VRS Pty Ltd v Buttigieg - [2020] SASC 200

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
VRS PTY LTD v BUTTIGIEG & ORS
[2020] SASC 200
Judgment of Judge Dart a Master of the Supreme Court
16 October 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - DEFAULT JUDGMENT - JUDGMENT IN DEFAULT OF OTHER REQUIRED STEP
Matter listed for trial - applicant is second registered mortgagee - seeks to enforce mortgage - also seeks to enforce guarantees - respondents ordered to file trial affidavits on four occasions - no compliance - trial imminent - applicant seeks judgment in default of compliance with orders - application allowed in part.
Held:
1. Applicant entitled to order for possession of real property.
2. Trial vacated.
3. Balance of issues stood over for further consideration.
Uniform Civil Rules 2020 (SA) r 3.1, r 146.1; Supreme Court Civil Rules 2006 (SA) r 4, r 228(1), referred to.
Testel Australia Pty Ltd v KRG Electrics Pty Ltd & Anor [2013] SASC 91; AON Risk Services Australia Ltd v Australian National University [2009] HCA 27, considered.

VRS PTY LTD v BUTTIGIEG & ORS
[2020] SASC 200
JUDGE DART:

These reasons deal with an application to have the Court enter a default judgment against the respondents. The default is comprised of a persistent failure to comply with interlocutory orders to prepare the matter for trial. The application is allowed in part.
Background
The applicant lent monies to the first, second and third respondents pursuant to written terms of loan dated 19 April 2017. The loan was in the amount of $300,000 and the term of the loan was for six months, to expire on 20 October 2017. The fourth and fifth respondents gave guarantees in respect of the loan obligations of the borrowers.
The first and second respondents are the registered proprietors of land at Eight Mile Creek and also at Racecourse Bay. They gave a mortgage over the land as security for the loan. The loan expired and the principal sum was not, and has not, been repaid. Default notices were served on or about 8 February 2018. The first and second respondents did not comply with the default notices. These proceedings were commenced on 5 April 2018.
The applicant seeks possession of the two properties pursuant to its rights as mortgagee. It is the second registered mortgagee. Westpac has a registered first mortgage. Separately, the applicant seeks judgment in a dollar amount against all of the respondents, including the guarantors.
The applicant, by interlocutory application FDN 43 filed on 24 September 2020, sought default judgment in the matter. The matter was listed for trial before me for three days commencing on 20 October 2020.
On 6 April 2020 orders were made requiring the applicant to file its trial affidavits within 28 days. It did so. At the same time, the respondents were ordered to file their trial affidavits within 21 days of receipt of the applicant’s documents. Accordingly, the affidavits of the respondents should have been filed…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] SASC 200
Decision Date: 16 October 2020

CaseChat Overview and Summary

The parties in this case are VRS Pty Ltd, the applicant, and the Buttigieg family, the respondents. The applicant has commenced proceedings against the respondents to enforce a mortgage and guarantees in relation to two properties, located at Eight Mile Creek and Racecourse Bay. The application before the court is to have the respondents declared in default for their failure to comply with orders to file trial affidavits and to enter a default judgment against them. The court must determine whether the persistent non-compliance by the respondents constitutes a serious or persistent breach of the rules or orders that justifies the entry of a default judgment.

The court was required to consider whether the respondents' persistent failure to comply with the interlocutory orders constituted a serious or persistent breach of the rules or orders that justified the entry of a default judgment. The court noted that the respondents had been given four opportunities to file their trial affidavits and had failed to do so, despite the matter being listed for trial. The court also considered that the failure to file the affidavits had seriously prejudiced the proper and expeditious conduct of the action, as the applicant would be prejudiced if the trial had to be vacated.

The court found that the respondents had committed serious and/or persistent breaches of the orders of the court which seriously prejudiced the proper conduct of the action. The court also found that the respondents had manifested an unwillingness to defend the action with due diligence. The court held that the jurisdiction to enter a default judgment was enlivened and exercised its discretion to do so. The court entered a default judgment against the second and fourth respondents for the relief sought by the applicant, including possession of the two properties.

The court orders that judgment be entered against the second and fourth respondents for the relief sought by the applicant, including possession of the two properties. The court orders that the second and fourth respondents pay the applicant's costs of the application, to be taxed if not agreed.

