TG Australia Pty Ltd v Oudman
[2010] WADC 27
•15 MARCH 2010
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: TG AUSTRALIA PTY LTD -v- OUDMAN & ANOR [2010] WADC 27
CORAM: MARTINO DCJ
HEARD: 18 JANUARY 2010
DELIVERED : 15 MARCH 2010
FILE NO/S: APP 86 of 2009
BETWEEN: TG AUSTRALIA PTY LTD (ACN 122 456 464)
Appellant
AND
ENNO WIEBO OUDMAN
JANTINA OUDMAN
Respondents
Catchwords:
Practice and procedure - Application to set aside default judgment - Estoppel
Legislation:
Nil
Result:
Appeal allowed
Representation:
Counsel:
Appellant: Mr S Wong
Respondents : Mr D A Lenhoff
Solicitors:
Appellant: Su & Co
Respondents : Holborn Lenhoff Massey
Case(s) referred to in judgment(s):
Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) [2008] WASC 239
Blair v Curran (1939) 62 CLR 464
Hall v Hall [2007] WASC 198
Kok Hoon v Leong Cheong Kweng Mines Ltd [1939] AC 1
Marshall v Town Planning Appeal Tribunal [2006] WASCA 146
New Brunswick Railway Company v British & French Trust Corporation Limited [1939] AC 1
MARTINO DCJ: The appellant, TG Australia, appeals against a decision in the Magistrates Court refusing to set aside default judgment.
The Magistrates Court action was commenced on 16 April 2009. In that action TG Australia claimed from the respondents, Mr and Mrs Oudman, $25,509.93, "being the balance owing for unpaid invoices rendered by [Mr and Mrs Oudman] to [TG Australia] in April 2007", interest at 6 per cent per annum from 23 April 2007 and costs. On 6 May 2009 judgment in default of a response was entered. That judgment was for $29,298.83 plus costs.
On 12 August 2009 TG Australia applied to set aside that judgment. That application was supported by an affidavit of Giao Quynh Tran, the sole director of TG Australia, which was made on 11 August 2009.
Mr and Mrs Oudman opposed TG Australia's application and filed an affidavit sworn by Benjamin Ashley Jackson, a solicitor employed by their solicitors Holborn Lenhoff Massey, sworn on 25 August 2009.
On 10 September 2009 Mr Tran swore a further affidavit.
The application was heard on 25 September 2009. On 16 October the learned Magistrate delivered reasons for the dismissal of the application.
The grounds of appeal are:
"A.The Magistrate erred in law in dismissing the application to set aside the default judgment in that:
(i)Her Honour failed to take into account or address the question as to whether the appellant had an arguable defence on the merits; and
(ii)Her Honour took into account and treated as material an irrelevant consideration (at pp 2 to 3 of her Honour's reasons), namely that:
(a)the judgment debt had been paid; and
(b)the payment of the judgment debt extinguished the cause of action, when (as a matter of law) the cause of action merged on entry of judgment.
B.The Magistrate erred in law in determining (at p 4 of her Honour's reasons) that a default judgment cannot give rise to an estoppel because, as a matter of law:
(i)a default judgment can be final; and
(ii)a default judgment can still contain matters of fact and law determined as a necessary consequence of the default judgment."
When the appeal came on for hearing before me Mr and Mrs Oudman had not filed an answer under r 53 of the District Court Rules 2005. In the course of his submissions counsel for Mr and Mrs Oudman submitted that by its conduct after the default judgment was entered TG Australia is estopped from attempting to set aside the default judgment. I pointed out that this did not appear to be a basis upon which the learned Magistrate had made her decision. Counsel for Mr and Mrs Oudman then applied for leave to file an answer.
I gave directions for the filing and serving of a minute of the proposed answer and of supplementary submissions and listed the appeal for further hearing before me on Friday 19 February 2010. I directed that the appointment on 19 February 2010 be vacated if the solicitors for both parties informed my Associate that the appointment was not required.
