Todaytech Distributions Pty Ltd v Yu Qun Xiong
[2005] VSC 313
•27 July 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
No. 4919 of 2003
| TODAYTECH DISTRIBUTIONS PTY LTD | Plaintiff |
| V | |
| YU QUN XIONG (KENNY) | Defendant |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 July 2005 | |
DATE OF JUDGMENT: | 27 July 2005 | |
CASE MAY BE CITED AS: | Todaytech Distributions Pty Ltd v Yu Qun Xiong | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 313 | |
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Practice and Procedure – appeal from orders made by Master setting aside default judgment – whether uncertainty in self-executing order on which judgment based rendered judgment irregular – court’s discretion to set aside judgment regularly entered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr Gillies | R B Legal Pty Ltd |
| For the Defendant | Mr Ross | David K Kin Cheung Solicitors |
HIS HONOUR:
In this matter the plaintiff has sued the defendant for misappropriation of moneys, in effect theft. There was an alleged admission of the theft and, in order to secure repayment of the moneys misappropriated, a charge was given by the defendant over certain real estate to secure the debt. That charge resulted in a caveat being placed over the relevant property. The property was sold by the mortgagee and the balance was paid into court because of the claim by the plaintiff to the surplus moneys as a result of its caveat.
After service of the writ in the proceeding, judgment was entered in default of appearance. A master of the court refused an application by the defendant to set aside that default judgment. One of the grounds expressed by the master was that there had been an admission as to the debt.
A notice of appeal was filed and was heard and determined by Redlich J. On the basis of new affidavit material which his Honour gave special leave for the defendant to file, and which explained the so called admission of misappropriation, his Honour set aside the default judgment on conditions, including a condition that the moneys paid into court by the mortgagee remain in court as, in effect, security for the plaintiff in respect of its claim.
His Honour also made directions for the future disposition of the proceeding. Those directions included directions for interrogatories to be delivered on behalf of the plaintiff and answered by the defendant within certain times, for a mediation, and, if the matter did not settle at mediation, for there to be a directions hearing before the Listing Master.
The matters referred to in the directions by Redlich J were in large part complied with, save and except for the default of the defendant in answering interrogatories delivered for his examination by the plaintiff.
When the matter came on for directions before Master Kings on 20 September 2004, there was no appearance on behalf of the defendant. The solicitor for the plaintiff asked the master to make a self-executing order in the event that answers to interrogatories were not provided within a specified time. The Listing Master refused. She extended the time within which the defendant should provide answers to the plaintiff's interrogatories until 27 September 2004 and reserved liberty to apply.
The interrogatories were not answered within the time extended by the master. Accordingly, by summons dated 4 October 2004, the plaintiff sought to bring the matter on before Master Kings. The summons sought directions and did not specifically seek any relief. In particular, it did not specifically seek a self-executing order in default of answering the plaintiff's interrogatories.
On 7 October 2004, that summons was heard by Master Kings. Once again, there was no appearance on behalf of the defendant. Once again, the solicitor for the plaintiff asked for a self-executing order in default of the plaintiff answering interrogatories. This time the master agreed. The terms of the master's order are unusual and should be set out. By paragraph 2 of her order, Master Kings ordered:
"The defendant file and serve answers to the plaintiff's interrogatories 21 days from the date of service of this order. Failure by the defendant to file and serve answers to the interrogatories in accordance with this order will result in the defendant's defence being dismissed."
The order made by Master Kings on 7 October was served by post on the solicitors for the defendant that day. It could not have been received before 8 October 2004. No appeal was ever instituted against the self-executing order made by the master on 7 October 2004.
Twenty days after the service of the 7 October order on the solicitors for the defendant, on 28 October 2004, a summons was issued on the part of the plaintiff seeking from a master judgment in the proceeding for damages to be assessed. At this time it would not have been open for the plaintiff to enter an interlocutory judgment in the Registry for damages to be assessed, because the 21-day period specified by the master had not elapsed. However, that is not the course which the plaintiff adopted. As I have said, the plaintiff chose to issue a summons and to bring on its application for judgment, and for the assessment of the damages, before a master.