Orders

Orders of the court

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Background

Background to the litigation

These reasons deal with an application to have the Court enter a default judgment against the respondents. The default is comprised of a persistent failure to comply with interlocutory orders to prepare the matter for trial. The application is allowed in part.Background The applicant lent monies to the first, second and third respondents pursuant to written terms of loan dated 19 April 2017. The loan was in the amount of $300,000 and the term of the loan was for six months, to expire on 20 October 2017. The fourth and fifth respondents gave guarantees in respect of the loan obligations of the borrowers. The first and second respondents are the registered proprietors of land at Eight Mile Creek and also at Racecourse Bay. They gave a mortgage over the land as security for the loan. The loan expired and the principal sum was not, and has not, been repaid. Default notices were served on or about 8 February 2018. The first and second respondents did not comply with the default notices. These proceedings were commenced on 5 April 2018. The applicant seeks possession of the two properties pursuant to its rights as mortgagee. It is the second registered mortgagee. Westpac has a registered first mortgage. Separately, the applicant seeks judgment in a dollar amount against all of the respondents, including the guarantors. The applicant, by interlocutory application FDN 43 filed on 24 September 2020, sought default judgment in the matter. The matter was listed for trial before me for three days commencing on 20 October 2020. On 6 April 2020 orders were made requiring the applicant to file its trial affidavits within 28 days. It did so. At the same time, the respondents were ordered to file their trial affidavits within 21 days of receipt of the applicant’s documents. Accordingly, the affidavits of the respondents should have been filed by late May. The matter came back before the Court for directions on 17 June 2020. At that time no trial affidavits had been filed by the respondents. A further order was made extending the time for the respondents to file their trial affidavits to 14 July 2020. The matter was again before the Court on 17 July 2020. The respondents had still not filed their trial affidavits. An order was made providing a further 14 days within which to do so. The matter was listed for trial on that occasion. No further interlocutory hearings were anticipated. The matter was called on, on 28 September 2020, as a result of the filing of the interlocutory application by the applicant. The interlocutory application sought judgment in default of compliance with the orders of the Court. On that day, the applicant was prepared to stand over the application to allow one further opportunity for the respondents to file their affidavits. An order was made allowing the respondents until 7 October 2020 to file their trial affidavits. The matter came on again on 9 October 2020. There were still no trial affidavits filed on behalf of the respondents. The first respondent is an undisclosed bankrupt and the trustee did not oppose the orders sought. A possession order was previously made against the first respondent’s interest in the two properties. It is only the second and fourth respondents that are defending the claim.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The application seeks a wide range of default orders finalising the matter. The primary relief is for possession of land as a mortgagee. The relevant rule is rule 146.1:[1][1] Uniform Civil Rules 2020.146.1—Judgment in default of compliance (1) If a party— (a) commits serious or persistent breaches of these Rules or an order of the Court which seriously prejudice the proper and expeditious conduct of an action; (b) fails to file a substitute originating process, pleading or affidavit within the time specified by the terms of leave granted under rule 70.3, 85.1 or 87.1; or (c) manifests an inability or unwillingness to prosecute or defend an action with due diligence, another party may apply for default judgment against that party. (2) An application for default judgment must be made by filing an interlocutory application and supporting affidavit in accordance with rule 102.1. (3) If the party in default is an applicant in an action, the Court may— (a) stay the action until the non-compliance is rectified; (b) grant judgment dismissing the action; (c) list the matter for an early trial or hearing; or (d) make any other or further order as it thinks fit. (4) If the party in default is a respondent or an interested party in an action, the Court may— (a) grant judgment in favour of the applicant for some or all of the relief sought; (b) grant judgment in favour of the applicant for damages or relief to be assessed; (c) order that an interested party be removed as a party to the action; (d) list the matter for an early trial or hearing; or (e) make any other or further order as it thinks fit. It is subrules 146.1(1)(a) and (c) that are applicable on the facts of this matter. The second and fourth respondents have committed serious and/or persistent breaches of an order of the Court which seriously prejudices the proper conduct of the action by failing to file their trial affidavits. They have had the applicant’s trial affidavits for five months. They have been ordered on four occasions to file the affidavits. They have not done so. There is no affidavit before the Court explaining the failure. The matter is listed for trial next week. The applicant says that, if affidavits are received in the next few days, it will be seriously prejudiced and that the trial would need to be vacated. The second and fourth respondents have manifested an unwillingness to defend the action with due diligence. It is clear that both provisions apply. The critical question is what the Court should do in the circumstances. By subrule 146.1(4) the Court is given a power to enter judgment for some or all of the relief sought. That is the power the applicant seeks to have the Court exercise. The jurisdiction is enlivened. The question is whether it should be exercised and what would be the most appropriate way to exercise it. The Supreme Court Civil Rules 2006 contained a similar provision.[2] That rule provided that, if a party committed a procedural irregularity that seriously prejudiced the proper and expeditious conduct of an action, the Court could enter a default judgment. Procedural irregularity was defined in those rules as including a failure to comply with an order.[3] In Testel Australia Pty Ltd v KRG Electrics Pty Ltd & Anor[4] Blue J said in relation to that rule:[29] While the power conferred by r 228 should only be exercised as a last resort, given the extent and importance of the failures by the defendants to comply with their obligations over a prolonged period coupled with their failure to take any active part in the action after 17 September 2012, it is appropriate that I exercise my discretion under r 228 and proceed to consider the relief to which Testel is entitled in accordance with the approach identified at [11]–[16] above.[2] Rule 228(1).[3] Supreme Court Civil Rules 2006 rule 4.[4] [2013] SASC 91.

Ratio Decidendi

Legal Principle Established

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