On 25 January 2010 Mr and Mrs Oudman filed a minute of proposed answer. In that minute they sought to rely upon the following reasons for upholding the decision of the learned Magistrate:
"1.It is apparent from the correspondence exchanged between the parties solicitors representing them at the time that:
1.1the Appellant represented to the Respondents that payment of, inter alia, the judgment sum of $29,298.83 was being made '… without any condition or qualification and in line with the agreement' ('the Representation);
1.2in the absence of the Representation, the Respondents would not have discontinued winding up proceedings against the Appellant then on foot in the Queensland Supreme Court;
1.3the payment was duly made without any qualification or condition and the Respondents, in line with the agreement, then had the winding up proceedings dismissed with no order as to costs;
1.4notwithstanding the Representation, after the winding up proceedings had been dismissed, the Appellant proceeded with the application to set the judgment aside.
2.Given:
2.1the clear and unambiguous Representation by the Appellant with the intention that it be acted upon by the Respondents;
2.2reliance by the Respondents upon the Representation with the consequent dismissal of the winding up proceedings;
2.3the detriment suffered by the Respondents as a consequence of their reliance upon the Representation;
the Appellant was and is estopped from proceeding with the application to set the judgment aside.
3.The estoppel relied upon the Respondents is either estoppel by representation or, in the alternative, estoppel by convention.
4.In making the decision, the Learned Magistrate did not consider estoppel as a ground for refusing the application by the Appellant to set the judgment aside."
The solicitors for each party filed supplementary written submissions and informed my Associate by letter that the hearing on 19 February 2010 was not required.
The hearing was vacated. TG Australia did not oppose the late filing of an answer by Mr and Mrs Oudman but informed my Associate that Mr and Mrs Oudman agreed to pay the costs thrown away in respect of the late filing of the answer. I will grant Mr and Mrs Oudman leave to file and serve the answer out of time and order that the minute of proposed answer do stand as the answer.
The purchase of the business
On 10 October 2006 TG Australia entered into a written agreement with Mr and Mrs Oudman by which it agreed to purchase a bus and coach charter services business from them for a total price of $744,000 plus stock, which was estimated to be valued at $6,000. Settlement of the purchase took place on 6 December 2006.
Clause 7 of the schedule to the written agreement provided that the purchase price was to be paid by a deposit of $50,000, the balance up to $600,000 at settlement and "the remaining $150,000" five years after settlement. The arithmetic in clause 7 is incorrect. The amount remaining after settlement was $100,000. The unpaid balance of the purchase price was to be secured by a mortgage over two coaches.
Clause 2 of the schedule to the agreement provided that the property purchased included the goodwill, leases and contracts of the business. Clause 4 of the schedule specified that the place of the business was 18 Kembla Way, Willetton. Clause 9 was titled "PARTICULARS OF LEASE OF PREMISES" and contained the following:
"Monthly Rental: $2383. TWO MONTHS RENT FREE IN FIRST YEAR.
Option to Renew: THIRD MONTHS RENT PAYABLE BY JUNE 30TH 2007. 5 YEAR OPTION.
Rent reviews/Next Review: ANNUAL REVIEWS ON 1 JANUARY, COMMENCING 1 JANUARY 2003
Lease Expires: OUTGOINGS TO BE ADVISED AND VALUE SUBJECT TO THE BUYERS APPROVAL."
By cl 11 of the schedule and cl 9 of the agreement's standard conditions Mr and Mrs Oudman agreed to train and familiarise TG Australia with the business, without remuneration, for four hours a day for six weeks after settlement.
Mr and Mrs Oudman's invoice and statement
Mr and Mrs Oudman sent an invoice, dated 22 February 2007 and numbered 5998, to TG Australia for the total of $19,081.91 for various services and for rent. Mr and Mrs Oudman later delivered an undated statement to TG Australia, stating that the total due to them by TG Australia was $25,509.93, made up of the amount of $26,694.78, said to have been invoiced in invoice number 5998 (in fact the invoice was for $19,081.91), a credit of $6,864 under invoice number 5999 and the sum of $5,679.15 invoiced in invoice number 5997.
Copies of invoice 5998 and the undated statement were attached to Mr Tran's affidavit of 11 August 2009. In that affidavit Mr Tran deposed that after the sale of the business to TG Australia Mr and Mrs Oudman had not closed their business bank accounts and they had received moneys payable to the business. Mr Tran estimated that customers of the business had wrongly paid between $15,000 and $20,000 into Mr and Mrs Oudman's bank account. Mr and Mrs Oudman had not paid those moneys to TG Australia. TG Australia did not pay rent to Mr and Mrs Oudman because Mr and Mrs Oudman had not paid those moneys to it.
