Australia and New Zealand Banking Group Ltd v Mahaffy

District Court of NSW|2012-11-16

Judgment 1The defendant by notice of motion filed on 5 November 2012 seeks orders setting aside a default judgment in favour of the plaintiff on 11 May 2012 for $180,094.19 plus interest, as well as orders in relation to provision of documents under subpoena. The plaintiff brings an application to set aside the subpoena. 2The matter came before me on Friday 16 November 2012. At that stage the relevant history was as follows: (a)October to December 2011: An amended statement of claim filed on 17 October 2011 is served on the defendants (an earlier statement of claim filed on 16 September 2011 was not served). A defence and cross-claim were filed promptly on 1 December 2011. The court vacation then intervened. (b)January to March 2012: On 20 January 2012, during the court vacation, the plaintiff filed a notice of motion to strike out the defence and cross-claim. On the first return date, the matter was adjourned to 23 March 2012. On 23 March 2012, Judicial Registrar Smith ("Judicial Registrar") made orders as follows: "1) I strike out the defts defence filed on 1/12/2011 and the cross claim filed on 1/12/2011 pursuant to rule 14.28. 2) The deft has leave to file and serve a fresh defence and a cross claim by 4/5/2012. 3) Stand the motion over to 11/5/2012 at 9.30am. 4) Stood over CMLDH 11/5/2012 at 9.30am to follow the notice of motion." There was no judgment. I have set out below in more detail a transcript of what occurred in court on that day. (c)April to June 2012: The defendants issued a subpoena on 27 April 2012 and the plaintiff filed a notice of motion to set that subpoena aside. That motion was never dealt with. On 11 May 2012, the court made orders as follows: "1) in relation to the motion filed on 20/1/12 - I grant order 2 as sought in that motion. 2) the order for default judgment is $180,094.19 plus interest in accordance with the civil Procedure Act together with the costs claimed in the Statement of claim. 3) The motion filed on 3/5/12 is dismissed. 4) In accordance with Practice Note 1, I return the affidavits that were read on the motion (Affiavit from Wayne Christie retained by the Court)2) An order pursuant to rule 16.6 of the Uniform civil Procedure Rules 2005 that default judgment be entered for the Plaintiff against the first and second defendants and each of them in the amount of the Plaintiff's claim." On 21 June 2012, the plaintiff obtained orders for judgment. There was no further activity in this court until October. In the interim, enforcement proceedings were commenced. (d)October and November 2012: On 15 October 2012 the defendants filed a notice of motion returnable on 26 October 2012. On this occasion, as was the case on 23 March 2012, Mr Mahaffy and the company were represented by Mr Mahaffy. On 5 November 2012, the defendants filed a notice of motion returnable for 16 November 2012. 3The following can be seen from this history: (a)A defence and cross-claim were filed promptly. The circumstances in which these pleadings were struck out on 23 March 2012 are discussed in more detail below; (b)Although a solicitor appeared, as agent, on 11 May 2012, the defendants have essentially been self-represented at all times; (c)There was delay between the hearing before the Judicial Registrar on 11 May 2012 and the filing of a motion to set aside the judgment. Mr Mahaffy states that he has been in and out of hospital suffering from a staph infection, and that he has other serious medical problems. 4When the matter came before me I had difficulty understanding when and why the defence and cross-claim had been struck out and I adjourned the proceedings to obtain the transcript of the March and May hearings. 5The pleading of the defence filed on 1 December 2011 is as follows: "1. The First Defendant denies owing the Australian and New Zealand Banking Group Limited ACN 005 357 522 anything and denied owing the above Plaintiff $157,360.93 as per claim 2. The Second Defendant DB Mahaffy & Associates Pty Ltd (ACN 003 014 417) denies owing the Australian and New Zealand Banking Group Limited ACN 005 357 522 anything and denied owing the above Plaintiff $157,360.93 as per claim 3. The Second Defendant DB Mahaffy & Associates Pty Ltd (ACN 003 014 417) has never given a guarantee for any business loans with the Plaintiff 4. The Plaintiff (ANZ Bank) has not served the proper paperwork in relation for any loan on First and Second Defendant and its enforcement of any loans with First and Second Defendant 5. The Plaintiff (Australian and New Zealand Banking Group Limited ACN 005 357 522) illegally entered premises at 5026 Emerald Island Drive, Carrara and illegally took possession of property and illegally sold the property for less than market value." 