On 19 August 2019, the plaintiff, Atlanta Building Pty Ltd (the "Builder"), entered into a contract with the defendants, Mr David Abela and his then spouse, Ms Rebecca Amos, to construct a dwelling on a property owned by Mr Abela and Ms Amos at Bangalow.
The Builder purported to terminate the contract on 20 August 2021 and now brings these proceedings against Mr Abela and Ms Amos to recover the amount it contends to be due under the contract.
On 13 September 2024, I struck out Mr Abela's List Response and his Cross Summons and Cross List Statement and entered judgment in favour of the Builder against Mr Abela in the sum of $830,154.04.
I granted Mr Abela liberty to apply to set aside those orders, with such liberty to be exercised no later than 5pm on 27 September 2024.
Mr Abela has exercised that liberty and, on 26 September 2024, applied to set aside the orders.
I have heard extensive argument about whether my orders should be set aside.
There were half-day hearings on 23 and 29 October 2024 at which a four-volume court book, comprising some 2,655 pages, was tendered, together with a further tender bundle comprising some 250 pages of documents produced on subpoena.
I have now received 45 pages of submissions from the parties.
At the hearing on 29 October 2024, Mr Fernon SC, who appeared with Mr Klooster for the Builder, accepted that Mr Abela had an "arguable defence" to the Builder's claim.
The Builder's application to strike out Mr Abela's List Statement and Cross Summons was based on a single event of default by Mr Abela.
That evident of default was Mr Abela's failure to serve his evidence by 30 August 2024, as required by an order made by the Court on 18 April 2024.
The Builder's Notice of Motion seeking to strike out Mr Abela's claims was filed on the second business day after the due date for the service by Mr Abela of his evidence: Tuesday 3 September 2024.
The Builder's solicitors served that Notice of Motion at 5:27pm that day by delivery to an identified email address of Mr Abela (the "Abela Email Address").
The following day, Wednesday 4 September 2024, the Court issued a notice of listing, stating that the Builder's Notice of Motion of 3 September 2024 would be heard in the motions list on Friday 13 September 2024.
For reasons unexplained in the evidence, it was not until Wednesday 11 September 2024 that the Builder's solicitors sent to the Abela Email Address notification that the Builder's motion was listed in the 13 September 2024 motions list.
The following day, Thursday 12 September 2024, the day before the Builder's motion was listed before me, the Builder's solicitors sent to the Abela Email Address an affidavit of the Builder's solicitor, Mr Amirbeaggi, dated 12 September 2024. That affidavit and its exhibit comprised over 200 pages. It had been filed at 8:35pm that day.
[3]
Uniform Civil Procedure Rules 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 18.4, requires notices of motion to be served at least three business days before the date fixed for the motion.
UCPR r 3.9 provides:
"If, as a result of a document being filed using Online Registry, the registrar of the court lists proceedings, the party filing the document is required to serve any notice of listing issued by the registrar in relation to that listing on all other active parties."
UCPR r 3.9 does not specify by what time service of such notice of listing is to occur but, when read in conjunction with UCPR r 18.4, should be seen as requiring that such notice of listing also be served three business days before the date listed for hearing of the motion.
That was not done in this case. This, itself, is a factor pointing in favour of setting aside the orders I made on 13 September 2024.
[4]
Principles
There was no dispute before me as to the relevant principles.
They were summarised in the submissions of Mr Fernon and Mr Klooster on behalf of the Builder as follows:
"The question to be determined by the Court in the exercise of its broad discretion to set aside orders is whether it is unjust to let the perfected order stand. [1] Two essential elements to be considered of any application to set aside a judgment regularly obtained are:
(a) whether any useful purpose would be served by setting aside the judgment, and
(b) how it came about that the applicant found himself bound by a judgment regularly obtained. [2]
There is no rigid rule for setting aside an undefended judgment. In considering whether it is unjust to let the Orders stand, Jordan CJ, in Vacuum Oil, posed the question thus: [3]
'The question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand. If so, it should be set aside on such terms as it will minimise the possibility of injustice to the plaintiff. If not, we should not interfere.'
Whether it is unjust to set aside a perfected order is dependent on:
'A state of satisfaction that it would be 'unjust' to let a perfected order stand necessarily involves the court making a broad evaluative judgment about a conclusion, injustice, which itself will be highly fact dependent.'" [4]
[5]
Mr Abela's explanation
In an affidavit made on 8 October 2024, Mr Abela said that:
"It was not until after 20 September 2024 that I received the email serving the [Builder's 3 September 2024 motion] at [the Abela Email Address]."
Earlier in that affidavit, Mr Abela deposed that after his company 3 Degrees Marketing Pty Ltd was placed into liquidation on 12 August 2024:
"I changed the settings on my iPhone so that [the Abela Email Address] was no longer synced to my mobile phone and so that I no longer received emails from that address to my mobile phone. My mobile phone is the primary device upon which I access my emails."
At the hearing on 29 October 2024, Mr Abela said that he wished to correct what he had said in his 8 October 2024 affidavit, as set out at [23] above, and that the paragraph should have stated that until 20 September 2024, he had not "read" the 3 September 2024 email.
At the hearing, Mr Fernon cross-examined Mr Abela in relation to a number of emails that had been sent to Mr Abela at the Abela Email Address and had been sent by Mr Abela from that email address throughout August 2024 and, in particular, on 3 September 2024.
On 3 September 2024, Mr Abela had an exchange of emails with business colleagues within half an hour of receipt at the Abela Email Address of the Builder's solicitor's email serving the Notice of Motion.
