Scott v Baring
[2019] WASC 278
•6 AUGUST 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SCOTT -v- BARING [2019] WASC 278
CORAM: MASTER SANDERSON
HEARD: 18 JULY 2019
DELIVERED : 6 AUGUST 2019
FILE NO/S: CIV 2157 of 2018
BETWEEN: BARBARA ANN SCOTT
Plaintiff
AND
DEAN PATRICK BARING
First Defendant
TESTMATING PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Application to set aside default judgments on basis of regular and irregular judgment - Principles - Effect of decision not to participate in litigation
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: A
Representation:
Counsel:
| Plaintiff | : | Mr M C Goldblatt |
| First Defendant | : | Mr J Maclaurin |
| Second Defendant | : | Mr J Maclaurin |
Solicitors:
| Plaintiff | : | Lavan |
| First Defendant | : | Hopgood Ganim |
| Second Defendant | : | Hopgood Ganim |
Case(s) referred to in decision(s):
Clayton v Aust (1993) 9 WAR 364
Cochrane v Mr Juicy Fruit Juices Pty Ltd (1981) 37 ACTR 44
Crayden v Ottaviano [2003] WASCA 20
Haigh v Haigh (1885) 31 Ch.D. 478
Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230
Schnabel v Lui [2002] NSWSC 15
Starrs v Retravision (WA) Ltd [2012] WASCA 67
MASTER SANDERSON:
This is the defendants' application to set aside two default judgments. The first judgment is dated 13 September 2018 and was entered in default of appearance. The second default judgment was entered 22 November 2018. That was after an assessment of damages which I undertook. An assessment of damages is a default judgment under the provisions of O 13 r 3(2)(b) of the Rules of the Supreme Court 1971 (WA) (the Rules). (During the course of this hearing I put it to counsel that the assessment of damages was not in fact a default judgment, rather a judgment obtained ex parte. That issue is put to rest by the provisions of the Rules).
Procedural history
The writ of summons was filed on 5 July 2018. It had an indorsement of claim. Under O 6 r 3(b) of the Rules a statement of claim cannot be indorsed on a writ in a defamation action. The endorsement read as follows:
1The plaintiff's claim arises in respect of:
1.1defamatory matter published of and concerning the plaintiff by the defendants on or about 24 February 2018 by posting it on the first defendant and the second defendant's, alternatively, the second defendant's, Facebook page @harnessbred, and the post of the defamatory matter being downloaded and read by persons accessing the Facebook page @harnessbred, from on or about 24 February 2018, which defamatory matter was also promoted, advertised and made available for download via a link to the @harnessbred Facebook page on the second defendant and the first defendant's, alternatively, the second defendant's, website at (Defamatory Matter);
1.2acts of republication of the Defamatory Matter, or the defamatory gist or sense and substance of the Defamatory Matter, by readers of the Defamatory Matter by 'liking' the Defamatory Matter (Facebook Likes) or in posting comments (Facebook Comments), in response to the Defamatory Matter on the @harnessbred Facebook page from on or about 24 February 2018, which Facebook Likes and Facebook Comments were, in turn, downloaded and read by persons accessing the Facebook page @harnessbred, from on or about 24 February 2018, such republication being the natural and probable consequence of the defendants publishing the Defamatory Matter, alternatively, the defendants knew or ought to have known or intended that the Defamatory Matter, or the defamatory gist or sense and substance thereof, would be republished by the Facebook Likes and the Facebook Comments, further or alternatively, such republication being authorised by the defendants;
1.3acts of publication of additional defamatory matter of and concerning the plaintiff made by third parties posting such defamatory matter on the Facebook page @harnessbred and on Sam Smith's Facebook page from on or about 24 February 2018 (Third Party Comments) in reaction to the Defamatory Matter, and the Third Party Comments being downloaded and read by persons accessing the Facebook page @harnessbred and Sam Smith's Facebook page, from on or about 24 February 2018, by 'liking' the Third Party Comments or posting their own comments, which Third Party Comments were the natural and probable consequence of the defendants publishing the Defamatory Matter, alternatively, the defendants knew, or ought to have known, or intended that the Defamatory Matter would induce publication of Third Party Comments, further alternatively, the defendants knew, or should have known, that there was a significant risk of defamatory observations about the plaintiff, in the form of the Third Party Comments, being posted by third parties on the Facebook page @harnessbred and on other Facebook pages in the guise of comments on the Defamatory Matter, further alternatively, the defendants authorised the publication thereof; and
1.4alternatively to sub-paragraph 1.3 above, acts of publication of the Third Party Comments in reaction to the Defamatory Matter, in circumstances where both of the defendants knew that the Facebook page @harnessbred contained defamatory matter posted by third parties and downloaded and read by others 'liking' the Third Party Comments or posting their own comments and they did nothing to stop or remove the Third Party Comments, although both of them could have done so, alternatively, in circumstances where the inflammatory nature of the Defamatory Matter expressly or implicitly invited defamatory comment by others and both of them allowed the Third Party Comments to remain on the Facebook page @harnessbred and thereby encouraged, endorsed and published the Third Party Comments.
2In respect thereof and arising therefrom, the Plaintiff claims:
2.1damages;
2.2aggravated damages;
2.3interest on such damages and aggravated damages at the rate of 6% per annum from such date or dates that such damages occurred until the date of judgment or payment pursuant to section 32 of the Supreme Court Act 1935 (WA) (as amended);
2.4costs; and
2.5such further or other relief as this Honourable Court considers just.
The writ was served on the second defendant on 9 July 2018. This was done by leaving a copy of the writ at the offices of a firm of accountants located in Southport, Queensland.[1] No issue was taken by the second defendant about the validity of the service of the writ. Nor was it anywhere suggested the writ did not come to the attention of the sole director of the second defendant who is the first defendant.