6As I understand the defendants' case, there is a denial that any guarantee was given, a denial of the sum owed and a challenge to quantum. The defence is infelicitously drafted, but not below the General Steel standard: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. It did not warrant wholesale striking out without any consideration of the merits. 7The cross-claim claims damages on a number of grounds, many of which appear fanciful. It is certainly a document which requires major surgery. Whether it deserves being struck out entirely in the manner that occurred before the Judicial Registrar in March and May 2012 is another issue. 8This brings me to a consideration of what happened before the Judicial Registrar. Neither party was able to tell me what happened on either occasion. Mr Mahaffy told me, correctly, that there had been no judgment in March 2012 and that his pleadings had simply been struck out. He was ill in hospital and unable to attend in May. He did not understand what had happened on that occasion. 9Although solicitors for the ANZ attended on both occasions and took notes, those notes were unfortunately unavailable. I drew the attention of both parties to the recent Court of Appeal decision in Dillon v Boland; Dillon v Cush [2012] NSWCA 364 concerning the desirability, where no judgment is available, of being able to produce notes. 10As neither side was able to tell me precisely when, or on what terms, judgment had been set aside, I have obtained transcript of proceedings before the Judicial Registrar on each of these occasion.

The hearing of the motion on 23 March 2012 11The whole of the text of this transcript is attached to this judgment and has been provided to the parties. The Judicial Registrar suggested to the defendants that one of the options was to strike out the defence and cross-claim and allow time for fresh pleadings to be filed. It appears that there were some discussions between the parties for the provision of draft pleadings. However, the Judicial Registrar did not find that necessary: "Mahaffy: I've only got a week to put them altogether and bring it back, and then I am going to give the... Minter Ellison, the solicitors, 28 days to comply with the subpoena, giving information to me, and then a further 14 days I will file and serve the amended statement of cross-claim and the defence. Now, they are also asking that I give them a draft copy, mmm... is that mmm... Judicial Registrar Smith: No, I am not going to do that... Mahaffy: ... [untranscribable] now I'm going to say..." 12The plaintiff suggested the defendants could provide draft pleadings in seven days; the Judicial Registrar allowed more time and suggested the plaintiff's counsel should seek instructions. These are demonstrated in this extract below: "Judicial Registrar Smith: The defence, sorry... The plaintiff is asking that your defence be struck out and default judgment be entered against you, you see? Mahaffy: Yup. Judicial Registrar Smith: So that's... Mahaffy: No. Judicial Registrar Smith: ... a two-step process. It may be after hearing from both parties, I... Mahaffy: Well. Judicial Registrar Smith: ... one option would be obviously to dismiss the... the motion and the other one would be to grant part of the motion but require you to file a new defence... Mahaffy: Well, that might be the case, but how... Judicial Registrar Smith: ... but whichever way it goes... Mahaffy: How can I file a defence when I haven't got any information that... they haven't supplied me any information which I need to file a defence. So it's alright to say I will do a new defence... Judicial Registrar Smith: Yup... Mahaffy: ... the thing is the bank are holding back, there is elements of fraud, this contract is void because the repossession for the place... mmm... and they entered without even going to the Supreme Court of NSW and I have spoken to a law specialist in Queensland and this matter should have been taken to the Supreme Court to get a writ of possession, they did not do that at all... Judicial Registrar Smith: Alright. Mahaffy: There are