Woolf v Sharma - [2024] WADC 27

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   WOOLF -v- SHARMA [2024] WADC 27
CORAM:   DEPUTY REGISTRAR HARMAN
HEARD:   11 APRIL 2024
DELIVERED          :   11 APRIL 2024
FILE NO/S:   CIV 4540 of 2022
BETWEEN:   MAREE JOAN WOOLF
Plaintiff

AND

HEMANT SHARMA
First Defendant

ARUNDHATI RAO PUSKOOR
Second Defendant

Catchwords:

Practice - Practice under the Rules of the Supreme Court 1971 (WA) - Application to set aside judgment in default of appearance - Judgment irregular

Legislation:

Nil

Result:

Application successful

Representation:

Counsel:

Plaintiff	:	Mr C K Edwards
First Defendant	:	No appearance
Second Defendant	:	Ms K Woods

Solicitors:

Plaintiff	:	Delta Legal
First Defendant	:	Not applicable
Second Defendant	:	Michael Paterson & Associates

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

Nil

DEPUTY REGISTRAR HARMAN:

According to the indorsement of the amended writ, the causes of action put against one or both defendants are breach of contract, breach of duty by a trustee and unjust enrichment. The contractual cause is put upon an agreement with the first defendant for development of real estate by which the plaintiff would receive a return within six months. From terms by which the cause of action for breach of duty is expressed, it is no more than open to consider that the plaintiff advanced money pursuant to the agreement. The cause for breach of duty is expressed along the lines that the plaintiff was an investor in a unit trust of which the defendants were joint trustees; that she advanced an amount of $140,000 to the first defendant as trustee; and that the defendants failed to act in good faith and in the best interests of the plaintiff as beneficiary. The plaintiff does not specify any matter that identifies the reason for so characterising some unspecified action or inaction of the defendants. It is no more than open to consider from terms by which the cause of action for unjust enrichment is expressed that the failure to act in good faith and in the best interests of the plaintiff as beneficiary had been by an unspecified transfer of funds to the first defendant and his failure to use the funds transferred for their intended purpose.
The only cause of action put against the second defendant is as a trustee of the unit trust for breach of duty by failure to act in good faith and in the best interests of the plaintiff as beneficiary.
On 6 June 2023 the plaintiff obtained an order that in part is as follows:
1.the plaintiff be granted leave for substituted service in the following terms:
(a)…
(b)that service will be deemed to have been effected upon the second defendant, once the plaintiff has taken all of the following steps:
a copy of both the Writ and the Orders made regarding substituted service:
(i)be sent by registered post to 4 Arnott Ct, Kelmscott Western Australia and to 8 Newcomen Road, Stirling and addressed to Arundhati Rao PUSKOOR, the second defendant;
(ii)be displayed by way of advertisement in both the Western Australian and Australian newspapers;
Upon a later application of the plaintiff by which she had sought to replace the provision in the order of 6 June 2023 for display of the writ with an order for publication of notice of the writ, an order issued on 8 August 2023 that in part is as follows:
1.Order … and 1(b)(ii) of the orders made on 6 June 2023 be vacated.
In support of the later application the plaintiff's solicitor deposed that on 14 June 2023 he had posted the writ and the order of 6 June 2023 to the second defendant at each of the addresses specified in the order by registered mail.
On 22 August 2023 the plaintiff lodged a form of the judgment that she proposed be entered against the second defendant in default of appearance together with an affidavit by which her solicitor again deposed to posting the writ and the order to the defendant on 14 June 2023.
By the requisition issued on 25 August 2023 the plaintiff was called upon to depose to the indorsement of the writ with the detail specified by O 9 r 1(4) and to produce the indorsement.
A copy of the indorsement made by the solicitor on the writ on 8 August 2023 was attached to a subsequent affidavit of the plaintiff's solicitor. He deposed that he had recorded the indorsement immediately after the order of 8 August 2023 was made; he had then considered that by the order of 8 August 2023 the plaintiff had been constituted as having taken all of the steps specified by the order of 6 June 2023; and that by so indorsing the writ, he had satisfied the condition expressed by O 9 r 1(4) that the indorsement be made within three days of the date on which the plaintiff had been so constituted. It is a fair assessment that the indorsement does not satisfy the requirements of the sub-rule but that it reflects the solicitor's evidence.
The response to the requisition reveals that the explanation for not presenting the indorsement on 22 August 2023 had not been that the plaintiff's solicitor had then considered that either O 9 r 1(4) did not apply or that failure to comply with its terms might be overlooked, but rather that he had not wanted to add unnecessary confusion.
It is evident that either the response to the requisition or a different assessment of the context accounted for judgment being entered against the second defendant.
The application of the second defendant presented for determination is that judgment entered against her in default of appearance be set aside. Regardless whether an applicant contends that judgment has been irregularly entered, the first task in dealing with an application to set aside judgment in default of appearance is to consider whether the judgment is regular.
The second defendant provides evidence that would do no more than support a submission that in circumstances where she deposes that prior to service of the judgment, she had not received the writ, the plaintiff would be denied the benefit of a presumption that service by post had actually been effective.
As there are reasons to consider that the judgment is irregular, the parties were so informed and given the opportunity to make submissions. After hearing submissions a determination was made along with an outline of the reasons. An undertaking was given that written reasons would be provided and what follows are the reasons for making an order in favour of the second defendant together with costs.
According to the indorsment of the writ, at the time that funds were provided to the first defendant for the purposes of the unit trust, the second defendant had also been a trustee. In presenting the cause of action against the second defendant, the lack of any other detail renders the contention that she breached a duty owed to the plaintiff by failing to act in good faith and in the best interests of the plaintiff, no more than a description of a cause of action. As an indorsement it is insufficient to identify any act or omission either attributable to the second defendant or for which she would be accountable for failing to act in good faith and in the best interests of the plaintiff.
Judgment was entered on the basis that the court had been satisfied that the defendant had failed to observe the command expressed by the writ. By that failure the defendant was deemed to admit that she is a trustee of the unit trust; that the first defendant received $140,000.00 from the plaintiff for the purposes of the trust; and that in some unspecified context, she failed to act in good faith and in the best interests of the plaintiff. By the judgment the plaintiff is entitled to recover damages to be assessed.