[1] Affidavit of service of Ross Williams filed 26 July 2018.
On 10 August 2018 the plaintiff applied for an order for substituted service in relation to the first defendant. The application was supported by an affidavit of Jasmine Ashleigh Sims[2] and a further affidavit of Mr Williams.[3] At par 2 of his affidavit Mr Williams sets out the attempts he made to serve the first defendant at his residence at B11 2 Rivage Royale, 75 Brighton Parade, Southport in Queensland. Between 6 July 2018 and 29 July 2018 he made five attempts to serve the first defendant. On each occasion he activated the intercom system but there was no response. Mr Williams made further attempts to track down the first defendant but he was unsuccessful. While Mr Williams was attempting to serve the first defendant, the plaintiff's solicitors took steps to bring the writ to his attention. This involved the use of the social media service Facebook. Paragraphs 19 and 20 of Ms Sims' affidavit read as follows:[4]
I am instructed by Mr Stephen Pocock, of information technology at Lavan, (Mr Pocock) which I verily believe to be true, that, on 27 July 2018 at 1.04 pm, he sent a Facebook message to a Facebook account called Dean Baring, which he believed to be operated by the first defendant attaching the Writ. I am instructed by Mr Pocock, which I verily believe to be true, that the source of his belief that the first defendant operates that Facebook account is the fact that the account uses the first defendant's full name and the profile picture is of a horse, indicating the operator of the Facebook account is in the same industry as the first and second defendants. Attached hereto and marked 'JAS‑9' is a true copy of that Facebook message and its attachment.
I am instructed by Mr Pocock, which I verily believe to be true, that, on 27 July 2018 at 1.05 pm, he sent a Facebook message to a Facebook account called Dean Bred, which he believed to be operated by the first defendant, attaching the Writ. I am instructed by Mr Pocock, which I verily believe to be true, that the source of his belief that the first defendant operates that Facebook account is the fact that the account uses the first defendant's first name, the profile picture is a very similar picture of a horse to the picture used in the Facebook account referred to at paragraph 19 above, the second name used in the Facebook account name is 'bred', which is also incorporated into the second defendant's business name. Attached hereto and marked 'JAS‑10' is a true copy of that Facebook message and its attachment.
[2] Affidavit of Jasmine Ashleigh Sims filed 10 August 2018.
[3] Affidavit of attempted service of Ross Williams filed 30 August 2018.
[4] Affidavit of Jasmine Ashleigh Sims filed 10 August 2018.
On 30 August 2018 Kenneth Martin J made an order for substituted service. That order was in the following terms:
1.Personal service of a copy of the writ of summons, dated 5 July 2018, in this action, duly sealed with the seal of the Court, (Writ) on the first defendant be dispensed with.
2.A copy of this order be served on the first defendant by:
(i)sending an envelope containing the order by prepaid ordinary post to B11, 2 Rivage Royale, 75 Brighton Parade, Southport, Queensland 4215; and
(ii)sending the order by email to the first defendant at [email protected] and [email protected].
3.The first defendant shall have 10 days after posting of the order, alternatively, after service of the order by email, whichever is the later, within which to enter an appearance.
4.Costs of the substituted service application are reserved.
No appearance was entered by either of the defendants. The default judgment application filed 12 September 2018 was supported by a further affidavit of Ms Sims.[5] She confirms substituted service had been effected in compliance with his Honour's orders. There is no suggestion that the writ did not come to the attention of the first defendant.
[5] Affidavit of Jasmine Ashleigh Sims filed 12 September 2018.
On 13 September 2018 I entered judgment against both defendants. The judgment was in the following terms:
UPON APPLICATION of the plaintiff by request for default judgment filed 12 September 2018 IT IS ORDERED that:
1.No appearance having been entered to the writ of summons by the defendants herein, it is this day adjudged that the defendants do pay to the plaintiff the sum of damages to be assessed.
2.Personal service of a copy of this judgment on the first defendant be dispensed with.
3.A copy of this judgment be served on the first defendant by:
(a)sending an envelope containing the judgment by prepaid ordinary post to B11, 2 Rivage Royale, 75 Brighton Parade, Southport, Queensland 4215; and
b.sending a copy of this judgment by email to the first defendant at [email protected] and [email protected].
4.The plaintiff's costs of this application to be paid by the defendants.
ASSESSMENT OF DAMAGES
5.By 4.00PM Wednesday 26 September 2018 the plaintiff is to file and serve any affidavits in support of the assessment of damages.
6.By 4.00PM Wednesday 26 September 2018 the plaintiff is to file and serve an outline of submissions and a list of authorities.
7.The Master to determine the assessment of damages on the papers.
BY THE COURT
MASTER C SANDERSON
Service upon the defendants of the order for default judgment was effected by post and email on 14 September 2018.[6] (My associate emailed the order for default judgment to the defendants on 13 September 2018 at 4.42 pm).
[6] Affidavit of Jasmine Ashleigh Sims filed 10 October 2019 at pars 5 ‑ 7.
On 28 September 2018 I made orders extending the time for compliance with orders 5 and 6 of the orders of 13 September 2018 to 10 October 2018. By orders 5 and 6 the plaintiff's solicitors were to serve copies of the affidavits in support of the assessment of damages on the defendants. It is common ground this was not done. Why it was not done is of no relevance. But it is important in the context of this application to note the plaintiff failed to comply with orders 5 and 6 of the orders I made on 13 September 2018 and amended on 28 September 2019.