actually in fraud... and I have enough evidence coming to dispute the whole case. Judicial Registrar Smith: So what you are saying, correct me if I am wrong, but you are saying that you want to issue subpoenas... Mahaffy: Yes. To get the information... Judicial Registrar Smith: ... to get some information to amend your defence. Mahaffy: Well, I've put in a blanket defence and I will put in an amended defence but I need information from these guys here. They won't give me anything, they have never given me anything... Judicial Registrar Smith: Yup... Mahaffy: ... They are hiding behind themself and I had to lodge a blanket defence... They haven't even lodged a defence yet, at all, now, I did that, because I had no information and I am requesting to issue a subpoena to get the information that I require to lodge a more elaborate defence. Judicial Registrar Smith: Okay, well, I'll... thanks. Just take a seat. Mahaffy: Yup... Judicial Registrar Smith: I'll put this to Mr Hynes. One option would be for me to make orders now for the defendant to serve an amended cross-claim and amended defence by a certain time and stand... Hynes: The motion over. Judicial Registrar Smith: ... the motion over. Hynes: Yes. Order 1 in the motion seeks... stands alone and it just seeks to strike out the pleadings... Judicial Registrar Smith: Yup. Hynes: ... so I will get instructions, but I'd imagine they will be content with the grant of order 1... Judicial Registrar Smith: Yup. Hynes: ... the defendant to serve a draft defence and a draft cross-claim within 7 days. Mahaffy: No, sorry, I ... Judicial Registrar Smith: Wait a minute. Yup. Hynes: He can [untranscribable]... and then the motion to come back before you, it's listed today as well for pre-trial directions apparently before you anyway, and then if the pleadings are good enough, I can proceed then with orders 2, 3 and maybe 4. Judicial Registrar Smith: Okay, well... You get some instructions about that, but look, I am going to allow more than 7 days. Mahaffy: Well. Hynes: I will get instructions. Judicial Registrar Smith: Get instructions, but I am going to allow more than 7 days if that's the case and I will stand the matter down, but one way or another... Mahaffy: Yeah, now... Judicial Registrar Smith: ... that should be dealt with today." 13The matter was briefly adjourned for the plaintiff's counsel to obtain instructions. When the parties returned, counsel for the plaintiff provided the court with a set of orders. Mr Mahaffy, however, stated that he did not agree to this procedure. He repeatedly asked about leave to issue a subpoena. He does not appear to have understood that once he filed a defence and cross-claim in proper form, he could seek discovery. The circumstances in which the Judicial Registrar made the 23 March 2012 orders can be seen from the following extract: "Judicial Registrar Smith: I strike out the defendant's defence filed on 1 December 2011 and the cross-claim filed on 1 December 2011 pursuant to r 14.28. Right? The defendant has leave to file and serve a fresh defence and a new cross-claim by 4 May. Six weeks. Mahaffy: Mmm... Judicial Registrar Smith: Yeah, I am not going to give you any longer than six weeks. Mahaffy: No, no, no. Cos if they don't comply with the subpoena I've got to rush around and try and do it. Can you make it seven weeks? Judicial Registrar Smith: Well, no, no, no. You asked for six so you are getting... Mahaffy: 4 May... Yup. Judicial Registrar Smith: 4 May... Mahaffy: Fine. Judicial Registrar Smith: ... and I will stand the motion over until 11 May at 9:30am. Mahaffy: Can I file a notice of motion myself in the time period? Judicial Registrar Smith: Well, speak to the Assistant Registrar, but I... Mahaffy: Yeah... I will go and speak to him. Judicial Registrar Smith: You have got the rights to file a notice of motion... Mahaffy: Okay, that's fine. So... 11 May... Judicial Registrar Smith: 11 May... Mahaffy: ... before yourself... Judicial Registrar Smith: ... at 9:30 Mahaffy: ... before yourself... Judicial Registrar Smith: Yeah, you are coming before me, and the matter is also listed for directions on 11 May at 9:30. Right..." 14There was no question that this order was a peremptory order, or a self-executing order of any kind. When the defendants, in lieu of providing any amended pleading, draft or otherwise, filed a subpoena, the plaintiff moved to set this subpoena aside and to obtain default judgment.