Mr Tran deposed that prior to the purchase of the business by TG Australia it had been conducted from two locations. One was at Yampi Way, Willetton, which was used to store vehicles. The other was at Kembla Way, Willetton, which was used for administrative purposes and to maintain and repair vehicles. Under the agreement for the purchase of the business TG Australia had agreed to lease premises for five years, with an option for a further five years, for rent of $2,383 per month, with rent for the first two months of the first year being free. During negotiations with Mr and Mrs Oudman in December 2006 it was agreed that TG Australia would be able to use premises at Yampi Way free of charge for four years. TG Australia agreed to pay rent of $35,000 a year for the Kembla Way premises for a period of one year. Mr and Mrs Oudman agreed to those changes and told Mr Tran that a lease would be drafted to reflect the agreement. Despite making numerous requests for that lease it was not provided to TG Australia.
Mr Tran deposed that on 22 February 2007 Mr Oudman went to the business' office and demanded payment of $19,081.91. Mr Tran told Mr Oudman that he would pay him for his services, but would look at the rent at a later date because he did not agree to the weekly rental rate and was waiting for an amended lease. On that day Mr Tran paid $6,864 to Mr Oudman.
Subsequently Mr Oudman threatened to lock a gate and the bus fleet to prevent TG Australia from operating the business and as a result of that and of the uncertainty of the terms of the lease of the premises in Kembla Way TG Australia moved out of the premises in mid April 2007 without giving notice.
TG Australia received the statement stating that the total due was $25,509.93 in April 2007. Mr Tran deposed that as the statement does not itemise the services or goods provided it is difficult to provide further particulars of TG Australia's defence, other than to say that that it is inconsistent with invoice number 5998.
Mr Tran also deposed that he believed that TG Australia has a strong counterclaim against Mr and Mrs Oudman for breaching the agreement for the purchase of the business in failing to assist in the management of the business, failing to allow TG Australia's nominated technicians to inspect the plant and equipment, failing to ensure that the plant and equipment were in good working order, failing to introduce TG Australia to the major clients and suppliers of the business, unlawfully using fuel and failing completely to pass the goodwill of the business to TG Australia. Some details of those claims are contained in Mr Tran's affidavit.
The affidavit in reply to Mr Tran's affidavit
In his affidavit Mr Jackson deposed that Mr and Mrs Oudman were in Queensland and that he was authorised to swear the affidavit on their behalf. On 18 August 2009 Mr and Mrs Oudman's Queensland solicitors, Herbert Geer, wrote to TG Australia's solicitors, who were then Julienne Penny & Associates, demanding payment of $100,000 pursuant to a loan agreement. A copy of the letter was annexed to the affidavit. In the first paragraph of the letter Herbert Geer informed Julienne Penny & Associates that a hearing to wind up TG Australia was adjourned to 24 August 2009, with costs reserved. Herbert Geer then referred to a written agreement dated 11 January 2007 under which TG Australia agreed to repay the sum of $100,000 within five years from the settlement of the sale of the business and that the sum would become immediately due and payable if any judgment in excess of $5,000 was entered against TG Australia. Herbert Geer informed Julienne Penny & Associates that Mr and Mrs Oudman demanded payment of the sum of $100,000.
Mr Jackson deposed that on 19 August 2009 Julienne Penny & Associates wrote to Herbert Geer agreeing to pay $135,793.83, being the sum of $100,000 lent plus the judgment sum, to Mr and Mrs Oudman. A copy of that letter was annexed to Mr Jackson's affidavit. In that letter Julienne Penny & Associates referred to correspondence from Herbert Geer of 18 August 2009 and informed Herbert Geer that TG Australia accepted the offer of Mr and Mrs Oudman made in that correspondence. The correspondence of 18 August 2009 referred to in Julienne Penny & Associates' letter of 19 August 2009 is not the letter of that date annexed to Mr Jackson's affidavit, because no offer was made in that letter.