Assessment of damages
It then fell to me to assess damages under O 34 r 18 of the Rules.
On 10 October 2018 an affidavit of the plaintiff was lodged, which was the founding affidavit for the assessment of damages,[7] along with an affidavit of Ms Sims[8] and an outline of written submissions in support.
[7] Affidavit of Barbara Ann Scott filed 10 October 2018.
[8] Affidavit of Jasmine Ashleigh Sims filed 10 October 2018.
On 22 November 2018, having assessed the damages, I made the following orders:
1.Judgment be entered for the plaintiff against the first defendant in the amount of $100,000.
2.Judgment be entered for the plaintiff against the second defendant in the amount of $40,000.
3.Interest to be awarded on the judgments in the amount of 6% per annum from 13 September 2018 to the date of payment.
4.The plaintiff's costs of the assessment to be paid by the defendants.
Application to set aside the default judgments
On 10 May 2019 the defendants applied to set aside the default judgments. In the summons the following orders were sought:
1.The First Defendant and the Second Defendant (together the Defendants) be granted leave to enter a late appearance in this action pursuant to Order 12 Rule 5 of the Rules of the Supreme Court 1971 (WA) (Rules).
2.The entry of judgment against the Defendants in default of appearance to the writ in this action on 13 September 2018 as to liability, and on 22 November 2018 as to the assessment of damages (Judgment) be set aside for irregularity pursuant to Order 2 Rule 2.
3.Further on in the alternative, the entry of the Judgment be set aside pursuant to Order 13 Rule 14 of the Rules.
4.The Plaintiff pay the Defendants' costs of and incidental to this application.
5.Such further orders as the Court deems appropriate.
The summons was supported by an affidavit of the first defendant. It is necessary to consider this affidavit in some detail.
Affidavit of Dean Patrick Baring filed 10 May 2019
At par 5 of the affidavit, the first defendant says the Facebook post about the plaintiff was made by 'Harnessbred'. He then says 'Harnessbred' is a domain name, is the name of a Facebook page, is not a company, does not trade and has never traded, does not hold any bank accounts and was established for the Australian Harness Racing Industry to share news, reports, articles, podcasts, race results and other information without charge. By par 6 he says Harnessbred is administered by a person resident in Macedonia. This individual, according to the first defendant, is responsible for administering the website and uploading and removing posts from the Facebook page. Paragraphs 8, 9 and 10 of the affidavit give further details about the way in which Harnessbred is administered.
The first defendant admits he requested the offshore administrator to make the Facebook post of which the plaintiff complains. The first defendant says shortly after authorising the post he travelled to Western Australia and did not monitor the Facebook page nor the comments made by third party Facebook users.[9] The first defendant says that at no time did he take any steps 'to cause, induce, promote or encourage' third parties to 'like', 'share' or otherwise republish the Facebook post.[10]
[9] Paragraphs 11 and 12.
[10] Paragraph 16.
The first defendant says that on or about 26 February 2018 he received from the plaintiff's then solicitors a 'Concerns Notice'. A copy of that concerns notice appears as attachment 'DPB‑1' to the first defendant's affidavit. The Concerns Notice was in the following terms:
Dear Sir
Ms Barbara Scott
Concerns Notice under Part 3 of the Defamation Act 2005
We are the solicitors for Ms Barbara Scott, the Chief Steward Harness of Racing & Wagering Western Australia.
You may accept this letter as a Concerns Notice under Part 3 of the Defamation Act 2005 (NSW).
We refer to:
1.the Facebook page at and
2.the website at which links to the Facebook page, and which is apparently hosted by bluehosting.com.
In particular, we note:
1.the post by you at 8.50 am on 24 February 2018 stating:
'Its been reported Ms Barbara Scott the Chief Steward of Harness Racing WA will be packing her bags and leaving her position after a very embarrassing recording has been leaked. Barbara in the view of many, has let the sport down. Its time for harness racing and Barbara to part ways'; and
2.the comments you have permitted to remain in relation to your post, for which you as controller are responsible.
Your defamatory post
It goes without saying that your post, published in all Australian States and internationally, is highly defamatory of our client and conveys imputations including that our client:
1.has behaved in a manner unbecoming of her position;
2.has behaved in a manner warranting termination of her employment;
3.is under investigation for misconduct;
4.has had her employment terminated;
5.is incompetent.
These allegations are utterly false and have been made with the express purpose of causing the maximum reputational harm to our client.
We are instructed that you are completely unqualified to express any of the opinions you purport to express, have no knowledge of our client's employment relationship, and provide no objective evidence from anyone independent who is so qualified or her employer.
Comments permitted to remain by you
Many of the comments you have permitted to remain on the page are defamatory, insulting, bullying and vindictive.
As you control the page, you are also responsible for the publishing of these matters, which will be raised in any court proceedings.
Lack of qualified privilege
The video at states that you 'will stay away from anything defamatory'. You are therefore clearly aware of the issues in relation to publication of defamatory statements.
Any suggestion that your defamatory publications would enjoy the protection of qualified privilege is risible as we are instructed that you have clearly made these false allegations out of personal spite and malice towards our client.
Our client will rely on the following facts and matters to establish that you are not a concerned member of the public:
1.You are not qualified to make the statements in your post;
2.You do not and cannot know anything in relation to our client's employment.
Opportunity to remedy
It seems inevitable given the very serious allegations you have made, that litigation against you will shortly commence, but in an attempt to mitigate the lasting damage already caused our client makes an open offer to you that she will not commence proceedings if you:
1.Remove the post and all comments upon receipt of this letter, and in any event, no later than 17:00 AEDT on 26 February;
2.Post a new post as follows:
On 24 February 2018 I made a post on this page in relation to Ms Barbara Scott, I completely and unreservedly withdraw the statements I made in that post, and acknowledge that there was no basis for the post. I apologise to Ms Scott.