The notice of motion on 11 May 2012 15These proceedings took slightly longer than the March proceedings and there was a judgment, the text of which is set out below. 16On this occasion, Mr Mahaffy was represented by a Mr Watson, who was an agent in Sydney. No fresh defence or cross-claim was filed by Mr Mahaffy. Mr Watson informed the court that the Mr Mahaffy would still like to file a defence. "Hynes: ... and then, in terms of the second motion, I'll just hand up one affidavit, I've just given my friend a copy of that... which is an updated affidavit of debt Judicial Registrar Smith: Yup. Hynes: ... the bank would like this resolved. Last time we were before you Registrar, Judicial Registrar, our motion was adjourned and that includes a prayer for relief which is that judgment be entered or default judgment be entered and is open to the court to make that order now. Judicial Registrar Smith: Right, thanks. Yes Mr Watson. Watson: Judicial Registrar, I... as you are aware, my principal is a litigant in person, he issued this subpoena with the leave of Registrar Grew, on the basis that, he says, that to prepare the defence to the amended state of claim and he needs these documents. Now I hear what my friend says, it may well be that what he should be doing is making an application for preliminary discovery but he says he can't... he is not in a position to... I think you gave him time to... Hynes: ... six weeks Watson: ... six weeks... Judicial Registrar Smith: Yup. Watson: ... to do this. He issued the subpoena I suppose in good faith when he is a lay person... Judicial Registrar Smith: Yup. Watson: ... and that was... the idea was he get documents which would enable him to put on a defence... I, he... I am at a disadvantage... he would still like to put the defence on, but I mean, you will see from the response to the... Do you have in front of you, do you have an affidavit of David Mahaffy sworn on 23 April?" 17However, this request was not acceded to and the Judicial Registrar gave judgment as follows: "Judicial Registrar Smith: Yup. That's right. Alright. Well on the face of it, this is a fair straightforward claim brought by way of amended statement of claim filed on 14 October 2011 by the ANZ bank against Mr Mahaffy, the first defendant, and DB Mahaffy & Associates Pty Ltd, the second defendant, for a business loan made by the bank to the first defendant, guaranteed by the second defendant. Hynes: Yes. Judicial Registrar Smith: That's the case? Right. Okay. Now, there was a defence filed by the defendants and a cross-claim and there was a motion then filed by the plaintiff on 20 January seeking that the defence and the cross-claim be struck out and that... following that, either summary, sorry, either default judgment be granted or summary judgment be entered. Now that matter came before me on 23 March 2012, that motion, the defendant was in person and Mr Mahaffy, the first defendant, is a director of the second defendant company and I... on that day I struck out the defendants' defences and cross-claim filed on 1 December, but... particularly... it's no doubt dealt with in my judgment on that day. I know what Mr Watson had put to me about the defendant being self-represented, but on the 23rd of March when I struck out the defence and cross-claim, I did grant the defendant leave to file and serve a fresh defence and a new cross-claim by the 4th of May. Now that has not taken place, and Mr Watson has today read an affidavit of Mr Mahaffy, David Mahaffy, but the affidavit appears to restate much of what Mr Mahaffy put to the court on the 23rd of March and that it is short affidavit with a lot of annexures, but the issue Mr Mahaffy raises is a proposed cross-claim that he says he has got against the plaintiff, but having regard to the regime in the Civil Procedure Act in ss 56 to 60 of the Civil Procedure Act, just, quick and cheap resolution of the real issues in dispute, and having regard to the justice in this matter to... as referred to in s 58, the plaintiff, sorry, the defendant hasn't filed the defence and cross-claim in accordance with the orders I had made on the 23rd of March. I gave the defendant the time he sought in relation to filing those pleadings, it hasn't been done, so in my view the regime referred to in the Civil Procedure Act is, is, is, best met if... well I withdraw that... Well, he's not actually... Mr Mahaffy hasn't actually made any application for an extension to file the defence or the cross-claim. The fact is he just hasn't done it. He has filed a subpoena, and that's been issued to the bank, and the bank filed a notice of motion seeking to have that subpoena set aside. But as I've mentioned earlier, these proceedings, if in dealing with the bank's original notice of motion, I grant them judgment, there is no... there is no need to go ahead and deal with the motion in relation to the subpoena. Now, the basis of... just the background I've given and in view of the affidavit of Wayne Christie dated 10 May 2012, read by Mr Hynes which verifies the debt, the order that I'll make in relation to the motion filed on 20 January 2012 is I grant order 2 as sought in that motion. So that actually disposes of the matter."

