Total Peripherals P/L v Schlomo Kaplan

[1998] VSC 49

SUPREME COURT OF VICTORIA

PRACTICE COURT JURISDICTION

Not Restricted

No. 8042 of 1994

TOTAL PERIPHERALS PTY. LTD.	Plaintiff
v.
SCHLOMO KAPLAN, YAAKOV SHENTZER	Defendants
AND MICROSCIENCE COMPUTERS PTY. LTD.

---

JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	19 AUGUST 1998
DATE OF JUDGMENT:	31 AUGUST 1998
MEDIA NEUTRAL CITATION:	[1998] VSC 49

---

CATCHWORDS: Default judgment - Irregularity - Setting aside judgment - Requirement that defendant to counterclaim show arguable defence - Discretion to dispense with requirement.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. A. Herscope	Rigby Cooke
For the Defendants	Mr. G. Garde Q.C. with	Issac Brott & Co.
Mr. A. Sandbach
SC:	1	JUDGMENT
HIS HONOUR:

1. I have before me three appeals from the orders of Master Evans made on 4 August 1998 whereby the Master set aside three judgments entered in default of delivery of pleadings. The three proceedings in which the orders were made involve the same or associated corporations and in two instances persons associated with them. The proceedings are related, and the appeals in each proceeding raise the same issues. In that situation it is only necessary to concentrate on one of the appeals as findings in respect of that appeal will determine the issues in the other appeals. For convenience I shall deal with the appeal in the proceeding in which Microscience (International) Pty. Ltd. is plaintiff and Total Peripherals Pty. Ltd. is defendant, being proceeding No. 4685 of 1993.

2. The writ in the proceeding was filed in the Court on 18 February 1993. The defendant entered an appearance on 26 March 1993 and filed its defence on 23 April 1993. Thereafter no step was taken in the proceeding until the defendant filed a notice of intention to proceed on 23 September 1996. On 30 June 1997 the proceeding was caught up in the net trawled through the registry by the Litigation Support Group. On some six occasions between that date and 20 March 1998 orders were made by Teague, J. or Master Bruce concerning interlocutory steps in the proceeding. The orders are not relevant for present purposes.

3. On 6 March 1998 Master Bruce made further orders in the matter including an order that the plaintiff deliver an amended statement of claim by 4.00 p.m. on 19 March 1998 and that the defendant deliver a defence to the amended statement of claim by 4.00 p.m. on 9 April 1998. By orders made on 2 May 1998 Master Bruce extended these dates to 27 May 1998 and 26 June 1998 respectively.

4. At the time Master Bruce made the orders on 6 March to which I have referred, he also made the following order:

"14. No party may take any of the steps provided for by this order more than 7 days after the time fixed by this order without the consent in writing of all other parties to the proceeding or the leave of a Judge or Master."

SC:BR 1 JUDGMENT

1. On 27 May 1998 the plaintiff filed and served an amended statement of claim.

2. At 10.24 a.m. on 3 July the defendant filed its defence to the plaintiff's amended statement of claim in the registry. The defendant's solicitor has sworn that the defence was served on the plaintiff's solicitors prior to 4.00 p.m. that same day.

3. At 4.30 p.m. on 3 July the plaintiff entered interlocutory judgment against the defendant in default of delivery of defence to the amended statement of claim.

4. It is clear that the entry of judgment was irregular because by the time that step was taken, the defendant had complied with the orders of Master Bruce. In normal circumstances that would be the end of the matter but because of what I was informed were the observations made by Master Evans concerning order No. 14, it is desirable that I say a little more concerning the matter.

5. From my experience in the Practice Court over recent months, it would seem that order No. 14 is made as a matter of course in proceedings subject to the control of the Litigation Support Group. In dealing with the three applications to set the interlocutory judgments aside, the Master is said to have held that an order in the terms of order No. 14 creates such uncertainty as to invalidate a judgment entered in default of defence on the seventh day after the time fixed for service of that pleading. I was further informed that the Master indicated that he had acted on the basis that the standard order was so unclear as to invalidate steps taken within that time in a large number of other cases.

6. In my opinion orders to the effect of order No. 14 may well have a tendency to mislead practitioners and did mislead Total Peripherals' solicitor in the present litigation. He was confident that by filing and serving the defence to the amended statement of claim on the seventh day after 26 June he had complied with Master Bruce's orders. I shall return to that aspect in a moment. However, although the order may tend to mislead, it does not invalidate steps taken within the time stipulated by the order.