We wait your immediate response, which if not forthcoming will result in proceedings being commenced against you without further notice. Our client will also take action in relation to your web site linking to the Facebook page.
Furthermore, our client requests payment of her reasonable legal costs in dealing with this matter paid to date which will at this stage not exceed $1,000 plus GST.
By par 19 of his affidavit, the first defendant says that shortly after receiving the first concerns notice he instructed his offshore agent to remove the Facebook post. It is not entirely clear when that was done but, the first defendant states his belief it was done within 24 hours of his receiving the first Concerns Notice.[11] On 27 February 2018 he received a further Concerns Notice. This notice appears as attachment 'DPB‑2'. It is in the following terms:
Dear Sir
Ms Barbara Scott
Concerns Notice under Part 3 of the Defamation Act 2005
We refer to our letter to you of 26 February 2018, and note that the relevant Facebook post has been removed.
However, it appears that the request apology has not been posted, and our client requires you to post the apology by 22.00 AEDT today. This post will bring an end to the matter and avoid the need for District Court action.
We trust this matter can be finalised today.
[11] Paragraph 22.
The first defendant sets out the reasons why he did not issue an apology as requested in the concerns notices. Essentially he says, at the time the allegations were true or substantially true. By implication at least he suggests he had a good defence to any claim for defamation.[12]
[12] Paragraph 23.
The first defendant says that, after the second Concerns Notice, the plaintiff's present solicitors wrote to him on a number of occasions and that he received 'large volumes of correspondence'. He does not attach to his affidavit copies of that correspondence nor does he give any indication as to what was contained in the correspondence.[13] Attached to the plaintiff's affidavit filed 10 October 2018 is a copy of a letter from the plaintiff's then solicitors to the first defendant dated 2 March 2018.[14] That letter does nothing more than refer the first defendant to a press release from Harness Racing WA that supported the plaintiff. There is nothing which suggests any correspondence was sent by the plaintiff's present solicitors to the first defendant. I will have more to say on this issue later in these reasons.
[13] Paragraphs 24 and 25.
[14] Affidavit of Barbara Ann Scott filed 10 October 2018, Attachment 'BAS-13'.
Between August 2018 and December 2018 the first defendant says that he was under considerable pressure, both financial and emotional, because his computer crashed and a project on which he was working was compromised. He says as a result of the pressure he was under his mental health suffered.[15] As I understand it, these paragraphs are intended to explain why the first defendant took no action in relation to the plaintiff's claim between August and December 2018.
[15] Paragraphs 27 to 33.
By par 34 of his affidavit, the first defendant says that he became aware of the judgment against him in December 2018 when a media report came to his attention. On 7 December 2018 he says he instructed solicitors. The first defendant was served with a statutory demand on 24 January 2019. He thereafter took steps to have the statutory demand set aside. Between 1 March 2019 and 13 March 2019, the first defendant's then solicitors attempted to obtain copies of the documents supporting the assessment of damages. After some toing and froing, copies of the documents were supplied on 13 March 2019.
At this point, the first defendant was instructing Eastern States solicitors. He then determined it would be more appropriate to instruct Western Australian solicitors. This was done. Those solicitors then advised instructing counsel. That was done in early April. Due to other commitments, counsel was not able to give the matter his full attention until late April 2019. The first defendant's affidavit was subsequently drafted and the application to set aside the default judgments was issued on 10 May 2019.
Grounds to set aside a default judgment
There was a time when there were two separate and distinct grounds upon which a default judgment could be set aside. If the judgment was irregular in the sense there was a mistake of one kind or another in the process that led to a judgment, then the judgment would be set aside without any consideration of the merits and, generally speaking, the party entering the judgment would be ordered to pay costs. On the other hand, there were regular judgments – those not tainted by any error of process. If those judgments were to be set aside then a party needed to establish an arguable defence. Other matters might be taken into account such as the length of the delay, the reasons for the delay and so on. But the prime consideration was whether or not the party against whom judgment was entered had an arguable defence.
The Rules do not explicitly refer to this dichotomy. It seems it grew up as a matter of practice. But after the decision of the Court of Appeal in Starrs v Retravision (WA) Ltd [2012] WASCA 67 the distinction is at best problematic. Starrs concerned a case where judgment was entered for an amount that was more than the appellant actually owed the respondent. Allanson J, with whom other members of the court agreed, held that the judgment was irregular: See [44]. However, that was not the end of the matter. His Honour said:
In my opinion, the correct approach to this appeal is to first consider whether the appellants may have a defence on the merits. Unless the appellants have a defence, they would be vulnerable to an application for summary judgment. It would be futile to set aside the judgment rather than vary it by substituting the amount now owing after the receipt of distributions from the receivers. That would be an important factor in the exercise of the court's discretion. The fact that the respondent did not earlier apply to vary the judgment is a factor to be taken into account in relation to the exercise of the discretion, and also in relation to the costs of the appeal [48].
His Honour then went on to consider the merits of the proposed defence. His Honour concluded the defence advanced by the appellants, and indeed any defence they might raise on the facts was bound to fail. On that basis he concluded it was pointless to set aside the judgment and justice could be effected by varying the amount of the judgment. In other words, it was not in every case that an irregular judgment would be set aside.
