White Dee Pty Ltd v Clark - [2020] WADC 50

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   WHITE DEE PTY LTD -v- CLARK [2020] WADC 50
CORAM:   DEPUTY REGISTRAR HEWITT
HEARD:   1 APRIL 2020
DELIVERED          :   17 APRIL 2020
FILE NO/S:   CIV 2387 of 2015
BETWEEN:   WHITE DEE PTY LTD
Plaintiff

AND

RICHARD JAMIE CLARK
First Defendant

KATHERINE LOUISE CLARKE
Second Defendant

FILE NO/S: CIV 2288 of 2017
BETWEEN: JON DAVID SAINKEN
Plaintiff

AND

KATHERINE LOUISE CLARK
Defendant

Catchwords:

Practice and procedure - Application to set aside default judgment - Consideration of the length of all reasons for delay - Consideration of proposed defence

Legislation:

Nil

Result:

Application dismissed

Representation:

CIV 2387 of 2015

Counsel:

Plaintiff	:	In person
First Defendant	:	By its director Mr J Sainkin
Second Defendant	:	By its director Mr J Sainkin

Solicitors:

Plaintiff	:	Not applicable
First Defendant	:	Not applicable
Second Defendant	:	Not applicable

CIV 2288 of 2017

Counsel:

Plaintiff	:	In person
Defendant	:	In person

Solicitors:

Plaintiff	:	Not applicable
Defendant	:	Not applicable

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

Nil

DEPUTY REGISTRAR HEWITT:

