Smith v Budandan Enterprises

Case [2002] NSWCA 322

Reported Decision:

 (2002) 55 NSWLR 367

New South Wales


Court of Appeal

CITATION: Smith v Budandan Enterprises [2002] NSWCA 322
FILE NUMBER(S): CA 40821/01
HEARING DATE(S): 3 June 2002
JUDGMENT DATE:
23 September 2002

PARTIES :
Phillip Gordon Smith (Claimant/Appellant)
Bundandan Enterprises Pty Ltd (Opponent/Respondent)
Daniel Herchenroder (Opponent/Respondent)
Dianne Herchendroder (Opponent/Respondent)
JUDGMENT OF: Mason P at 1; Beazley JA at 2; Campbell AJA at 3
LOWER COURT JURISDICTION : District Court
LOWER COURT
FILE NUMBER(S) : 		60/98
LOWER COURT
JUDICIAL OFFICER :		 Sidis DCJ
COUNSEL: D C Warren (Claimant/Appellant)
J Priestley (Opponent/Respondent)
SOLICITORS: Brian C M Bigelow (Claimant/Appellant)
Hertzberg Heydon (Opponent/Respondent)
CATCHWORDS: cessation of payments under consultancy agreement - statement of confession - whether judgment entered irregularly - judicial discretion
LEGISLATION CITED: District Court Act 1973 (NSW), s 159
District Court Rules, Pt 14 r 2, Pt 31 r 16, Pt 31A r 2, Pt 31 r 12A, Pt 14 r 1
CASES CITED:
 Johnson v Dukes (1983) NSWR 730
Roach v B & W Steel Pty Ltd (1991) 23 NSWLR 110
Armitage v Parsons [1908] 2 KB 410
W L McLean v Commonwealth of Australia (unreported, 22 August 1996)
Harkness v Bell's Asbestos and Engineering Ltd [1967] 2 QB 729
Fox v Ashwin (1887) 4 WN (NSW) 78
Coles v Burke (1987) 10 NSWLR 429
Commonwealth v Verwayen (1990) 170 CLR 394
Rein v Stein (1892) 66 LT 469
The Assunta [1902] P 150
Fry v Moore (1889) 23 QBD 395
Gerlack v Clifton Bricks Pty Ltd [2002] HCA 22
DECISION: Leave to appeal granted; Appeal allowed




                          CA 40821/01

                          MASON P
                          BEAZLEY JA
                          CAMPBELL AJA

                          23 September 2002
PHILIP GORDON SMITH v BUNDANDAN ENTERPRISES and DANIEL AND DIANNE HERCHENRODER

      FACTS

      The claimant brought proceedings against the opponents in the District Court by way of a statement of liquidated claim, claiming balance of monies owed by the first opponent under a consultancy agreement entered into between the claimant and the first opponent. The second opponents had guaranteed payments due under the agreement.

      Notwithstanding legal advice that they had a defence on the merits to the claim, the second opponents instructed their then solicitors to file a Statement of Confession because they did not have the financial resources to defend the action. The Statement of Confession was in terms: “ The defendant confesses to the amount claimed by the plaintiff ”.

      Judgment was entered against all opponents. Although an application to pay the judgment debt by instalments was refused. The opponents made instalment payments over an 18 month period. The opponents then ceased payments. The claimant served a Bankruptcy Notice, founded on the judgment debt. The opponents then filed an application to set aside the judgment.

      Sidis DCJ held that the judgment had been entered irregularly and in the exercise of her discretion set aside the judgment because the opponents had an arguable defence on the merits.

      The claimant sought leave to appeal. That application and the appeal were heard together.

      HELD per Campbell AJA (Mason P and Beazley JA…

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Smith v Budandan Enterprises [2002] NSWCA 322
Case
[2002] NSWCA 322
Decision Date

CaseChat Overview and Summary

Smith (the appellant) sought to appeal against a judgment entered against him by Budandan Enterprises (the respondent) in the Supreme Court of New South Wales. The dispute arose from the cessation of payments under a consultancy agreement, with the respondent having entered judgment based on what it asserted was a statement of confession by the appellant. The appellant contended that the judgment had been entered irregularly.

The primary legal issue before the Court of Appeal was whether the judgment had been entered irregularly, and if so, whether the court should exercise its discretion to set aside that judgment. This involved an examination of the nature of the statement of confession and whether it constituted a valid basis for summary judgment in the circumstances.

The Court of Appeal found that the judgment had indeed been entered irregularly. Their Honours reasoned that the document relied upon by the respondent did not amount to a clear and unequivocal admission of liability sufficient to justify the entry of judgment in that manner. The court applied the principle that judgments entered irregularly may be set aside as of right, although the court retains a discretion in the matter.

Leave to appeal was granted, and the appeal was allowed. The judgment entered in favour of the respondent was set aside.

Orders

Orders of the court

Leave to appeal granted; Appeal allowed

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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