detail in any decision of this Court and was not the subject of detailed argument in the present matters. In those circumstances, we proceed on the assumption (which was not challenged) that a plaintiff may frame alternative claims in negligence and under the provisions of the Trade Practices Act relied on here. But it is to be recognised that claims of the kind which were made in these matters, in negligence and under the Trade Practices Act, were alternative claims, and that, if a group member succeeds in establishing the elements of both claims, that group member must elect which remedy will be taken (136). That election would have to be made no later than at the time of seeking final judgment in the action.
Footnote 136 in the passage quoted above is a reference to United Australia Limited v Barclays Bank Limited [1941] AC 1, 19. In that case the appellant company had sued the respondent bank for (i) damages in conversion, (ii) alternatively, damages for negligence, (iii) in the further alternative, money had and received. At (18) and (19) Viscount Simon, L C said the following:
[i]s now possible to combine in a single writ a claim based on tort with a claim based on assumpsit, and it follows inevitably that the making of the one claim cannot amount to an election which bars the making of the other. No doubt, if the plaintiff proved the necessary facts, he could be required to elect on which of his alternative causes of action he would take judgment, but that has nothing to do with the unfounded contention that election arises when the writ is issued. … The substance of the matter is that, on certain facts he is claiming redress either in the form of compensation, i.e. damages as for a tort, or in the form of restitution of money to which he is entitled, but which the defendant has wrongfully received. The same set of facts entitles the plaintiff to claim either form of redress. At some stage of the proceedings the plaintiff must elect which remedy he will have. There is, however, no reason of principle or convenience why that stage should be deemed to be reached until the plaintiff applied for judgment.
In that same case Lord Atkin when dealing with the issue of election said (29) and (30):
It seems to me that in this respect it is essential to bear in mind the distinction between choosing one of two alternative remedies, and choosing one of two inconsistent rights. As far as remedies were concerned, from the oldest time the only restriction was on the choice between real and personal actions. If you chose the one you could not claim on the other. Real actions have long disappeared: and, subject to the difficulty of including two causes of action in one writ which has also now disappeared, there has not been and there certainly is not now any compulsion to choose between alternative remedies. You may put them in the same writ: or you may put one in first, and then amend and add or substitute another ...
…
On the other hand, if a man is entitled to one of two inconsistent rights it is fitting that when with full knowledge, he has done an unequivocal act showing that he has chosen the one he cannot afterwards pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose. Instances are the right of a principal dealing with an agent for an undisclosed principal to choose the liability of the agent or the principal: the right of a landlord where forfeiture of a lease has been committed to extract the forfeiture or to treat the former tenant as still tenant and the like. … I think therefore that, on a question of alternative remedies no question of election arises until one or other claim has been brought to judgment. Up to that stage the plaintiff may pursue both remedies together, or pursuing one may amend and pursue the other: but he can take judgment only for the one, and his cause of action on both will then be merged in the one.
The plaintiff has contended that it was not required to elect because the remedies it sought were cumulative. In my view, the plaintiff's assertions that the remedies are cumulative and that no election was required can be answered by an examination of its pleadings.
Assuming, without deciding, that based on the same facts a plaintiff could obtain cumulative damages for breach of contract and negligence and breach of the ACL, in this particular case the plaintiff has not pleaded cumulative damages. The plaintiff has pleaded each cause of action in the alternative. No application to amend the pleadings to make the causes of action cumulative has been made. Accordingly, while the plaintiff might be able to make out each cause of action on the facts as pleaded it cannot, because of the way in which it had framed it pleadings, obtain damages in respect of each cause of action.
It follows, therefore, that I find that an election was required to be made at the time judgment was entered on 15 August 2017.
If the plaintiff did not have sufficient information to know which remedy it wished to pursue for the purposes of the assessment of damages, for example because discovery in relation to issues going to the assessment of damages had not been ordered or not been provided, then the appropriate course would have been to defer the entry of judgment and to seek an order for discovery. In this case, however, it is apparent from an examination of the submissions which were filed in readiness for the assessment of damages that the plaintiff was able to ascertain the damages it was able to claim under each of its alternative causes of action and would therefore have been in a positon to make the necessary election.