Mr Jackson deposed that he had been informed by a solicitor at Herbert Geer that TG Australia had paid $135,793.83 to Mr and Mrs Oudman on 24 August 2009. He requested that the application to set aside the default judgment be dismissed because the judgment debt had been satisfied pursuant to the agreement between Mr and Mrs Oudman and TG Australia outlined in the correspondence annexed to his affidavit.
Mr Tran's second affidavit
Mr Tran's affidavit of 10 September 2009 responded to Mr Jackson's affidavit. Mr Tran deposed that following the entry of default judgment Mr and Mrs Oudman commenced proceedings in the Supreme Court of Queensland for the winding up of TG Australia on the basis of non payment of the judgment debt. Annexed to Mr Tran's affidavit was a letter from Herbert Geer to Julienne Penny & Associates dated 18 August 2009. This letter is different to the letter of that date annexed to Mr Jackson's affidavit and appears to contain the offer accepted in Julienne Penny & Associates' letter of 19 August 2009. In the letter annexed to Mr Tran's affidavit Mr and Mrs Oudman offered to agree to dismiss the application to wind up TG Australia on the basis that TG Australia pay $135,793.83 to Mr and Mrs Oudman. That sum was made up of $100,000 pursuant to the loan agreement of 11 January 2007, $29,298.83 pursuant to Mr and Mrs Oudman's statutory demand and legal costs of $6,495.
On 21 August 2009 Mr Tran engaged the firm of Su & Co to act for TG Australia. On that day Su & Co wrote to Herbert Geer informing them that TG Australia disputed the sum owed to Mr and Mrs Oudman and would pay the sum of $135,793.83 under protest and "reserve their rights in the matter". A copy of Su & Co's letter of 21 August 2009 was attached to Mr Tran's affidavit, as were copies of correspondence in reply. This consisted of an email of the same date, in which Mr Chothia, a solicitor at Herbert Geer, expressed surprise at the letter in view of Julienne Penny & Associates' letter of 18 August 2009 accepting the offer contained in Herbert Geer's letter, and a letter also dated 21 August 2009 in which Herbert Geer informed Su & Co that Mr and Mrs Oudman would not accept payment under protest or on conditions and that the only basis on which they would accept payment was that based on the terms of Herbert Geer's letter of 18 August 2009 and Julienne Penny & Associates' letter of 19 August 2009.
Mr Tran deposed that he instructed Mr Su of Su & Co to speak to Mr Chothia to confirm that payment of the sum of $135,793.83 did not prevent TG Australia from challenging that the sum was not correct and that TG Australia only agreed to pay that sum to prevent the winding up proceedings going ahead. Mr Tran annexed another letter from Herbert Geer dated 21 August 2009 to his affidavit. In that letter Herbert Geer informed Su & Co that Mr and Mrs Oudman's position was that there was an agreement between them and TG Australia contained in Herbert Geer's letter of 18 August 2009 and Julienne Penny & Associates' letter of 19 August 2009 and that Mr and Mrs Oudman understood TG Australia would pay $135,793.83 into their trust account that day, "such payment without any condition or qualification and in line with the agreement".
On that day TG Australia paid the sum of $135,793.83 and Su & Co wrote to Herbert Geer confirming that payment had been made and requesting confirmation that Herbert Geer would arrange for the winding up application to be dismissed with no order as to costs. Mr Tran deposed that he instructed Mr Su to send another letter to Herbert Geer on 21 August 2009. A copy of that letter is annexed to Mr Tran's affidavit. In it Su & Co informed Herbert Geer that they were instructed that the payment was made per the agreement constituted by Herbert Geer's letter of 18 August 2009 and Julienne Penny & Associates' letter of 19 August 2009.
On the same day Herbert Geer wrote to Su & Co confirming receipt of the sum transferred and wrote that in line with the agreement contained in the correspondence Mr and Mrs Oudman would consent to the winding up application being dismissed with no order as to costs. Su & Co then sent an email to Herbert Geer asking for the terms of the proposed consent orders. Herbert Geer sent an email in reply which referred to a telephone conversation between Mr Su and Mr Chothia on that day and contained the following:
"We further note that our mutual clients have resolved their disputes and on that basis, our client proposes to appear before the Court on Monday morning seeking the following orders:
1.Dismissal of our client's winding up application; and
2.No order as to costs."
