Temsign Pty Ltd (in liq) v Riverbeach Pty Ltd as Trustee for the Riverbeach Trust

[2000] WADC 339

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   TEMSIGN PTY LTD (in liq) & ORS -v- RIVERBEACH PTY LTD As Trustee for THE RIVERBEACH TRUST & ORS [2000] WADC 339

CORAM:   WILLIAMS DCJ

HEARD:   14 DECEMBER 2000

DELIVERED          :   21 DECEMBER 2000

FILE NO/S:   CIV 1513 of 1997

BETWEEN:   TEMSIGN PTY LTD (in liq) (ACN 059 983 185)

First Appellant

GRAHAM JAMES DARCY
CLAIRE MICHELLE DARCY
Second Appellants

AND

RIVERBEACH PTY LTD As Trustee for THE RIVERBEACH TRUST (ACN 070 911 821)
ROBERT ALBERT BAILEY
FRANCES TERESA BAILEY
First Respondents (Plaintiffs and Judgment Creditors)

LISA JANE BAILEY
SARAH ANNE BAILEY
Second Respondents (Defendants and Judgment Debtors)

AUSTRALIAN AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)
Third Respondent (Garnishee)

Catchwords:

Procedure - Application to set aside judgment and garnishee order

Legislation:

Corporations Law

Supreme Court Rules

Result:

Judgment and garnishee order set aside

Representation:

Counsel:

First Appellant  :      Mr M C Hotchkin

Second Appellants  :      Mr M C Hotchkin

First Respondents

(Plaintiffs and Judgment Creditors)   :      Mr A Stavrianou

Second Respondents

(Defendants and Judgment Debtors)

Third Respondent (Garnishee)

Solicitors:

First Appellant  :      Hotchkin Hanly

Second Appellants  :      Hotchkin Hanly

First Respondents

(Plaintiffs and Judgment Creditors)   :      Minter Ellison

Second Respondents

(Defendants and Judgment Debtors)

Third Respondent (Garnishee)

Case(s) referred to in judgment(s):

Anlaby v Praetorius (1888) 20 QBD 764

Cuthbertson v Hobart Corporation (1921) 30 CLR 16

Drayton Giftware Ltd & Ors v Varyland Ltd (1982) 132 New LJ 558

Farden v Richter (1889) 23 QBD 124

Homestyle v City of Belmont & Anor [1999] WASCA 59

Case(s) also cited:

CM Van Stillevoldt BV v EL Carriers Inc [1983] 1 WLR 207

D Wilson (Birmingham) Ltd v Metropolitan Property Developments Ltd & Anor [1975] 2 All ER 814

Esther Investments v Markalinga (1989) 2 WAR 196

Gallo v Dawson (No 2) (1992) 109 ALR 319

Henderson v Johnson and Henderson [1969] WAR 3

Jackson v Sterling Industries Ltd (1987) 162 CLR 612

News Limited v Australian Rugby Football League Limited (1996) 64 FLR 450

Re Morton; Ex parte Mitchell Products Pty Ltd; Morton & Ors v Vouris & Ors (1996) 21 ACSR 497

1. WILLIAMS DCJ:  This is an application on the part of the first ("Temsign") and second appellants ("the Darcy's") for an extension of time to appeal against the judgment entered on 12 June 1997 and the decision of the learned Deputy Registrar given on 2 September 1997 ordering that the garnishee ("the ANZ") forthwith to pay to the judgment creditors ("Riverbeach and the Bailey's") $136,954.35 being so much of the debt due from the ANZ to Riverbeach and the Bailey's as is sufficient to satisfy the judgment debt and costs together with $500 the cost of the garnishee proceedings and that in default thereof execution may issue for the same.

2. The Darcy's have made application to be joined in the appeal.

3. This matter has a long and convoluted history in both the Federal Court of Australia and the Supreme Court of Western Australia.  At the time of the issue of the writ of summons in these proceedings the Darcy's and others were the beneficiaries of a mareva injunction obtained in the Federal Court of Australia proceedings over a bank account in the name of Temsign held at the ANZ branch at 220 St George's Terrace, Perth.  It was not until March 1998 that the Darcy's and others became aware of these proceedings and of the fact that the monies the subject of these proceedings had been paid out of the account which was the subject of the mareva injunction.

Application for extension of time to appeal

1. The court has a wide discretion to grant extensions of time to appeal.  The primary question in each case being whether justice as between the parties would be best served by granting or refusing the application, weighing the injustice to the applicant if the application is refused and the possible injustice to the respondent resulting from the disturbance of the respondents vested interest in maintaining the judgment:  Par 63.4.2 Seaman, Civil Procedure, Western Australia.

2. In my view the following factors are relevant to this issue:

   (a)As there were no true protagonists to the original proceedings in that the second and third named first respondents are the parents of the second respondents there was no opposition to any of the orders sought, and hence no chance of an appeal within normal time constraints.

   (b)The first that any genuine protagonist such as the Darcy's were made aware that any such orders had been made was in the Federal Court on 24 March 1998:  par 25, affidavit of Graham James Darcy sworn 6 July 2000.

   (c)Temsign could not appeal the decision until after it was placed in liquidation on 12 August 1998.  The liquidator could not instruct solicitors to lodge an appeal until it had investigated the records of the company in order to determine whether there was sufficient record so as to establish that a genuine debt did exist for which Temsign might be liable:  par 4 to par 40 of affidavit of Ian Charles Frances sworn 2 July 2000.

   (d)Temsign's directors (the second respondents) and former accountant failed or refused to comply with the statutory requirement to submit all records and documents of the company to the liquidator or to otherwise cooperate: par 4 to par 40 of affidavit of Ian Charles Frances sworn 2 July 2000.