Accordingly, I find that the judgment was irregularly entered because the plaintiff failed to elect in respect of which of the alternative causes of action it wished to take judgment.
While the judgment must therefore be set aside, the justice of the case may have permitted a judgment identifying the cause of action in relation to which the plaintiff elected to take judgment to be substituted, but this issue was not argued in the appeal and the parties accepted the judgment was to be set aside if the court found it had been entered irregularly.
Exercise of discretion
In the event that I prove to be wrong about the issue of whether the judgment should have been set aside on the grounds that it was irregularly entered, I now consider the question of whether the judgment should be set aside in the exercise of the court's discretion and the time for compliance with the springing order be extended.
Principles
The RSC O 13 r 14 expressly provides that the court may set aside or vary default judgment 'on whatever terms it thinks just'. But, as I have already discussed that discretion is not unqualified and is to be exercised 'so as to do justice between the parties having regard to the circumstances of the case: Starrs [36]; Hall v Hall [63].
Where a judgment has been regularly entered, the defendants should only be denied the opportunity to proceed in the ordinary way, and after taking advantage of the usual interlocutory processes, if there is a high degree of certainty about what the outcome would be should the matter go to trial: Starrs [51].
There are, however, limits to the extent of the opportunity to be given to the defendants. They are only entitled an opportunity sufficient to ensure the just resolution of the case: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 [98], [102]. In this regard, in exercising the discretion in RSC O 13 r 10 the case management considerations set out in RSC O 1 r 4A and O 1 r 4B are relevant.
Where the judgment is regularly entered, the most cogent consideration is whether the defendants have a defence on the merits: Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano [2003] WASCA 20 [16], [53] (Templeman J); Starrs [36] (Allanson J).
Even where there has been a long delay the defendant will, if it has an apparently good defence, be given an opportunity to defend the action provided that the plaintiff has not suffered irreparable prejudice: National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441, 449 (McPherson J). In relation to the issue of what constitutes irreparable prejudice, in Crayden v Ottaviano his Honour Justice Templeman expressed the view that irreparable prejudice would only be the failure to be able to prove its case.[25]
[25] Crayden v Ottaviano [30].
In addition to the merits of the proposed defence, the following factors are relevant:
(a)the explanation given by the defendant for allowing the judgment to be entered against him or her or it;
(b)the length of the delay between the judgment being entered in the application to set aside, and the defendant's explanation for the delay; and
(c)the extent of any prejudice, in particular irreparable prejudice, the plaintiff will suffer if the judgment is set aside.
Thus, where judgment is regularly entered, the following issues usually arise for determination:
1.Has the defendant provided an adequate explanation for the judgment being entered against it?
2.Has the defendant provided an adequate explanation for the delay in commencing the application to set aside judgment?
3.What are the merits of the proposed defence?
4.Has the plaintiff suffered any irreparable prejudice?
5.Where do the interests of justice lie?
6.What final orders are appropriate?
In order for it to be appropriate to set aside default judgment, it must appear from the material before the court that the defendant's case is not inherently incredible and that if its evidence were accepted a trial that would have a real prospect of success. An application to set aside default judgment should be supported by affidavit evidence which discloses a defence on the merits and explains the failure to comply with the rules and any delay in bringing the application: Miller v M (Murray) Franconi & Associates [2000] WASC 175 [3] (Bredmeyer M).
The RSC O 3 r 5(1) provides that the court may, on such terms as it thinks just, extend the time within which a person is required to do any act in any proceedings. The application to extend time can be made after the expiration of the time within which the act was to have been done: O 3 r 5(2).
The authorities make it clear that the ambit of the RSC O 3 r 5 encompasses extending the time for compliance with a springing order even after the time for compliance with the order has expired: FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; Mees v Sherwood Nominees Pty Ltd t/as Wovodich Engineering [2009] WADC 65 [36] (Davis DCJ).