Mr Abela's explanation for this was:
"I first received treatment from a clinical psychologist on 15 July 2020 for symptoms of anxiety, depression and insomnia stemming from stress of my separation from Ms Amos. I have continued to see the same clinical psychologist since that time.
The Family Court orders made on 9 May 2024 have had a significant impact on my mental health and on my personal financial circumstances. I did not cope well at the time and rather than deal with my problems, I instead buried my head in the sand and was unable to give my lawyer at the time any instructions or make decisions concerning the proceeding. I could not bring myself to read any emails I received which concerned these proceedings.
Every time that I see an email about these proceedings or think about having to engage in legal issues, I am at risk of or experience a panic attack. I am not in a position where I am presently able to easily manage these panic attacks and instead avoid opening emails about these proceedings or engaging in discussions about my legal issues. I presently find and have found since May 2024, opening emails related to these proceedings to bring on feelings of panic, to trigger intense anxiety, flashbacks, and to overwhelm me emotionally. I have recently been working with my Psychologist to manage these feelings and have put procedures in place by appointing lawyers to deal with legal proceedings on my behalf and only contact me to obtain necessary instructions."
The "Family Court Orders made on 9 May 2024" to which Mr Abela referred were orders made in that Court resolving an evidently contentious dispute between Mr Abela and Ms Amos.
On this application, Mr Abela has produced evidence from his treating psychologist, Dr Marcus Squirrel.
Dr Squirrel said he had been treating Mr Abela since July 2020.
In a report prepared for the purpose of this application, Dr Squirrel said:
"Medical Diagnosis
Mr Abela has been diagnosed with Complex Post-Traumatic Stress Disorder (C-PTSD), a condition formally confirmed approximately two years ago. Despite receiving treatment, Mr Abela's mental health has significantly deteriorated over the past four years, largely due to the prolonged duration of legal proceedings and the profound sense of powerlessness he has experienced throughout the process. In my professional opinion, his diagnosis has evolved in response to a worsening of trauma-related symptoms, which have been exacerbated by ongoing family law disputes. Additionally, the psychological impact of unresolved childhood trauma has been reactivated by his current legal battles, further intensifying his distress."
And:
"Conclusion and Prognosis
In conclusion, Mr Abela's Complex PTSD has significantly impaired his ability to manage personal financial circumstances and engage in legal proceedings. His condition creates significant emotional and cognitive barriers that make it challenging for him to maintain timely and appropriate responses to court matters. Although there have been some signs of improvement through therapy, his ongoing difficulties necessitate continued treatment."
This evidence was not challenged.
I have received detailed submissions on behalf of both the Builder and Mr Abela as to Mr Abela's capacity to engage in these proceedings to the point where I made the orders on 13 September 2024 and as to the truthfulness of the explanation he has given for not engaging with the proceedings sufficiently to serve his evidence in accordance with the 14 April 2024 orders, and for not reading the Builder's solicitor's 3 September 2024 email.
I am not persuaded that I should find that Mr Abela has given deliberately false evidence in support of this application, nor that I should reject his evidence that, although he sent and received emails on 3 September 2024 from the Abela Email Address, he could not bring himself to read the critical email attaching the Builder's Notice of Motion.
Indeed, the lucidity of Mr Abela's email communications later on 3 September 2024 suggests to me that it is likely, as Mr Abela said, that he did not read the email from the Builder's solicitor as, had he done so, he is unlikely to have ignored it.
In those circumstances, and in the light of the swiftness with which the Builder moved following Mr Abela's failure to serve evidence by 30 August 2024, the belated delivery to the Abela Email Address of the notice of listing and the evidence in support of that motion, and, perhaps most importantly, the Builder's acceptance that Mr Abela has an arguable basis upon which to defend these proceedings, I am persuaded that I should set aside my orders of 13 September 2024.
One further matter should be mentioned, and that is that on 3 October 2024, Mr Nick Mellos from Grant Thornton was appointed as Mr Abela's controlling trustee pursuant to s 188 of the Bankruptcy Act 1966 (Cth).
A meeting of Mr Abela's creditors was convened on 13 November 2024 and has now been adjourned to 10 December 2024.
Mr Mellos has said he will be circulating a report to creditors concerning his investigation and recommendations by 27 November 2024.
In written submissions, Mr Fernon and Mr Klooster contended that, should my orders of 13 September 2024 be set aside, the Builder would not be able to prove in Mr Abela's Personal Insolvency Agreement.
That submission was not developed and appears to be incorrect. The Controlling Trustee will be obliged to adjudicate on the Builder's proof of debt in the usual course in accordance with his duties under the Bankruptcy Act. If the Builder is dissatisfied with the Controlling Trustee's determination, it can make an application to review same under s 90-15 of Sch 2 to the Bankruptcy Act for a review of the adjudication.
In any event, faced with the Builder's claim, it would have been open to Mr Abela to appoint a controlling trustee at any time, and whether or not the Builder had obtained the orders of 13 September 2024.
I set aside the orders I made on 13 September 2024 striking out Mr Abela's List Response, Cross Summons and Cross List Statement and entering default judgment against him.
I will hear the parties as to the terms which I should attach to the making of those orders, and as to costs.
[6]
Endnotes
Northey v Bega Valley Shire Council [2012] NSWCA 28 at [16] (Barrett JA).
Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116 at [43] (Leeming JA), citing Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 (Jordan CJ).
Supra at 243-4. In Pham v Gall (supra), Payne JA noted that the question posed in Northey v Bega Valley Shire Council (supra) by Barrett JA and by Jordan CJ in Vacuum Oil (supra) are "functionally equivalent" and "indistinguishable" (at [102]).
Pham v Gall (supra) at [108] (Payne JA).
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Decision last updated: 28 November 2024