Although the context in which judgment was provided explains the reason that it is so expressed, the liability that it generates is exposed by the indorsement as open-ended. In the context established by the indorsement, that result establishes the judgment as irregular. For the same reason, whilst the judgment remains effective, it precludes identification of the datum for the purposes of assessing damages.
According to the writ, the second defendant is a resident of metropolitan Perth, Western Australia. Upon the issue of the writ, in accordance with O 5 r 11(1) she was provided the period of 10 days from the date of service of the writ to comply with the command that it expressed. That period is the minimum specified by the rule.
Inevitably posting the writ by mail would precede the date of delivery by a number of days. By an order for substituted service by post made in conventional terms, the period for compliance with the command expressed by a writ would be extended to accommodate the period between the dates of posting and delivery with the result that it would not intrude into the period specified by the writ for compliance with the command. The order of 6 June 2023 did not establish an extension of time.
As service upon which the plaintiff relied in seeking judgment had been established by the order of 6 June 2023; and by that order, service had been deemed to have been undertaken on the date of posting, operation of the order of 6 June 2023 would inevitably reduce the period for compliance with the command to less than the period expressed by the writ and thereby the minimum expressed by the rule.
By utilising the order for the purpose of obtaining judgment, the plaintiff established ground to conclude that the judgment is irregular.
There are three other features of the context that constitute the judgment as irregular.
The first is that the order of 6 June 2023 does not provide for substituted service of the writ of summons, it only establishes the date of deemed service of an unspecified document. The words of an order for substituted service of a writ of summons made in conventional terms would specify that undertaking a particular task shall be good and sufficient service of the writ of summons on the defendant. The significance of the words 'shall be good and sufficient service of the writ of summons on the defendant', is that they speak to the requirement expressed by O 9 r 1(1) that a writ of summons be served personally and also to the context expressed by r 1(4): that for service to be sufficient for the purpose of obtaining judgment in default of appearance, an indorsement of specified features of personal service be made on the writ within three days. It is by those words, not by the task specified, that the term 'substituted service' used with reference to an order given more conventional expression, conveys that upon compliance and default, it would be open to the plaintiff to obtain judgment in default of appearance: appropriately, by motion in chambers without regard for r 1(4).
In this instance, the order of 6 June 2023 had specified alternative means of service but did not express that undertaking the specified tasks shall be good and sufficient service of the writ of summons upon the defendant.
As the order of 6 June 2023 was not expressed in terms that would establish effective service of the writ, all that the plaintiff's solicitor's evidence establishes is that he had posted the writ of summons and the order of 6 June 2023 to the defendant. The writ has not been served.
The second is that to be effective from the perspective of the defendant it was necessary that the content of the order of 8 August 2023 be communicated to her. When judgment was entered the plaintiff had presented no evidence that she had taken any step to inform the second defendant that the order of 6 June 2023 had been amended by the order of 8 August 2023.
The significance of the lack of such communication is that on the case for judgment presented by the plaintiff, having at least been deemed served with both the writ and the order of 6 June 2023 the second defendant would be taken as having had the opportunity to consider and respond to their content. It is open to consider that to determine the commencement date of the period for compliance with the command expressed by the writ, the defendant would at least scan the content of each of the publications specified in the order for each day subsequent to 6 June 2023 to establish that she could be satisfied whether the writ had been displayed. Had she done so upon receipt of the documents, she would then have been satisfied that the period for compliance with the command expressed by the writ had not yet commenced. On the same reasoning the same observation is apposite for each subsequent day until the date that the defendant was informed of the judgment. It is open to consider that until she became aware of the order of 8 August 2023, she had been nonplussed.
Until the defendant had been informed that the terms and effect of the order of 6 June 2023 had changed such that the date of postage rather than the date of display of the writ in the specified publications would establish the date of service, the plaintiff could not establish the defendant's default.
The third is that it is open to consider that judgment had been entered upon the plaintiff's response to the requisition rather than reconsideration of the applicability and impact of r 1(4). Both the indorsement of the writ and the evidence provided in response to the requisition were obviously insufficient compliance with r 1(4). The indorsement records nothing about the process of service upon which the plaintiff relied and was made some nine weeks beyond the time specified by the rules as a condition for entry of judgment.
Moving beyond the reasons for concluding that the judgment is irregular, each of the parties filed submissions that were to the effect that regardless the status of the judgment, an applicant was required to present evidence upon which the court could be informed of the utility of setting it aside.
In this instance the paucity of the indorsement could not justify the proposition that any onus falls upon the second defendant. The more fundamental point is that although the court is presented with the opportunity to hear and consider the applicant's intentions does not mean that it is appropriate to do so.
In circumstances where an applicant seeks to set aside a judgment that is irregular there is no reason to consider that the applicant should be in a different position to any other defendant who is yet to file a defence. As a matter of principle, it is not possible to discern that consideration of what may transpire if an irregular judgment is set aside should have any significance in the context of an application to set it aside. The prospect that an applicant may intend to do no more than require the plaintiff to establish a case at trial, alternatively may put what may be considered to be an inadequate case in response, could not justify the result that an irregular judgment should stand. Any determination to the contrary would properly be confined by its facts.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AC
Court Officer
1 MAY 2024