Su & Co sent an email in reply agreeing to the proposed orders.
On 25 August 2009 Herbert Geer wrote to Su & Co confirming that the orders had been made by consent.
On 27 August 2009 Su & Co wrote to Holborn Lenhoff Massey informing them that Su & Co had written to the Magistrates Court to have the application to set aside default judgment adjourned. Su & Co also informed Holborn Lenhoff Massey that they had just received the file from Julienne Penny & Associates and Su & Co believed that TG Australia had a strong case against Mr and Mrs Oudman for breach of the agreement to purchase the business and that TG Australia disputed that the sum paid to Mr and Mrs Oudman by TG Australia was owing to Mr and Mrs Oudman.
The learned Magistrate's reasons for dismissing the application to set aside default judgment
In her reasons for dismissing the application to set aside default judgment the learned Magistrate referred to the winding up proceedings in the Supreme Court of Queensland and the payment on 21 August 2009. Her Honour noted the submission made on behalf of TG Australia that the payment did not resolve the dispute as to whether the sum claimed by Mr and Mrs Oudman. Her Honour then said:
"The pressure exerted on the defendant is a reality of legal proceedings. TG Australia had legal representation and chose to make a commercial decision to pay and not oppose the winding up proceedings.
The documentary evidence shows that in the correspondence between the parties TG Australia Pty Ltd initially stated the payment was made under protest. This was not accepted by the Oudmans who would only accept payment without any condition or qualification and in line with the agreement. TG Australia Pty Ltd had other legal remedies available to it other than paying the sum which [sic] respect to the winding up application. They made a commercial decision to pay the amount in the winding up petition."
Her Honour then expressed her views as to the nature and effect of a default judgment and her conclusion to dismiss TG Australia's application to set aside the default judgment against it:
"A default judgment is not a final judgment. It is an administrative judgment. No final decision of the court has been made on the merits of the case or the credibility of the witnesses. Once the amount of the claim has been paid the cause of action is extinguished.
This does not stop TG Australia from commencing their own action against the Oudmans.
There can be no issue of either res judicata or issue estoppel being raised if an action is commenced by TG Australia against the Oudmans. (see Marshall & Anor v The Town Planning Appeal Tribunal of Western Australia and Anor (2006) WASCA 146). At paragraphs 15 and 16 of that decision, Her Honour McLure (sic) states:
'The doctrine of res judicata provides that where an action has been brought and final judgment on the merits has been entered in that action, no other proceedings may be maintained on the same cause of action. To determine what is res judicata, only the record may be examined. Only the parties to the action and their privies are bound.
The doctrine of issue estoppel applies where there is a final judicial determination directly involving an issue of fact or law that disposes once and for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion: Blair v Curran (1939) 62 CLR 464 at 531 – 532 per Dixon J.'
There has been no final judicial determination directly involving an issue of fact or law that disposes once and for all of the issues, so TG Australia can commence proceedings against the Oudmans on the issues raised in TG Australia's submissions at paragraphs 15 and 16 of the written submissions.
The application to have default judgment set aside is dismissed."
Principles upon which an application to set aside a default judgment is to be determined
Section 19(3) of the Magistrates Court (Civil Proceedings) Act 2004 empowers the Court to set aside a judgment given without trial as a result of the failure of a party to comply with the Act, the rules of court or an order or direction of the court. The judgment may be set aside unconditionally or on conditions as to the payment of costs or as to other matters.
The power to set aside default judgment is not expressed to be subject to any conditions. In my view the principles explained by Master Newnes (as his Honour then was) in Hall v Hall [2007] WASC 198 at [63] to [67] apply to an application under s 19(3). The discretion is unfettered and no hard and fast rules can be laid down as to how it is to be exercised. The discretion is to be exercised so as to do justice between the parties, having regard to the particular circumstances of the case. As an application is to be determined on affidavit evidence the Court should be wary about attempting to come to a provisional view as to the probable outcome of a defence involving issues of fact. It must appear from the evidence filed in support of the application that the defendant's case is not inherently incredible and that if the defendant's evidence were accepted at trial the defendant would have a real prospect of success.