The purpose of this judgment 18The purpose of these reasons is not to consider the merits of the parties' applications, but to set out the circumstances in which I adjourned the hearing of this motion to 30 November 2012. As the defendants are self-represented, the court should provide a greater degree of guidance than would be the case for a represented litigant. 19This was a claim involving a substantial sum of money. The defendants were unrepresented and it would appear that Mr Mahaffy was in poor health. In particular, it would appear that this is not a case where Mr Mahaffy and the second defendant were given a proper opportunity to revise the pleadings of the defence and the cross-claim. Instead, it would appear that these documents were struck out without any reasons being given on a date which was effectively the first time the motion was before the court. 20In Ross v Hallam [2011] QCA 92 Margaret McMurdo P stated at [12]-[13]: "[12] The appellant's counsel in this appeal contended that the judge did not give proper assistance, as required by law, to the self-represented appellant to ensure fairness in the hearing the subject of this appeal, citing cases including Neil v Nott; Abram v Bank of New Zealand; Jeray v Blue Mountains City Council (No 2); Panagiotopoulos v Rajendram; and Tomasevic v Travaglini. [13] As Allsop P recognised in Jeray, different judges will take different approaches to different self-represented litigants. The judicial task of ensuring fairness to all parties where one party is self-represented, can be difficult. Judges must be cautious that, in ensuring fairness to self-represented litigants, they do not cause unfairness to represented litigants. Balancing these tensions can be challenging. I am not persuaded that the primary judge was unfair to the appellant in these proceedings. His Honour encouraged him to put forward his best case and tried to assist him to focus on the real issues. The appellant persistently refused to avail himself of those opportunities. His Honour's frustration at the appellant's recurrent failure to file a competent defence, and his Honour's concern that the appellant was not using the court process legitimately, was understandable in the circumstances. But a perusal of the transcript of the proceedings below makes it clear enough that the appellant was attempting to articulate, albeit ineffectively, that he had a defence to the respondent's defamation claim, namely truth and perhaps fair comment. That said, there can be no doubt that the respondent was entitled to succeed in his application on the material before the primary judge, at least in having the appellant's defence of 13 September 2010 struck out with costs." 21Chesterman JA, concurring in the setting aside of the judgment, noted the helpful explanation of the authorities and the rules where there is a litigant in person set out by Applegarth J in Mbuzi v Hall [2010] QSC 359 at [25] as follows: "[25] A self-represented litigant, like any other litigant, impliedly undertakes to the Court and to the other parties to proceed in any expeditious way. The purpose of the rules of civil procedure is to "facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense". The just resolution of the real issues in civil proceedings may on occasions require a judge to give proper assistance to self-represented litigants to ensure that the proceedings are conducted fairly and to avoid "undue delay, expense and technicality". The proper scope for assistance depends on the particular litigant and the nature of the case. The judge cannot become an adviser to the self-represented litigant, for the role of the judge is fundamentally different to that of a legal adviser. Further, the judge must maintain the reality and appearance of judicial neutrality at all times and to all parties, represented and self-represented." 22Chesterman JA went on to note Althaus v Australian Meat Holdings Pty Ltd [2009] QCA 221 as an example of the dismissal of an action by a litigant in person by reason of a "serial failure" to articulate a case in an intelligible pleading, noting that the same principles applied to a defence. 23That is not the case here. The defendants' pleadings were struck out at the first opportunity and, when he did not provide further pleadings but issued a subpoena instead, judgment was entered. 24The defendants seek to set aside judgment. Part 36 r 36.16(2) Uniform Civil Procedure Rules 2005 (NSW) provides that the court may set aside or vary a judgment or order. Such orders are generally made in circumstances where a party against whom default judgment has been obtained asks to be let-in to defend. That is not the case here; the claim brought by the defendants is to set aside the orders made by the Judicial Registrar and the judgment of the Judicial Registrar. 25I remain to be convinced as to whether the plaintiff should seek such relief from this court or, as I indicated in the course of the hearing before me, by way of application to the Court of Appeal, in the same way that an appeal was brought in Ross v Hallam, supra. This is an issue about which I will need to be addressed on 30 November 2012. 