The factors to which the court will normally have regard were set out by her Honour Judge Davis in Mees v Sherwood Nominees Pty Ltd [39]. They are:
(a)the circumstances in which the springing order came to be made;
(b)the reason for non‑compliance with the springing order;
(c)the prejudice to the defaulting party if the time were not extended;
(d)the prejudice to the other party if the time were extended; and
(e)the merits of the action, there being no point in resuscitating a case that is devoid of merit.
I now turn to consider all of these factors.
Affidavit of discovery now provided
The defendant has now complied with the order made in relation to the provision of supplementary discovery.[26]
Merits of the proposed defence
[26] Defendant's submissions filed 26 October 2018 par 33(b).
The plaintiff claims that the Unit it purchased from the defendant was not fit for purpose or not of merchantable quality.
The defendant claims that the defects did not exist at the time of sale and that the defects materialised later than alleged by the plaintiff having been first identified in an inspection in June 2016.
It is specifically pleaded in the defence that before the delivery of the Unit it was inspected issued with a certificate of modification and an engineer's certificate in respect of the certificate of modification. It is further pleaded that in accordance with the one year warranty provided by the defendant for the Unit, faults with the Unit which were reported by the plaintiff were rectified.[27]
[27] Defence par 11 (b).
The defendant submits that it has a very strong case against the plaintiff's claim for damages. It says that the defects complained of in pars 9(a) and 9(b) of the statement of claim were not identified in the reports of defects found:
(i)when the Unit was returned shortly after delivery to the plaintiff in August 2014;
(ii)when the plaintiff tested it after it was repaired in December 2014;
(iii)when it was taken to Westrans Services Pty Ltd or/and Mackey's Mobile Mechanical Repairs in February and April 2015; and
(iv)when the plaintiff's technical expert inspected the Unit in December 2015.
The defendant also says that after the inspection in December 2015, the plaintiff made no further contact with it until a letter of demand was sent on 31 May 2016.
Based on the pleadings and the affidavits filed in support of the application before the deputy registrar and in this appeal, I find that there is a genuine dispute between the parties about whether the Unit was unfit for purpose or not of merchantable quality. Accordingly, I find that the defendant has established that it has an arguable case on the merits.
Explanation for the delay
The defendant had not been in breach of any order except that relating to the provision of supplementary affidavit of discovery before the springing order was made. The fact that the defendant's solicitors consented to the making of the springing order in those circumstances, makes this case an unusual one.
At the time the springing order was made and at the time judgment was entered the defendant was represented by a Melbourne law firm and the defendant's current solicitors were the local agent for that firm.
Mr Benjamin Potter, the defendant's director, deposes that the defendant's former solicitor never sought instructions to consent to the making of the springing order[28] and that he was never made aware in clear terms of its effect.[29]
[28] Affidavit of Benjamin Charles Potter filed 20 April 2018, par 33.
[29] Attachment APB-1 to the affidavit of Paul Beavon filed 23 May 2018.
It is also submitted on behalf of the defendant that, not being local solicitors, the defendant's solicitors at the time perhaps did not understand the nature and effect of a springing order.[30] In support of that submission the defendant relies upon correspondence from the solicitors to the defendant dated 21 July 2017 in which the solicitors stated:
Whilst we have previously indicated to the Plaintiff's solicitors that a suitable mediation date would be a date between 10 July 2017 and 28 July 2017 are suitable, the Plaintiff has insisted on discovery being completed prior to the mediation and to date, no mediation date has been locked in.
[30] Defendant's submissions dated 9 July 2018, par 17.
Accordingly, it is important that discovery be finalised as a matter of urgency so that the plaintiff does not have a basis upon to petition the court to strike out your defence.[31]
[31] Attachment APB-1 to affidavit of Paul Beavon filed 23 May 2017.
In my view, it is not clear from that correspondence whether the defendant's solicitors failed to appreciate the consequences of the springing order not being complied with, but it is apparent from this letter that the defendant's solicitor does not tell the defendant that the court had already made a springing order which would operate to strike out the defence and to enter judgment for the plaintiff in the event that discovery were not provided by 4 August 2017.