There is no doubt that the summons and supporting affidavit for judgment and for assessment was served upon the solicitors for the defendant and came to the attention of the defendant personally.
When the matter came on for hearing before Master Wheeler, on 5 November 2004, there was, once again, no appearance on behalf of the defendant, notwithstanding that notice of an application for judgment had been served on his solicitors and been brought to his attention. Master Wheeler considered the form of the order made on 7 October by Master Kings and referred to its unusual language, of the defendant's defence being dismissed rather than struck out, in the "Other Matters" section of the order. Master Wheeler proceeded to grant judgment in favour of the plaintiff as a result of the non-compliance with Master Kings's order for damages assessed in the sum of $226,492, together with interest, and costs. Further, Master Wheeler ordered that the moneys paid into court by the mortgagee of the defendant's premises be released to the plaintiff, and this has occurred.
A few days later, on 8 November 2004, the defendant pleaded guilty in the County Court of Victoria to a charge of theft of money, being, in effect, the same theft which is alleged as a misappropriation in this proceeding. By this time the plaintiff had already obtained its judgment before Master Wheeler and there was no need for the plaintiff to attend the County Court and seek, in the usual way, an order for restitution based upon the conviction which resulted from this plea of guilty. The conviction was apparently entered and the defendant sentenced to a suspended period of imprisonment on 2 December 2004.
On 22 December 2004 a bankruptcy notice was served upon the defendant. It appears that applications in the Federal Court have been proceeding since that time and the application for a bankruptcy order against the estate of the defendant has been adjourned pending the outcome of an application to set aside the judgment of Master Wheeler. That application was finally and belatedly made by summons dated 6 June 2005, supported by an extremely short affidavit of the defendant of the same date.
The summons came on before Master Evans for hearing on 14 July 2005. At that time the master apparently took the view that the order made by Master Kings on 7 October 2005 was irregular and that the result of this was that the judgment entered by Master Wheeler was also irregular. On this basis the master did not accept the filing of an affidavit on behalf of the defendant which had been sworn by him that day, and proceeded to order that the judgment against the defendant be set aside and gave the defendant a further period within which to file answers to interrogatories.
The plaintiff has appealed against the orders of Master Evans.
In the first instance I should note that I granted special leave to the defendant to file in court and rely upon an affidavit sworn on 14 July 2005, which was sworn prior to the hearing before Master Evans but not accepted by him.
The appeal before me must be determined as a re-hearing de novo, and I should ignore that which occurred before the master unless there is some matter which I should properly give weight to. In the circumstances that the master did not hear the matter on its merits, but dealt in a perfunctory way with the irregularity argument, I will just commence again and put to one side what happened before him.
The defendant argued in the first instance, based no doubt on the approach adopted to this matter by Master Evans, that the orders of Master Kings of 7 October 2004 were uncertain and ambiguous and infected all of the steps which subsequently took place until judgment was entered by Master Wheeler on 5 November 2004. Mr Ross, who appeared for the defendant, relied in particular upon Household Financial Services v Braybrook[1], a decision of the Appeal Division of this court, where, at page 584, it is stated that a principal objection to an order is that it is ambiguous or uncertain, in particular if the order is a self-executing one.
[1][1991] 2 VR 577.
I do not accept the submission on behalf of the defendant that the self-executing orders made by Master Kings on 7 October 2004 are irregular and should lead to the finding that the judgment entered by Master Wheeler on 5 November 2004 was not regularly entered. Although inelegantly expressed, there is no lack of clarity as to what was meant by the 7 October orders. It must have been obvious to the defendant's legal advisers that the defendant had 21 days from the date of service to comply with the order that interrogatories be answered, and that, if the defendant did not do so, the defendant's defence would be dismissed. There can be no real confusion from the use of the term "dismissed" rather than "struck out". I am mindful that there is a need for clarity in orders, especially self-executing orders, but no practitioner, acting reasonably, could have misunderstood what was intended by Master Kings.