26I also note the recent decision of Meagher JA in Mothership Music Pty Ltd v Flo Rida (aka Tramar Dillard) [2012] NSWCA 344. The defendants in those proceedings, a musician and a corporation, did not defend proceedings and, when the matter was listed for hearing, did not appear. Damages were assessed and judgment entered. One of the defendants (the musician) appealed. Meagher JA held that the judgment was final and leave to appeal was not required (at [10]). This was because the judgment entered, although it could be set aside under r 36.16(2)(b), as it was made in the absence of the respondent, was nevertheless final. 27There are other bases set out in the Uniform Civil Procedure Rules in which judgment may be set aside. It is not appropriate for me, as the judge hearing this application, to refer to those rules, or to the principles upon which a fresh application to set aside default judgment may be brought, for the reasons explained by Margaret McMurdo P in Ross v Hallam, supra, at [13]. 28I will, however, note that the order for judgment having been entered in June, the relevant period for an appeal to be lodged is the Court of Appeal may be argued to have expired. Again, conformably with my role as the judge hearing this application, it is not appropriate for me to comment further upon such matters, or such alternatives to an appeal as may be available to the defendants. These are matters upon which the defendants must seek their own advice. 29However informal the reasons of Judicial Registrar Smith on the second occasion may be, they are nevertheless reasons. It is open to question whether judges of this court are even obliged to give reasons. In Bar-Mordecai v Attorney General (NSW) [2012] NSWCA 207 a judge of this court made an order dismissing a notice of motion brought by a litigant in person on the basis that seeking an order for discovery amounted to a "proceedings" for the purpose of the Vexatious Proceedings Act 2008 (NSW) and required leave from the Supreme Court. In the course of setting aside that order, the Court of Appeal noted that no reasons were given, without making any comment or criticism of any kind. 30The degree to which reasons for judgment should be provided to parties whose cause of action is struck out, and the degree to which those proceedings must not only afford the parties are right to be heard, with copies of reasons to be given to the parties for consideration of their rights on appeal, are issues of policy and law which fall outside the parameters of the application before me. Our system of law is an adversary system, not an inquisitorial system. While allowance must be made for litigants in person, there are limits to those allowances. 31By granting an adjournment to enabling the court to ascertain what occurred in March and May 2012 when the matter was before Judicial Registrar Smith, and providing a transcript to the parties of those matters, I have done all that is in my power to ensure that the parties have sufficient information to proceed. What occurs on 30 November 2012 will be a matter for the parties to make appropriate submissions. 32I will, however, provide a copy of this judgment to the Attorney-General's Department, and I note that counsel for the plaintiff has raised with me the possibility of obtaining a Suitors' Fund Certficiate in relation to the proceedings before Judicial Registrar Smith in the event that, by reason of the failure to give reasons in March and any perceived inadequacy in the reasons given in May, the orders made by Judicial Registrar Smith must be set aside. 33As is clear from the orders set out below, I indicated that, to assist both parties in circumstances where the circumstances in which the Judicial Registrar's orders were made was uncertain, I would prepare an outline of reasons setting out the circumstances in which I adjourned the hearing in order to ascertain the nature of the proceedings before the Judicial Registrar in March and May 2012, and setting out some of the issues that the defendants should consider in dealing with the quite difficult issues which arise. 34When the matter is before me on 30 November 2012, both parties will need to address both the question of jurisdiction of this court and the further conduct of the applications before me. 35The preparation of the transcript of these proceedings as well as of this judgment have been undertaken on an urgent basis, and I apologise for any informalities of language or content arising as a result.

Orders 36I make orders as follows: Upon the undertaking of the plaintiff, by its counsel to take all available steps to have Federal Magistrates' Court proceedings SYG 1873/2012 adjourned until after the defendants' motion filed on 5 November 2012 is determined, the Court orders: (1)The defendants' notice of motion filed 5 November 2012 is adjourned to 30 November 2012. (2)The Court will publish an outline of the circumstances in which the adjournment was granted. (3)The defendants to serve on the solicitors for the plaintiff and lodge with the Associate to Judge Gibson a draft defence and cross-claim on which the defendants intend to rely by 23 November 2012. (4)Costs of today reserved.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 January 2013

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