It is also clear from the correspondence from the defendant's solicitors dated 18 August 2017[32] that on 31 July 2017 the solicitors raised with the defendant the issue of completing the affidavit of discovery and in the course of doing so said:
We are preparing an Affidavit to be sworn by Ben …, so that same may be filed and served by Friday 4 August 2017. Accordingly we require your urgent instructions as to whether there are any additional documents that need to be included in the affidavit of discovery.
Please note that in the absence of compliance, the Plaintiff will be entitled to enter judgment. Accordingly, we must have your instructions by 2.00 pm on Tuesday 1 August 2017, to ensure that the Affidavit is prepared, executed, filed and served by Friday.
[32] Attachment BP-20 to affidavit of Benjamin Charles Potter filed 20 April 2018.
The reference to 'will be entitled to enter judgment' in that correspondence was presumably a reference to effect of the springing order.
Mr Potter, deposes that he was not made aware that the springing order had been made or that judgment had been entered for the plaintiff until he received a telephone call from his current solicitors on 13 April 2018 in relation to the damages hearing which was scheduled for 27 April 2018.[33] He attests that that there was correspondence received from his former solicitors dated 18 August 2017 and 20 December 2017 informing him that judgment had been entered for the plaintiff but he says that he did not read all of his emails and relied upon his personal assistant to bring important issues to his attention but that he did not have those emails brought to his attention. He attests that he demoted his personal assistant in August 2017 after he discovered that she had failed to bring other important correspondence, including correspondence from the Australian Taxation Office, to his attention and that her replacement, Hannah Prouse and Paul Beavon, the chief executive officer of the defendant company who had the responsibility for dealing with the litigation similarly failed to inform him of the fact that the springing order had been made or that judgment had been entered for the plaintiff.[34]
[33] Affidavit of Benjamin Charles Potter filed 210 April 2018, pars 29 ‑ 30.
[34] Affidavit of Benjamin Charles Potter filed 20 April 2018, pars 37 - 44.
Mr Potter deposes[35] that he did not swear the affidavit of supplementary discovery before 4 August 2018 because:
(a)there was a family emergency involving the hospitalisation of his son on 1 August 2017;
(b)he then had urgent work to attend to that had not been done as a result of the family emergency; and
(c)he was then out of the office on 3 and 4 August 2017 at a pre‑arranged financial workshop. He says that had he been aware of the consequences of not doing so, he would have made efforts to swear the affidavit or sought from the plaintiff an extension of time for compliance.[36]
[35] Affidavit of Benjamin Charles Potter filed 31 August 2018, pars 12 ‑ 16.
[36] Affidavit of Benjamin Charles Potter filed 31 August 2018, par 16.
In his affidavit made 19 April 2018, and filed on 20 April 2018 the defendant's current solicitor, Mr Douglas, deposes that he was provided with a draft supplementary affidavit of discovery on 11 August 2017 and formed the view that there were defects in it and that it needed to be re-sworn. He says that as a consequence he corresponded with the defendant's solicitors about that issue for the next couple of weeks. He also says that on 11 August 2017 and the weeks that followed he was unaware that a springing order had been made and says that, had he been, he would have immediately filed the affidavit in order to protect the defendant's position.
It took the defendant eight months from judgment having been entered to apply to set aside the default judgment. During that time its Melbourne solicitors had been engaged in preparing for the assessment of damages, including having provided unavailable dates for hearing.
In his affidavit of 20 April 2018, Mr Douglas deposes that in December 2017 he became aware of the springing order having been made after ascertaining from the court portal that judgment had been entered. In February 2018, after becoming aware that he had missed a court hearing, about which the defendant's then solicitors had not informed him, he provided the defendant's solicitors with information regarding the procedure available to apply to set aside the default judgment. He says that despite following up with those solicitors he heard nothing further about it from them but did receive correspondence from them regarding the programming of the hearing for the assessment of damages.[37]
[37] Affidavit of Guy James Douglas filed 20 April 2018 pars 24 - 31.