Effect of payment of a judgment sum
At the hearing of the application to set aside default judgment counsel for the respondent submitted that once the judgment debt was paid, the action came to an end and it was no longer competent to apply to set aside the judgment, as it had been paid in full. Counsel for the respondent made the same submission at the hearing of this appeal.
In her reasons Her Honour said: "Once the amount of the claim has been paid the cause of action is extinguished." However it is not the payment of a judgment debt that extinguishes a cause of action, it is the entry of judgment. Once a judgment has been entered the cause of action passes into judgment, so that it is merged and no longer has an independent existence: Blair v Curran at 532. Payment satisfies the judgment debt. As it is the entry of judgment that extinguishes the cause of action the fact that a default judgment has been paid could not prevent the Court exercising its unfettered discretion to set aside that judgment so as to do justice between the parties if that were an appropriate exercise of the discretion.
Res judicata and issue estoppel
The decision in Marshall v Town Planning Appeal Tribunal did not concern default judgment. There are authorities from the House of Lords and the Privy Council that a default judgment is a decision on the merits for the purpose of the doctrine of res judicata: New Brunswick Railway Company v British &French Trust Corporation Limited [1939] AC 1, Kok Hoon v Leong Cheong Kweng Mines Ltd [1939] AC 1. I very much doubt that in Marshall v Town Planning Appeal Tribunal McLure JA was expressing a concluded view that these authorities do not state the law in Western Australia.
As the doctrines of res judicata and of issue estoppel apply only to the matters necessarily determined by the judgment it is probably correct to say that the default judgment obtained by Mr and Mrs Oudman would not prevent TG Australia from commencing an action against them for damages for breach of the agreement to purchase the business. However the fact that TG Australia may be able to commence another action against Mr and Mrs Oudman does not determine the application to set aside default judgment. It was necessary for the learned Magistrate to consider whether TG Australia had a real prospect of defending the action.
TG Australia's appeal
By the affidavit of Mr Tran sworn on 11 August 2009 evidence TG Australia put forward what were said on its behalf to be defences to Mr and Mrs Oudman's claims. Counsel for TG Australia submitted on the hearing of this appeal that by the affidavit evidence TG Australia had discharged the onus of establishing that it had an arguable case because it had shown that it was arguable that it had defences to the claim in that the amount of rent and the entitlement of Mr and Mrs Oudman to charge for their services were disputed. Counsel for TG Australia also submitted that it had demonstrated that it was arguable that it had a set off for its counterclaims against Mr and Mrs Oudman for their breaches of the agreement for the purchase of the business in failing to close their business accounts, failing to assist in the management of the business, failing to permit inspection of the plant and equipment before settlement, failing to ensure that two engines were in working order, failing to introduce TG Australia to major clients, taking fuel and not allowing TG Australia access to the business email account.
These issues, which are raised by Mr Tran's affidavit of 11 August 2009, were not dealt with by her Honour in her reasons. In my respectful view they needed to be dealt with, to ascertain whether TG Australia had a real prospect of defending the action.
Counsel for Mr and Mrs Oudman submitted on the hearing of the appeal that there were two reasons why the default judgment should not be set aside. The first reason, he submitted, was that as the judgment debt had been paid it is no longer competent to apply to set aside the judgment. For reasons I have already given I do not accept that submission. The second reason is now the subject of the minute of proposed answer.
Counsel for Mr and Mrs Oudman did not, by his submission on the hearing of this appeal nor by Mr and Mrs Oudman's minute of proposed answer, contend that the matters raised by Mr Tran's affidavit of 11 August 2009 did not show that TG Australia had a real prospect of defending the action.
In my view TG Australia has established the grounds of its notice of appeal. The learned Magistrate failed to consider whether TG Australia had a real prospect of defending the action. It is not submitted on behalf of Mr and Mrs Oudman that if her Honour had considered the issues raised in Mr Tran's affidavit of 11 August 2009 her Honour should have found that TG Australia had not established that it had a real prospect of defending the action. The disposition of the appeal therefore turns on Mr and Mrs Oudman's answer.