   (e)The liquidator could not instruct solicitors to take action on behalf of Temsign without being satisfied that it was adequately resourced for the purpose of such an application, which could not take place until the liquidator had exhausted all reasonable avenues for ascertaining the true financial position of the company, which was not completed until the preparation of the report to creditors on 2 December 1999.  The decision to bring the appeal could not be made until the meeting of creditors on 21 December 1999.

   (f)The liquidator instructed Hotchkin Hanly to bring application for leave to appeal on 13 March 2000.  The application was filed on 6 July 2000.  In my view the time periods for these dates have been satisfactorily explained; par 9 and par 10, affidavit of Michael Charles Hotchkin sworn 6 July 2000.

Application by Darcy's to be joined in relation to the appeal

1. Leave to appeal by a non party is given as a rule if the person applying, although not a party might properly have been one:  Cuthbertson v Hobart Corporation (1921) 30 CLR 16 at 25. Order 18 r 4(1) and r 6(2)(b) of the Supreme Court Rules provide the source of power to join the Darcy's to the proceedings.

2. It is sufficient that a party's rights against or liabilities to any party would be directly affected by a finding:  Homestyle v City of Belmont & Anor [1999] WASCA 59.

3. In my view it is appropriate that the Darcy's be joined as a party.

Principles applicable in relation to setting aside judgment

1. Where the Plaintiff's claim is against a defendant for a liquidated demand and the defendant fails to serve a defence the plaintiff may at the expiration of the period fixed under the rules for service of the defence enter final judgment against that defendant:  Order 22 r 2(1).

2. The Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this order:  Order 22 r 10.

3. In Evans v Bartlam [1937] AC 374 at p 480 Lord Atkin said as follows:

   "The principle obviously is that unless and until the court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by failure to follow any of the rules of procedure."

4. If the judgment is regular then it is an almost inflexible rule there must be an affidavit on the merits ie an affidavit stating the facts showing a defence on the merits:  Farden v Richter (1889) 23 QBD 124.

5. For the purpose of setting aside a default judgment, the defence on the merits which the defendant is required to show need only disclose an arguable or triable issue:  Drayton Giftware Ltd & Ors v Varyland Ltd (1982) 132 New LJ 558.

6. Where a judgment is obtained irregularly the defendant is entitled ex debito justistiae to have it set aside:  Anlaby v Praetorius (1888) 20 QBD 764.

7. The evidence is to the effect that despite it being a live issue in the mareva injunction at no stage during the Federal Court proceedings were the Bailey daughters able to demonstrate a debt due from Temsign to Riverbeach and the Bailey parents:  Affidavit of Graham James Darcy sworn 6 July 2000.

8. The evidence is further to the effect that an extensive search of Temsign's records after it was liquidated failed to reveal any financial records which would demonstrate the existence of such a debt; affidavit of Ian Charles Frances sworn 6 July 2000.

9. The actions of the Bailey's in failing or refusing to cooperate with the liquidator in his endeavour to uncover the true state of affairs of Temsign leads to the potential for an abuse of process by the Bailey's.

10. In par 6 of Francis Teresa Bailey's affidavit sworn 14 July 1997 she states as follows:

    "Since the legal proceedings against Sarah and Lisa started my husband and I and our company Riverbeach Pty Ltd have loaned Lisa, Sarah and Temsign approximately $150,000.00 to cover their necessary home and living expenses, some mortgage payments and legal costs relating to the proceedings.  Lisa and Sarah and Temsign Pty Ltd do not have the means to repay these monies to us except from their money in the ANZ Account.  The legal proceedings issued against Lisa and Sarah in the Federal Court have been very stressful for my husband and I and also have been a financial burden.  In late February 1997 Lisa and Sarah approached my husband and I for a further loan of $60,000.00 in order to pay a Bankruptcy Notice which had been issued against them by their previous solicitors Barker Gosling.  We told them that we simply could not raise that amount of money.  Later that same day my husband suffered a massive heart attack due to the stress and anxiety.  In respect of the Appeal which is outlined in paragraph 5.12 above my husband and I loaned to Lisa, Sarah and Temsign the necessary monies to fund the Appeal on their assurance that we would be reimbursed from further funds to be released from the ANZ Bank account if the application was successful.  My husband and I do not have any private health fund cover and his recent heart attack has been a great financial strain on both of us."

11. No distinction is made between Temsign and the Bailey daughters.

12. For these reasons I am of the view that the judgment should be set aside.

The garnishee order

1. It follows in my view that the garnishee order must also be set aside.

2. The garnishee order absolute dated 2 September 1997 directed the garnishee to pay to the joint creditors the judgment sum.  In fact the garnishee paid Riverbeach only the sum of $137,454.35.  That does not appear to me to be compliance with the order.

3. In my view the whole matter of the judgment and garnishee proceedings is most unsatisfactory.  It requires that both the judgment and the garnishee order be set aside.

Riverbeach Pty Ltd

1. Counsel for the Bailey's makes the point that Riverbeach was deregistered on 28 June 2000 and that proceedings against it can not continue:  Corporations Law, s 601AD(1). In these circumstances I do not propose to make any order against Riverbeach.

Orders

1. I make the following orders:

   1.The second appellants be made party to the proceedings.

   2.The first and second appellants be granted an extension of time to appeal against the judgment entered on 12 June 1997 and order of Deputy Registrar Hewitt made on 2 September 1997.

   3.Judgment entered on 12 June 1997 be set aside.

   4.The decision of Deputy Registrar Hewitt made on 2 September 1997 be set aside.

   5.Robert Albert Bailey and Francis Teresa Bailey do pay into court the sum of $136,954.35 plus costs of $500 and interest at the gazetted interest rates payable on a judgment sum from 2 September 1997 until payment such payment to be made within 14 days of this order.