It is worthy of note that the application to set aside the default judgment was commenced on 20 April 2018; a matter of only one week after the defendant says he became aware of the judgment having been entered and very shortly after the defendant appointed it current solicitors.
The plaintiff submitted that the defendant's explanation for both the failure to comply with the springing order and the delay in applying to have the default judgment set aside are not credible and in any event, inadequate.
I am satisfied that the defendant has offered a reasonable explanation for both failures.
Has the plaintiff suffered any irreparable prejudice?
In his affidavit of 6 June 2018 the plaintiff's director, Gary Anderson deposes that the plaintiff sought promptly to deal with the litigation but that the defendant was tardy in the provision of its discovery. He states that:
(a)the strain on the plaintiff's business resulting from the litigation has been considerable and the stress will be worse if the judgment is overturned and the plaintiff has to go through the ordeal of a trial;
(b)the plaintiff has incurred considerable costs in the preparation for the assessment of damages;
(c)the plaintiff has found its profit margin reduced as it has had to hire other work platforms in order to tender for additional business; and
(d)the plaintiff acquired a new Unit based on the judgment. He says that the plaintiff is placed in a difficult financial situation as a result because it is now servicing the loans it had to take out to purchase both the Unit and the replacement Unit.
In CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 [42], his Honour Justice Le Miere explained what is and is not relevant when considering the question of prejudice in the following way:
[I]t is not the harm or damage resulting from the actions of the defendants complained of in the action, nor the stress to the plaintiff, or its directors and employees, in trying to redress such harm and damage.
I have no doubt that protracted litigation is stressful for all parties involved and that the making of the application to set aside the default judgment and the consequent vacation of the date set for the assessment of damages has prolonged the plaintiff's stress. However, even after judgment was entered, the quantum of damages remained in dispute and there would have been stress for the plaintiff until that was resolved. In any event, the stress of ligation is not the kind of prejudice to which the court is to have regard in resolving the appeal.
The assessment of damages will still need to occur regardless of the outcome of this appeal. Any legal costs thrown away in the preparation of the adjourned assessment of damages was dealt with by way of a costs order made by her Honour Judge Davis on 27 April 2018 when she ordered the defendant pay the costs of the hearing to vacate the scheduled hearing of assessment of damages and the costs thrown away by reason of the application to adjourn, to be taxed if not agreed. However, I expect that not all of the work done in preparing for the assessment will have been wasted as that issue will have to be dealt with if the matter proceeds to trial in any event. I note that I have been told that the hearing of the evidence concerning liability will extend any hearing by only a day.
It seems that the real prejudice which is said to arise is the possibility that the plaintiff will be unable to meet its loan repayments if it does not recover damages from the defendant.
Given that the parties were preparing for the assessment of damages for eight months before the application to set aside default judgment was made, it was, in my view, reasonable for the plaintiff to expect that no such application was going to be made when it purchased the replacement Unit. While the defendant's lack of timely application to set aside the judgment may have contributed to the plaintiff's decision to purchase replacement equipment, given that quantum was disputed, the cost of the new equipment may ultimately never have been recoverable and this risk cannot be said to be prejudice caused to the plaintiff by the defendant's conduct in applying to set aside the default judgment.
Similarly, the costs of having to hire replacement equipment and the lost profits are not matters to which the court can have regard in considering prejudice which may be occasioned by the plaintiff if the default judgment is set aside, although they may be matters which are relevant to the assessment of damages.
Finally, I note that there is nothing in Mr Anderson's affidavit to suggest that the plaintiff will be unable to adequately present its case in the event that the judgment is set aside and the matter proceeds to trial.
While the defendant's lack of timely application to set aside the judgment may have contributed to the plaintiff's decision to purchase replacement equipment, given that quantum was disputed, the cost of the new equipment may ultimately never have been recoverable. This risk cannot be said to be prejudice caused to the plaintiff by the defendant's conduct in applying to set aside the default judgment.