In any event, no one was misled. The plaintiff did not take the opportunity to enter judgment in the Registry, as it could have done. Instead, a summons was issued before Master Wheeler. It was served and there was due notice given to the defendant and his legal advisers that an application for judgment was being made based upon the failure to comply with the order of Master Kings.
I find that the judgment entered by Master Wheeler was a regularly entered judgment, and I refuse to set it aside on the grounds of irregularity.
There is, of course, a discretion to set aside a judgment which is regularly entered, and that jurisdiction has also been invoked by the summons. The principles are not in doubt and are conveniently collected in Kostokanellis v Allen[2], especially at 603 and following. In the exercise of a discretion to set aside a regularly entered judgment, the court has a wide discretion according to the justice of the case. Issues which fall for consideration include, but are not limited to, whether there is evidence of a prima facie defence, why the judgment was allowed to go undefended and whether there is a reasonable explanation for that, and any prejudice to the plaintiff if the judgment is set aside.
In the affidavit of 14 July 2005, the defendant seeks to explain his delay. The defendant says that he was in a state of emotional distress, having regard to the criminal proceeding against him, at the time that he learned of the application for judgment which was returnable before Master Wheeler on 5 November 2004. I accept that the explanation in this regard is a credible and reasonable one. However, there is no credible or reasonable explanation given for the inordinate delay in failing to apply to set aside the judgment in the period between 2 December 2004, when the defendant was convicted and given a suspended gaol sentence, and the filing of the summons on 6 June this year. That summons is apparently filed in a last ditch effort to avoid bankruptcy proceedings which have been pending now for over six months in the Federal Court.
[2][1974] VR 596.
In his affidavit, the defendant does not say that he cannot pay the balance of the amount which is due under the judgment, having regard to the moneys which were released from court pursuant to the orders of Master Wheeler. He simply says that he attempted to comply with the orders but has not been able to do so, for reasons that he had lost hope in his life following his conviction. The defendant also says that he will be prejudiced if the judgment is not set aside because he has been offered work in China, and that will require him to travel overseas; he will not be able to do that if he is bankrupt.
The fact that the defendant intends to accept employment outside of Australia and to travel to China is a material factor for me to consider in the exercise of my discretion.
Next I will consider whether or not there has been a sufficient affidavit on the merits which establishes a prima facie case to defend this proceeding. I note that, in an earlier affidavit sworn in the proceeding on 14 April 2004, the defendant deposed to a defence along the lines that he was taking the money in cash from the plaintiff pursuant to an agreement to do so; in other words, that he was authorised to take the money which is the subject of the misappropriation claim in this proceeding and which was the subject of the theft charge in the County Court. At that time, Redlich J was prepared to hold that this affidavit evidenced a prima facie defence which should be allowed to go to trial. In my view, circumstances have changed since that time. The defendant pleaded guilty to the theft charges which mirror the misappropriation claims made in this proceeding. He says he did so for practical reasons, to avoid a long trial. In my view, the plea of guilty by the defendant in the County Court can be relied upon by the plaintiff as an admission of the misappropriation which is alleged by the plaintiff in this case. I find that the defendant has not established a prima facie defence on the merits.
Finally, it was submitted on behalf of the defendant that I had a discretion to extend the time to answer the interrogatories and that this discretion continued notwithstanding that judgment had been entered. Reliance was placed upon the decision of the High Court in FAI General Insurance Co Ltd and Ors v Southern Cross Exploration NL and Ors[3]. It may be that I have such a discretion. However, that discretion raises, in my view, the very same discretionary factors which apply to my decision as to whether or not, in the circumstances of this case, I ought to set aside the judgment on the basis that it is a regular judgment.
[3](1987) 77 ALR 411.
In all the circumstances of the case, it is in my view a proper exercise of my discretion to refuse the application to set aside the judgment.
Accordingly, the appeal against the orders of Master Evans will be allowed and in lieu thereof it will be ordered that the defendant's summons dated 6 June 2005 will be dismissed with costs.
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