The position is different with a regular judgment. Civil Procedure puts the position this way (at par 13.14.4):
Disclosure of a defence on the merits Where the judgment is regularly entered, the 'most cogent' consideration is whether the defendants have a defence on the merits: Crayden v Ottaviano [2003] WASCA 20; BC200300540 at [16], [53] (Templeman J, Murray J and Rolfe AJ agreeing); Starrs v Retravision (WA) Ltd [2012] WASCA 67; BC201201614 at [36] per Allanson J, with Pullin and Murphy JJA agreeing.
It is proper to consider the merits of any proposed defence, because defendants should only be denied the opportunity to proceed in the ordinary way, and after taking advantage of the usual interlocutory process, if there is a high degree of certainty about what the outcome would be, should the matter go to trial: Stars v Retravision (WA) Ltd, above at [51] per Allanson J, with Pullin JA and Purchy JA agreeing; Agar v Hyde (2000) 201 CLR 552; 173 ALR 665; [2000] HCA 41; BC200004311 at [57] (Gaudron, McHugh, Gummow and Hayne JJ); Batistatos v Road and Traffic Authority of New South Wales; Batistatos v Newcastle City Council (2006) 226 CLR 256; 227 ALR 425; [2006] HCA 27; BC200604226 at [46] per Gleeson CJ, Gummow, Hayne and Creenan JJ.
The learned authors also deal with the relevance of delay in bringing an application. They say at par 13.14.5:
Delay in bringing the applicationThe delay in bringing an application to set aside is one of the factors that will be taken into consideration in the exercise of the court's discretion: see Say v Fitzpatrick (WA Supreme Court Full Court, 14 September 1987, Burt CJ, Kennedy and Rowland JJ, unreported); Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382; BC201408998 at [11] per Gething AM. The defendant should, to the extent possible, provide an explanation of any delay in bringing the application to set aside.
That said, a defendant who has an apparently good ground of defence is unlikely to be refused the opportunity of defending (even though a lengthy interval of time had elapsed), provided that no irreparable prejudice is done to the plaintiff: Crayden v Ottaviano [2003] WASCA 20; BC200300540 at [16]-[18] (Templeman J, Murray J and Rofle JA agreeing); Fusia Ltd v Neoside Pty Ltd [2005] WASC 228; BC200509246 at [69]‑[74] per Newnes M. In this regard, the extent of the delay is not of itself a basis to refuse to set aside default judgment; rather, it is the prejudice to the plaintiff resulting from the delay which is material: Say v Fitzpatrick (WA Supreme Court Full Court, 14 September 1987, Burt CJ, Kennedy and Rowland JJ, unreported); C and M Partnership v Van Der Kuyl [2000] WADC 123; BC200040112 at [35] per Reynolds Cmr.
The same principle has been applied in other jurisdictions. By way of example, in England the Supreme Court Practice (1991) (vol 1) (the White Book) at 13/9/14 put the position this way:
The discretionary power to set aside a default judgment which has been entered regularly is unconditional, and the court should not lay down rigid rules which deprive it of jurisdiction. The purpose of the discretionary power is to avoid the injustice which may be caused if judgment follows automatically on default. The primary consideration in exercising the discretion is whether the defendant has merits to which the court should paid heed, not as a rule of law but as a matter of common sense, since there is no point in setting aside a judgment if the defendant has no defence, and because, if the defendant can show merits, the court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. Also, as a matter of common sense, the court will take into account the explanation of the defendant as to how the default occurred.
Submissions
At this point it is appropriate if I say that I am satisfied the defendants have, prima facie, a defence on the merits. The plaintiff's position is set out in pars 5 through to 9 of their submissions.[16] These paragraphs read as follows:
[16] Plaintiff's written submissions filed 12 July 2019.
5On 12 September 2018, Lavan sent to the defendants copies of the plaintiff's entry for judgment in default of appearance, the Sims' 12 September 2018 Affidavit, in support of the entry for judgment, and the affidavit of the process server under cover of a letter to the associate of Kenneth Martin J, in which, inter alia, an appropriate timetable for the plaintiff to file material in support of the assessment of damages was indicated, and also a request that damages be assessed on the papers; Affidavit of Sims, sworn on 9 July 2019, (Sims' 9 July 2019 Affidavit) JAS‑21, pp.15-56. There was no response or objection by the defendants to the course proposed by the plaintiff for the assessment of damages.
6On 13 September 2018, Master Sanderson ordered that, no appearance having been entered by the defendants to the Writ, it was adjudged that the defendants do pay to the plaintiff the sum of damages to be assessed. Master Sanderson further ordered that a copy of the judgment be served on the first defendant and made directions as to the filing and service of any affidavits and an outline of submissions by the plaintiff in support of the assessment of damages and that the assessment of damages be determined on the papers.
7On 14 September 2018, copies of the orders of Master Sanderson, made on 13 September 2018, and the Writ were served on the first and second defendants, under cover of a letter in which it was stated that:
7.1judgment had been entered against them in default of appearance to the writ;
7.2the Court would then proceed to an assessment of the plaintiff's damages, as noted in the enclosed orders; and
7.3they should contact Sims or Nick Stagg at Lavan if they wished to discuss the matter; Affidavit of Sims, sworn 10 October 2018, (Sims' 10 October 2018 Affidavit) pp.5-35.
The enclosed orders directed that the Master would determine the assessment of damages on the papers. The defendants did not respond to these documents.
8On 10 and 11 October 2018, respectively, the plaintiff filed affidavits and her outline of submissions in support of the assessment of damages. Due to an oversight, those documents were not served on the defendants.
9On 22 November 2018, judgment was entered for the plaintiff against the first and second defendants in the amounts of $100,000 and $40,000 respectively; Scott v Baring [2018] WASC 361.