The answer
By their answer Mr and Mrs Oudman contend that estoppel by representation or estoppel by convention apply to estop TG Australia from proceeding with the application to set the default judgment aside. The principles of both estoppel by representation and estoppel by convention were comprehensively analysed and explained by Owen J in Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) [2008] WASC 239 at [3455] to [3534]. I respectfully adopt his Honour's analysis and explanation.
The two categories of estoppel are separate and distinct, but they share many ideas and criteria. The elements of estoppel by representation are:
a.a clear and unambiguous representation as to an existing fact – a promise or representation of an intention to do something in the future is insufficient;
b.the conduct of the person making the representation must have been conduct from which a reasonable person would believe that the person making the representation intended that the representation be acted upon;
c.the person to whom the representation was made must have believed the representation;
d.the person to whom the representation was made must have acted in reliance upon the representation; and
e.the person to whom the representation was made must have suffered some detriment by acting in reliance upon the representation.
The elements of estoppel by convention are:
a.the party who is seeking to rely upon the estoppel must have adopted an assumption as to the terms of that party's legal relationship with the other party;
b.the other party must have adopted the same assumption;
c.both parties must have conducted their relationship on the basis of that mutual assumption;
d.each party must have known or intended that the other party acted on the basis of that mutual assumption; and
e.departure from that assumption must cause a detriment to the party seeking to rely upon the estoppel.
I have referred earlier to the correspondence that Mr and Mrs Oudman rely upon as establishing an estoppel. In determining the issues raised by Mr and Mrs Oudman I need to bear in mind that this is an appeal against a decision to dismiss an application to set aside a default judgment. The test is whether TG Australia would have a real prospect of success at trial.
Counsel for Mr and Mrs Oudman has submitted that the representation made on behalf of TG Australia was that payment of $135,793.80 would be made unconditionally, that it was made with the intention that Mr and Mrs Oudman act upon it by the winding up proceedings in the Supreme Court of Queensland be dismissed, that Mr and Mrs Oudman did rely upon it in having those proceedings dismissed and they have suffered detriment. The detriment is expressed in Mr and Mrs Oudman supplementary submissions dated 8 February 2010 at par 1.3 as follows: "It is submitted that the detriment suffered by [Mr and Mrs Oudman] is that [TG Australia] can now, without more, disregard the agreement to make the Payment unconditionally and attempt to set the judgment aside."
Counsel for Mr and Mrs Oudman appeared to submit that the mutual assumption relied upon to support estoppel by convention was that payment of $135,793.80 would be made unconditionally.
Conclusions as to the answer
At the time of the correspondence which Mr and Mrs Oudman point to as constituting the representation or establishing the mutual assumption the application to set aside the default judgment had been commenced. It is not suggested that Mr and Mrs Oudman or their solicitors did not know about the application at the time of that correspondence and it seems clear from the chronology of events, including the date of Mr Jackson's affidavit, that they did know about it. The correspondence does not provide that the application would be dismissed or withdrawn.
The fact that Mr and Mrs Oudman had the understanding contained in Herbert Geer's letter of 21 August 2009, namely that payment by TG Australia would be "without any condition or qualification and in line with the agreement" does not mean that TG Australia represented that it would not proceed with its application to set aside default judgment or continue to dispute the debt, nor that there was a common assumption to that effect. The agreement constituted by Herbert Geer's letter of 18 August 2009 and Julienne Penny & Associates letter of 19 August 2009 does not refer to those matters. Nor does Herbert Geer's letter of 21 August 2009 refer to them.
It is, at the very least, arguable that in the correspondence TG Australia did not represent or assume that it would not proceed with its application to set aside the default judgment or continue to dispute the debt.
Mr and Mrs Oudman have not made out the grounds of their answer because they have not established that TG Australia does not have a real prospect of success at trial on Mr and Mrs Oudman's contentions that TG Australia made a representation that prevents it from disputing the debt, or that there was a common assumption to that effect. The appeal will be allowed.
The orders I propose are:
1.The respondents have leave to file and serve an answer in terms of their minute of proposed answer dated 25 January 2010;
2.The minute do stand as the answer and further filing and service be dispensed with;
3.The respondents do pay the appellant's costs thrown away by reason of the late filing of the answer to be taxed in any event;
4.The appeal be allowed.
5.The respondents pay the appellant's costs of the appeal to be taxed.
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