Prejudice to the defendant if discretion not exercised
If the default judgment is not set aside and the time for compliance with the springing order is not extended, the defendant would lose the opportunity to defend its action. This is clearly very significant prejudice where they appear to have a defence on the merits.
Where do the interests of justice lie?
The plaintiff submits that a breach of a springing order is an egregious breach of an order which is intended to be the last opportunity afforded to a party to put its case in order and that, where a springing order is breached, the proper administration of justice requires that the litigant bears the consequences of such failure even where the failure is due to its solicitors: MTQ Holdings Pty Ltd v Lynch [2007] WASC 49 [54].
The defendant submits that because there had been no persistent dilatory or contumelious behaviour on its part, having only failed to comply with one court order, the springing order was made in circumstances where it should not have been made. Implicit in that submission is a contention that this should be taken into account when considering whether to set aside the default judgment. I accept that submission.
The explanation for the failure to comply with the springing order that has been given by the defendant in its supporting affidavits has not been seriously challenged by the plaintiff. No one was cross‑examined on the affidavits filed by the defendant in support of the appeal. In that circumstance, I accept that the defendant was not clearly told of the fact that a springing order had been made or of the consequences of failing to comply with the springing order before it had sprung.
In this particular case the factual explanation for the delay in seeking to set aside the default judgment was also not challenged by the plaintiff and I accept that, while the defendant's solicitors prepared for the assessment of damages, the defendant itself did not rest on its rights. Instead, as soon as its director became cognizant of the fact that judgment had been entered and the consequence of that having occurred, it appointed new solicitors and instructed them to apply to have the judgment set aside.
The fact that a litigant did not contribute to the default or was unaware of the springing order is not necessarily sufficient to enable it to avoid the consequences of non-compliance. Much that goes on in litigation is left to a party's solicitors and occurs without direct involvement or knowledge of the litigant.The plaintiff rightly points out that a litigant is not necessarily excused from a solicitor's failure to comply with court orders in respect of such matters. Whether the consequences of non‑compliance should be visited upon the litigant when the fault lies with its solicitors will depend upon the particular circumstances: MTQ Holdings Pty Ltd v Lynch [52].
Bearing that in mind, in all the circumstances to which I have referred above, I am satisfied that the interests of justice favour the exercise of the court's discretion to set aside the default judgment entered on 15 August 2017.
Costs
Costs are always in the discretion of the court, having regard to the justice of the case. The usual order is that costs follow the event. However, where an irregularly entered judgment is set aside as of right the defendant is usually entitled to its costs.[38] Where the court sets aside a default judgment in the exercise of its discretion it is usually the case that the defendant will be ordered to pay the plaintiff's costs of and occasioned by the entry and setting aside of the judgment.[39] However, it is open to the court to depart from those general costs outcomes when the conduct of the party who may otherwise be awarded costs has been unreasonable or has in some way impinged upon the proper administration of the court process: CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 (S) [5].
[38] Kertesz v Kessler [1966] VR 453, 458.
[39] See RSC Common Form 26.
There is nothing in the conduct of the defendant in respect of the appeal that would justify departing from the usual order that costs follow the event. Accordingly I order that the plaintiff pay the defendant's costs of the appeal to be taxed if not agreed.
The deputy registrar made an order that there be no order as to costs in relation to the application before him. In my view there is no reason why the defendant should not be entitled to its costs before the registrar given that it was successful in its application have the judgment set aside and having regard to the usual order where a judgment is set aside for irregularity.
Orders
In the circumstances I make the following orders:
1.The orders made by the deputy registrar on 30 August 2018 be set aside.
2.The appeal be dismissed.
3.The judgment entered for the plaintiff on 15 August 2017 be set aside.
4.Time for compliance with the order made 4 August 2017 be extended to 24 May 2018.
5.The plaintiff do pay the defendant's costs of the application before the deputy registrar to be taxed if not agreed.
6.The plaintiff do pay the defendant's costs of the appeal to be taxed if not agreed.
7.The matter be adjourned to a trial listing hearing before a registrar on a date to be fixed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
CH
Associate to Judge Glancy8 AUGUST 2019