The plaintiff asserted both in written and oral submissions there was no defence to the claim and for that reason the judgment ought to stand. With respect, that submission cannot be accepted. As I have indicated, the authorities require that the defendant establish it has a prima facie case on the merits; or put another way, there is a serious question to be tried. Really, the test is the same as the test for summary judgment. If, in this case, the plaintiff had applied for summary judgment (leaving to one side for the moment the fact no statement of claim was filed) there is no prospect a judgment would have been entered against the defendants. So the starting point for what follows is to acknowledge the defendant has an arguable defence and, on the state of the authorities, that is a strong reason why judgment ought be set aside.
In his oral submissions, counsel for the defendants seemed to advance the proposition that the stronger the defence the greater the reason to set aside a default judgment. Counsel was unable to provide any authority for that proposition. As a general rule, when dealing with interlocutory matters, it is inappropriate to attempt to make any assessment of the relative strength of a party's case. For instance, under O 14 of the Rules, when a summary judgment application is brought and the technical requirements of the order are satisfied, it is for the defendant to establish they have a prima facie case on the merits. The evidence may disclose that it is a strong case or a weak case but that is not to the point. What must be established is the defendant's position is arguable. Much the same is true of an application to set aside a statutory demand. The applicant must establish there is a serious question to be tried. The relative strength or weakness of the applicant's position is not a proper consideration.
Case law
Although no case was cited in argument which supported the proposition put by counsel for the defendant, it is instructive to look at the decision of the Full Court in Clayton v Aust (1993) 9 WAR 364. That case concerned an application for an extension of time to bring a claim under the Inheritance (Family and Dependent's Provision) Act 1972 (WA). One of the criteria for granting the extension of time was that the applicant had an arguable case. At first instance the Master concluded the applicant's case was 'weak on the merits or barely arguable'. Malcolm CJ (with whom Rowland and Franklyn JJ agreed) determined all that an applicant needed to establish was an arguable case. His Honour concluded:
In my opinion the learned Master should have held the applicant had made out an arguable case. That is not to say it was a case which had to be categorised as strong or weak. It was enough that it was arguable [370].
Of course Clayton v Aust was dealing with a completely different situation. But it is consistent with the way in which a requirement to establish an arguable case is treated in interlocutory proceedings. It really is a black and white situation. Either the case is arguable or it is not. If it is, that is the end of the matter and it goes in one party's favour. If it is not, it goes the other way. No assessment of the strength of the case is either warranted or appropriate.
The main argument put by the plaintiff in this case was that the delay in bringing this application was unreasonable and as a consequence the plaintiff would suffer prejudice if the judgments were now set aside. While that is undoubtedly a relevant consideration, what seems to me important in this case is that the defendants intentionally and wilfully decided not to appear and defend the claim. Referring again to the same edition of the White Book mentioned above, at par 13/9/11 the learned authors say:
Where a defendant has with full knowledge of the result refused to obey an order for production, and has wilfully allowed judgment to go in default, the court will not interfere.
The case cited in support of that proposition is Haigh v Haigh (1885) 31 Ch.D. 478. The headnote to the case puts the position this way:
The Defendant to an action disobeyed an order to produce documents for inspection; her defence was struck out and judgment given against her in default of a defence. There was evidence that her solicitor had explained to her the effect of the order for production and the consequences of disobeying it. The Court refused to set aside the judgment on any terms.
The decision is by a single judge Pearson J at first instance. His Honour introduced his judgment in this way:
I have no hesitation in saying that I have the strongest disinclination, as I believe every other Judge has, that any case should be decided otherwise than upon its merits. But this order was introduced to prevent plaintiffs and defendants from delaying causes by their negligence or wilfulness. So great was my anxiety to relieve this lady from the consequence of her wrong headedness if, by any possibility, I could on proper terms, that I hesitated to refuse to make the order asked for, and I have looked into all the cases I could find on the subject to see what the practice of the Court has been on this order. And I can find no case in the books where it has been applied, where a man knowingly and wilfully has allowed judgment to go by default.
His Honour then refers to three cases all of which support his proposition. He concludes:
It seems to me that there is no case which has gone to shew that this rule can be acted upon where the party who seeks to put it in force has, with full knowledge and wilfully, allowed judgment to go by default.
This approach appears to find some support in the Full Court decision of Crayden v Ottaviano [2003] WASCA 20. The relevant facts were as follows:
2The appellant is the executor of the late Sandra Irene Farnworth, ('the plaintiff') who claimed to have been injured at the respondent's restaurant in Northbridge, on 2 January 1994, when she slipped and fell.
3The plaintiff brought an action against the respondents in the District Court, by a writ indorsed with a claim:
for damages for personal injuries … which injuries were caused by the negligence of the (respondents) and/or through the (respondents') breach of their duties under the Occupiers Liability Act 1985 as amended.
4Although the accident happened in 1994, the action was not commenced until July 1999. The writ was served on 30 October 1999.
5On 14 December 1999, the plaintiff entered judgment against the respondents, in default of appearance. It is not disputed that the judgment was obtained regularly, due notice having been given to the respondents.
6On 25 January 2000, the plaintiff died, from causes unrelated to her alleged injury, and before her damages had been assessed.
7On 18 January 2002, the default judgment was set aside by a District Court Judge, allowing an appeal from a Registrar, who had declined to make such an order.
8The appellant now appeals against the order of the learned District Court Judge. The respondent, by Notice of Contention, contends that the Judge's decision should be affirmed on additional grounds.
One of the grounds of appeal was that the judge erred in law in setting aside the default judgment where there was no satisfactory explanation for the respondent's conduct in allowing judgment to be entered against them. His Honour did not accept that proposition. He said:
39In my view, the District Court Judge was entirely justified in his view that the respondents, personally, did all they could to bring the matter to the attention of their insurers.