The evolution of this matter concerns the purchase by a company known as Karika Pty Ltd of a business owned by the various entities who are plaintiffs to this action of a business known as Club Bayview. Katherine Louise Clark and her brother, Richard Jamie Clark were the directors of the purchaser and the price of the purchase was $2,032,000. The impetus for the purchase came from Richard Clark however Richard was unable to fund such a purchase and was not able to obtain a bank loan in order to do so and so he invited his sister Katherine to join in the purchase and to use her home as a security for any business loan which was taken out to assist in the purchase.
The plaintiff has indicated in the various affidavits that she has filed that she was uncomfortable with the arrangement and felt highly pressured and compromised to provide her home as a security.
The purchase was eventually consummated on terms which are contained in a written agreement which was dated 1 November 2013. It was a term of that agreement that Richard and Katherine would guarantee monies due to the seller.
Karika Pty Ltd defaulted under the terms of the agreement and as a consequence of that default the actions were commenced in 2015 and 2017 respectively. In each of those actions, Katherine Clark filed no appearance and a judgment in default of appearance was entered. The first such judgment was entered in CIV 2387 of 2015 on 3 September 2015 and the second on 8 September 2017.
The matter with which I have to deal with on both of these actions is the application of Katherine Louise Clark to set aside the default judgments which have been entered against her. The delay in bringing the applications has been extreme but in each instance the applicant says that she placed the matter in the hands of her brother who assured her that the matter would be resolved. It would appear she was fortified in this belief by the fact that she considered that she had retired from the company and the business, although copies of the ASIC record which have been produced indicate that was not the case.
In order to succeed in an application of this kind, an applicant needs to explain the reason for the delay and establish that he or she has a good defence on the merits. The first defence which is advanced by the defendant is that there was in fact no contract because the formalities had not been completed. In fact, the contract is described as a 'heads of agreement' and there is a proviso that if the seller so requires, the terms and conditions in the heads of agreement should be reproduced in a formal agreement and executed by the parties. The seller did not make any such requirement but in any event a business worth something in excess of $2 million was passed into the hands of the defendants' company and operated by the defendant company and it is simply not tenable to say there was no contract between them as is contended by the applicant.
The next proposition which is advanced by the applicant is that she entered the guarantee based on assurances from the plaintiff Mr Sainken that it was not his intention to pursue her under the terms of the guarantee and the guarantee was to be executed simply to keep his accountant happy. The applicant says that were she aware that in signing the guarantee she was placing her house at risk, she would not have signed it. There is a difficulty with this proposition. The only reason the purchase of the business was going ahead was because the applicant had agreed to mortgage her house to secure a loan which was to be used in the purchase. In fact two such mortgages were registered against the title for her home, each to Australia and New Zealand Banking Group, the first being registered on 26 November 2013 and the next on 24 December 2013.
In agreeing to mortgage her property and in mortgaging her property, the applicant had agreed to place her home in peril in the event of default. It is very difficult to see, having agreed to mortgage her home to the bank and thereby putting it in risk of sale by a mortgagee, that she would be so hesitant to sign a sale agreement containing a guarantee which might have had the same effect. In truth, whatever rights were created by the guarantee in respect of the land, they would be subservient to those created in favour of the bank and, for practical purposes, irrelevant.
The applicant has in her affidavit described how she was being pressured by her brother to enter the deal and it is clear that she knew that in doing so she was placing her largest asset at risk in the event that the business venture was not a success. In fact, that is what came to pass and the mortgagee sold the property because of default. At that stage, the plaintiff placed possession and sale orders on the properties, in the words of Mr Sainken, in the hope that after the mortgagee sale there might be something left over. That did not eventuate. Therefore because of the substantial delay and the defence which is offered to the claim of the guarantee, it is my view that the proposed defence is so thin as to be transparent and certainly not a justification for setting aside the judgments, or either of them.
The next matter to consider is what is proposed as a potential counterclaim by the applicant for misleading and deceptive conduct. It would appear that the claim revolves around the fact that approximately three years earlier the business was offered for sale at a much lower price. How that could possibly amount to misleading and deceptive conduct, since no conduct is identified and no reliance on that conduct is disclosed, escapes me. A counterclaim such as is proposed by the applicant simply has no proper foundation basis or chance of success.
I now turn to discuss the conduct of the applicant in the course of the applications which are before me.
There have been a succession of hearing dates fixed to deal with these applications, but those of importance were the hearing on 5 December adjourning the matter to 23 January; the hearing on 23 January adjourning the matter to a special appointment on 27 February; a special appointment on 27 February which led to a further special appointment on 1 April at 2.15 pm; and an order that the applicant file and serve any further affidavit upon which she intends to rely by 20 March 2020.
In relation to the final order, that was in response to an indication from the applicant that she wished to amplify the materials which she had filed. No such affidavit was filed. On the day before the hearing, namely 31 March, the plaintiff emailed the court indicating that she had received a directive to undergo a 14‑day period of quarantine due to her exposure to people testing positive to the COVID‑19 virus. Notwithstanding that the period of quarantine was stated to be for 14 days, the applicant requested that the matter not be relisted before August 2020, almost a period of some four months. No explanation for the delay was offered.
The court responded inviting the applicant to appear by telephone link‑up. In response to that letter, the applicant provided a telephone number but indicated it was not her preference to participate in a conference call because there was a lack of privacy and mobile reception can be patchy in some areas of the home. The plaintiff then indicated that she would be available from 2.30 pm. No explanation was offered as to why the matter should not proceed at 2.15 pm as was scheduled, and I directed my associate to inform the plaintiff, which I believe she did, that the matter would proceed at the allocated time of 2.15 pm.
When the proceeding began contact was made to the telephone number provided by the applicant. A recorded message indicated the applicant was not available. Rather than keep the other party to the matter waiting for 15 minutes to see if the applicant would become available, I decided that I had sufficient information and had heard sufficient argument from the parties to be able to resolve this matter on the papers and that is the course that I took.
This decision is a result of my review of the materials which have been placed before me by all parties in relation to the matters that I am required to decide.
For whatever reason I have gained the impression that the applicant does not wish to have these matters resolved and does not wish to participate in the hearing of her application.
Having reviewed the materials and the arguments advanced by the applicant in those materials I am satisfied that there was no satisfactory explanation for the delay in bringing these applications and secondly, there is no credible defence which is put forward by the applicant which would justify setting aside these judgments which have been allowed to remain on the court record for approaching 5 years and 2½ years respectively.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
DH
Court Officer
17 APRIL 2020