SC:BR 2 JUDGMENT

1. The combined effect of the two orders is that if a party does not file and serve his pleading by 4.00 p.m. on the date stipulated he may, without the consent of the other party or the leave of the Court, file and serve it within seven days of that date unless within that seven day period and prior to the filing and serving of the pleading, the opposite party has entered default judgment. Having said that, it is my opinion that an order to the effect of order No. 14 serves no useful purpose and the practice of making such orders should cease.

2. Had the judgment in the present case been entered regularly, nevertheless I would have set it aside. Total Peripherals' solicitor has sworn that in filing the defence to the amended statement of claim on 3 July 1998 he believed he had complied with Master Bruce's orders. I accept his explanation in the matter. Further, having regard to the history of this litigation I consider Microscience's solicitor took an unfair advantage of Total Peripherals' solicitor in entering the default judgment when he did. It is clear that at all times Total Peripherals intended to defend the proceeding. That much follows from the filing and service of its original defence and the fact that it was Total Peripherals that gave the notice of intention to proceed on 23 September 1996 rather than Microscience.

3. In Hogg v. J. Isherwood-Hicks Pty. Ltd. (1992) 108 F.L.R. 262 Kearney, J. dealt with an application to set aside a judgment entered in default of defence. In setting the judgment aside his Honour said at p.264:

   "I should add that I consider that where, as here, a solicitor has entered an appearance, the practice of 'snapping on' a default judgment, without notice, immediately upon the expiration of a period prescribed by the rules, should be strongly deprecated. It serves no useful purpose. It increases the costs of litigation unnecessarily. It should form no part of the practice of the law in Darwin."

4. I simply add - nor should it be the practice in the State of Victoria.

SC:BR 3 JUDGMENT

1. It was contended by counsel for Microscience that I should only set the judgment aside if Total Peripherals has satisfied me that it has an arguable defence on the merits to Microscience's claim.

2. Whilst as a rule the Court will not set aside a judgment against a defendant which has been entered regularly unless the defendant satisfies the Court that it has an arguable defence on the merits, the rule is not inflexible and there are cases in which such a requirement is not imposed on a defendant. See for example Collins Book Depot Pty. Ltd. v. Bretherton [1938] V.L.R. 40. In the circumstances of this case I dispense with the requirement.

3. The appeal will be dismissed with costs to be taxed and paid by the plaintiff.

4. In proceeding No. 6818 of 1994 in which Total Peripherals is plaintiff and Microscience and Shentzer are defendants, on 6 March 1998 Master Bruce ordered that the defendants file and deliver their defence and any counterclaim by 4.00 p.m. on 19 March 1998 and that the plaintiff file and deliver into reply and defence to counterclaim by 4.00 p.m. on 9 April 1998. At the same time he made a similar order to order No. 14.

5. By order of 22 May 1998 Master Bruce extended the time for the filing and delivery of the defence and counterclaim to 27 May 1998 and the filing and delivery of the reply and defence to counterclaim to 26 June 1998.

6. On 27 May 1998 the defendants filed and delivered their defence and counterclaim. At 10.24 .m. on 3 July 1998 the plaintiff filed its reply and defence to counterclaim. It served its reply and defence to counterclaim on the solicitor for the defendant before 4.00 p.m. that day.

7. At 4.29 p.m. on 3 July 1998 judgment was entered against the plaintiff in default of defence to counterclaim.

SC:BR 4 JUDGMENT

1. For the reasons stated, the appeal from the orders of the Master made on 4 August 1998 whereby the judgment was set aside will be dismissed with costs to be taxed and paid by the first named defendant.

2. In proceeding No. 8042 of 1994 in which Total Peripherals is plaintiff and Microscience and others are defendants the sequence of events is the same as in the other proceedings. The only difference is that the default judgment was entered one minute later than that in proceeding No. 6818 of 1994.

3. Again for the reasons stated the appeal from the orders of the Master made on 4 August whereby the judgment entered against the plaintiff in default of defence to counterclaim was set aside will be dismissed with costs to be taxed and paid by the third named defendant.

---

SC:BR 5 JUDGMENT