40Although the Judge did not refer to the evidence in his judgment, his Honour said to the extent that his reasons were insufficient 'they are apparent from my line of questions to counsel in any event'. In the course of argument, the Judge asked a number of questions of the respondents' counsel about the respondents' failure to enter an appearance. From the answers to those questions, and from the evidence, it emerged that the probable explanation was that the respondents informed their insurance broker about the writ. He asked the respondents to send it to him, which they did. The broker then notified the insurers. But they had closed the file, there having been no proceedings commenced for a considerable period after the plaintiff's letter of demand. It seems that the insurers then lost or mislaid the files.
41In my view, although it is legitimate to criticise the insurers for their slack procedures, the insurers' conduct does provide a satisfactory explanation for the respondents' failure to enter an appearance to the writ.
42The case is similar in some respects to Attwood v Chichester (supra) there, the defendant was a married woman who had signed a cheque and a bill of exchange at the request of her husband. The defendant was sued upon those documents and was served with the writ. The defendant handed the writ to her husband, who promised to attend to it. He did not do so and judgment was entered against the defendant in default of appearance.
43Cotton LJ said (1878) 3 QB D at p 725:
I should have thought that if the defendant had lain by intentionally, she could not be now allowed to appear; but the neglect to defend must be attributed to her husband, and she cannot be considered to have been guilty of such laches as to disentitle her to relief …
44Similarly, at p 722, Brett LJ said:
… I draw the inference that when [the defendant] handed the writ to her husband, she did not understand its meaning, and that she did not know the consequences of suffering judgment by default.
45It may be said here, that the respondents, who are conducting a business, might reasonably be expected to have a better understanding of the consequences of failing to act on a writ than a married woman would have had in 1878. Indeed, counsel for the appellant drew attention to the fact that the writ contains a warning against the consequences of failure to enter an appearance. So it does, in terms which are familiar to lawyers:
"WE COMMAND YOU, that within TEN (10) days after the service of the writ on you, exclusive of the day of such service, you cause an appearance to be entered for you in our District Court in an Action at the suit of the above named Plaintiff; and take notice that in default of your so doing the Plaintiff may proceed therein and judgement may be given in your absence."
I accept that the command to enter an appearance is clear. However, the consequences of defaulting in that obligation are, in my view, not nearly as clear as they might be. What is a lay person to understand from the words "the plaintiff may proceed therein"? In my view, it is by no means clear that the plaintiff may proceed without any further notice to the defendant. To tell a defendant that "judgement may be given in your absence" suggests that there may well be some proceedings to which the defendant will be invited: and that only then, in the defendant's absence, is there a risk of judgment being given against him or her.
46The writ does not say words to the effect that if an appearance is not entered, the plaintiff may obtain a judgment against the defendant without any further notice.
47But even if the warning was clear (or if the present respondents in fact understood the warning) it seems to me that they acted reasonably, in all the circumstances, by sending the relevant documents to their insurer.
The decision in Haigh v Haigh is not mentioned in the red book and appears never to have been the subject of discussion in cases in this jurisdiction. It has been mentioned in other jurisdictions on three occasions: see Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Schnabel v Lui [2002] NSWSC 15 and Cochrane v Mr Juicy Fruit Juices Pty Ltd (1981) 37 ACTR 44. In the latter two cases the principle was stated and approved.
Failure to engage in litigation
Against that background it must be determined whether or not these default judgments ought be set aside. In favour of setting aside the judgments is the fact the defendants have a prima facie defence. Great weight must be attached to that finding. And it weighs heavily in the balance in favour of setting the judgments aside.
Against that is the fact the defendants wilfully neglected to engage in the process of litigation. Two Concern Notices were sent to the defendants – neither drew a response. From the date of the first Concern Notice the defendants were aware the plaintiff believed she had been defamed. There can be no doubt about that – nothing to the contrary is suggested in the first defendant's affidavit. Moreover, the first defendant was concerned enough to instruct his agent to take down the Facebook post. He was well aware the failure to apologise could lead to proceedings being issued. If he was in any doubt after the first Concern Notice he could have been in no doubt after the second Concern Notice.
The writ was then served on the second defendant. It must have come to the attention of the first defendant soon after it was served. Once the writ was in the hands of the first defendant, in his capacity as the director of the second defendant, he was aware he was a party to the action. Despite the plaintiff's solicitors' efforts to serve the first defendant an order for substituted service was required. This was despite the fact the plaintiff's solicitors had used email and social media in an attempt to contact the first defendant and arrange for service. The evidence does not go to the point where it could be said the first defendant evaded service. But there is no doubt he did nothing to cooperate with the plaintiff in circumstances where he knew a writ had been issued and where he must have known he would be forced to engage with the process.
Once both defendants were served there was simply a wilful default in engaging with the process. The first defendant made no contact with the plaintiff's solicitors. Even accepting he was under some pressure, both with respect to his business activities and personally, there was nothing to stop him contacting solicitors and engaging them to act on behalf of the defendants. He did that soon enough when a statutory demand was issued. The conclusion must be that he wilfully failed to engage in the litigation process.
It is also worthy of note that the explanation the first defendant offers for not engaging in the process is limp and unsatisfactory. He says in his affidavit he was overwhelmed by correspondence from the plaintiff's solicitors.[17] During the course of his submissions, counsel for the plaintiff maintained that statement was an untruth. That submission was not made lightly. In the interlocutory proceedings where there is no cross‑examination of a deponent to an affidavit, accusations of dishonesty should only be made in the clearest of cases. Counsel for the defendants made that point in his submission in reply. This is one of those cases where the submission was justified. There is no evidentiary basis for the first defendant's claim. That is relevant in determining whether or not there was a wilful neglect in this case and re‑enforces the conclusion that there was.
[17] Affidavit of Dean Patrick Baring filed 10 May 2019 at pars 24 – 26.
The wilful nature of the defendants' failure to engage in the litigation process weighs very much against the defendants and in favour of the plaintiff.
Question of delay
There is, then, the question of the delay in actually bringing the application. There is no doubt it could have been brought sooner. The first defendant says he became aware of the result of the assessment of damages in December 2018.[18] In fact he became aware of the judgment in default of appearance not long after 14 September 2018. So really the delay was between mid to late September 2018 and May 2019 – some eight and a half months. Even allowing for the assessment of damages as the starting point (the order being made 22 November 2018) there was a delay of something over five months. With respect, there is no real explanation for that delay.
[18] Affidavit of Dean Patrick Baring filed 10 May 2019 at par 34.
This issue of delay, as the authorities note, really feeds into the question of whether or not the plaintiff has suffered prejudice. The complaint the plaintiff has is that she was defamed in her profession. She has every right to expect her complaints will be dealt with quickly so as not to disadvantage her professionally. There is nothing in the evidence to suggest the defendants' delay in bringing the application to set aside the default judgments has caused her specific prejudice. But there is also no doubt that she suffers the general prejudice which always comes with delay.
The delay in bringing this application weighs in the balance in favour of refusing to set aside the default judgments. However, it is a factor of little weight in the context of the application.
Conclusion
On balance, I am not satisfied that the default judgments in this matter ought be set aside. What I see as determinative is the wilful default on the part of the defendants to engage in the process. No‑one can compel a defendant to actually appear to a claim and defend it. That is a choice any defendant has to make. What every citizen is entitled to is the opportunity to put their case. But if they decide not to engage in the process and not put their case, having been in possession of all relevant facts, then it is simply unreasonable, when they find the result not to their liking, to back track and seek to undo all that has been done. Put simply, the defendants here must bear the consequences of their decision not to participate in the litigation process.
On that basis I would dismiss the defendants' application to set aside default judgment.
All of the above is predicated on the basis the judgment is regular. The defendants, by par 2 of their chamber summons, maintain the judgment is irregular. They do so on the basis the affidavits in support of the assessment of damages and the submissions were not served as was required by the order. In my view, that is an irregularity. The question is whether that irregularity is one which, consistent with the reasoning in Starrs can be seen as sufficient to warrant the judgment being set aside.
In determining this question it is important to focus on what the Starrs decision actually decided. As I have indicated above in times past there was a rigid demarcation between the principles applicable to regular and irregular judgments. The effect of the Starrs decision is to make the touchstone of the discretion the interests of justice. That phrase 'the interests of justice' is not used by Allanson J in his decision. But really that is the consequence of his Honour's reasoning. The question his Honour proposed was this: 'Does an irregularity in the judgment mean that in any situation even when a defendant does not have a good defence on the merits the judgment will be set aside?'. In this case the question might be posed in this way: Was the failure to serve the affidavit in support of the assessment of damages and the submissions of such consequence that it makes the judgment entered unsafe? The answer to that question must be 'No'. The defendants had been served with the writ and the judgment and the orders that I made allowing for assessment of damages. Those orders required the plaintiff to serve any affidavit and submissions on the defendants. The date by which service was to be effected was specified. If the defendants had been engaged in the process, when the date for service of the affidavit and submissions came and went they could surely have contacted the plaintiff's solicitors and asked for copies of the relevant documents. Rather, they took no action. Moreover, there is nothing in the first defendant's affidavit which suggests had he been served with the documents he would have adopted any different approach to the complete indifference he had displayed up to that time. In other words, there is nothing in the evidence to suggest service of the documents would have changed his position.
In making that point about there being no evidence the first defendant would have changed his position had he have been served with the documents I am conscious that when dealing with applications to set aside a judgment on the basis it is irregular, it is generally not necessary to show the irregularity caused prejudice. The fact of the irregularity is itself sufficient. That statement of principle cannot, I think, stand with the position in Starrs. As I have said, it is a question of looking holistically at the position of the defendants. When that is done, it is clear the irregularity here is not such as to warrant the default judgment being set aside.
There is one final matter which arose during the submissions and which, as I understand it, was said to be an irregularity. Judgment in this matter was entered under O13 r 3(1)(a) of the Rules. That rule allows for default judgment where a writ is indorsed with a claim for unliquidated damages. That is this case. It was the defendants' contention that the failure on the part of the plaintiff to file a statement of claim before the assessment of damages was an irregularity because there was no factual basis upon which the assessment could be made. With respect, I am not satisfied that is the case. As I have indicated, O 13 r 3 allows for default judgment where there is an indorsement of claim on the writ. Order 13 r 9 deals with claims 'to which none of rules 2 to 6 apply'. In those cases prior to the entry of judgment a statement of claim must be filed: see O 13 r 9(2)(a). The way in which the rules work together suggests there is no irregularity in assessing damages without a statement of claim. In fact it is open to question whether once default judgment is entered a statement of claim can be filed.
Lest I misrepresent the position of counsel in this matter, it may be that his submission about the absence of a statement of claim was tied in with the merits of the defence. He made the point that without a statement of claim it may not possible to determine whether or not imputations alleged could actually succeed. If that was the scope of the submission then it really only goes to the question of whether or not the defendants have an arguable defence. Having concluded they have I really need say nothing more about the absence of a statement of claim.
For these reasons the defendants' application will be dismissed. The defendants should pay the costs of this application including the reserved costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson5 AUGUST 2019
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