Bendigo and Adelaide Bank Limited v Borg

The Statement of Claim

1. As the application turns partly on whether the Statement of Claim was regular and pleaded all material facts it is necessary to set it out in full.
2. The Statement of Claim in the matter is as follows: "PLEADINGS AND PARTICULARS 1. At all material times the Plaintiff was a company duly incorporated at law, capable of suing and being sued in its own corporate name and style. 2. On or about 1 July 2007 the First Defendant and the Second Defendant (the Defendants) and ABLN Nominees Pty Ltd, ACN 106 256 521 (ABLN) entered into a loan deed. The loan deed provided, amongst other things: (a) ABLN would lend to the Defendants the sum of $25,500 for the purpose of the Defendants investing in one or more Great Southern Managed Investment Schemes; (b) Interest would be charged on the amount loaned in accordance with the terms of the loan deed and was payable to ABLN by the Defendants; (c) The Defendants would make monthly repayments to ABLN in accordance with the terms of the loan deed; and (d) If an acceleration event occurred under the terms of the loan deed, ABLN was entitled to demand all monies payable by the Defendants at that time. 3. On or about 9 April 2009 the Defendants and ABLN entered into a loan deed. The loan deed provided, amongst other things: (a) ABLN would lend to the Defendants the sum of $55,275 for the purpose of the Defendants investing in one or more Great Southern Managed Investment Schemes; (b) Interest would be charged on the amount loaned in accordance with the terms of the loan deed and was payable to ABLN by the Defendants; (c) The Defendants would make monthly repayments to ABLN in accordance with the terms of the loan deed; and (d) If an acceleration event occurred under the terms of the Loan Deeds, ABLN was entitled to demand all monies payable by the Defendants at that time. 4. The Plaintiff refers herein to the loan deeds described in paragraphs 2 and 3 collectively as "The Loan Deeds". 5. ABLN loaned the monies to the Defendants, but the Defendants have failed to make monthly payments in accordance with the terms of the Loan Deeds. 6. Subsequent to the date of the Loan Deeds, the Plaintiff acquired all of ABLN's right, title and interest in the Loan Deeds and by letter dated 30 April 2009, notice was given from the Plaintiff to the Defendants at xxx, Minto NSW 2566. 7. The occurrences referred to in paragraph 5 above constitute acceleration events within the meaning of the loan deed. 8. The occurrence of the acceleration events referred to in paragraph 5 above permitted the Plaintiff to demand immediate payment of the monies payable. 9. By letters dated 20 October 2009, the Plaintiff demanded repayment of the amount then outstanding under each loan deed, being $26,012.18 and $56,399.01 making a total of $82,411.19 which the Defendants refused or neglected to pay. 10. The Defendants challenged the rights of the Plaintiff to recover under the terms of the Loan Deeds by becoming a Group Member in Group Proceedings in the Supreme Court of Victoria, proceedings number SCR2011 04071 (the Group Proceedings). 11. The Group Proceedings were settled by a Deed of Settlement wherein all Group Members, including the Defendants, acknowledged and admitted the validity and enforceability of the Group Members' loan deeds. PARTICULARS Clause 4.1.4 of the Deed of Settlement. 12. On 11 December 2014, the Deed of Settlement was approved by the Supreme Court of Victoria, wherein it was determined: (a) The Plaintiff's right to sue to recover debts owed to it as equitable assignee of the loans is not in issue; (b) The making of the loans to the Group Members is not now in dispute; (c) The Plaintiff's claims to recover the debts from Group Members is established and admitted; (d) None of the Group members disputed the benefits obtained from their loans; (e) In the circumstances, it would be unjust for the Group Members to retain the benefits obtained from the use of the loan without a commensurate obligation to repay the loan. PARTICULARS Clark v Great Southern Finance Pty Limited (in liquidation) [2014] VSC 516 per Croft J at [4161-4162] and [4170]. 13. In the premises, the Defendants: (a) Are bound by the Deed of Settlement as approved by the Supreme Court of Victoria; (b) cannot raise any Defence or Cross Claim to these proceedings; (c) admit the validity and enforceability of the Loan Deeds; (c) Are liable to the Plaintiff for the amount now outstanding to the Plaintiff under the Loan Deeds. 14. The Plaintiff claims: (a) The sum of $175,094.75 being the monies payable under the Loan Deeds as at 1 September 2015; (b) Interest on the amount of $175,094.75 from and including 1 September 2015 at the higher/overdue rate as set out in the Loan Deeds up to payment or judgment. (c) Alternatively, to paragraph (b) above, interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW); (d) Costs; (e) Any such further Order as this Honourable Court deems fit."

Summary of the parties' submissions

1. Mr P Horobin of counsel appeared on behalf of Mr and Mrs Borg who were the applicants on the Motion.
2. Mr Horobin submitted that the Statement of Claim in question was irregular within Rule 36.15(1) of the UCPR because it failed to plead material facts within Rule 14.7 of the UCPR and this constituted an irregularity which provided sufficient cause to set aside the default judgment. Mr Horobin relied in particular on the decision of the Court of Appeal in Fenato v Chief Commissioner of State Revenue (2010) 78 NSWLR 20.
3. Mr Horobin submitted that the deficiencies in the Statement of Claim, particularly as to how the final amount sought in the Statement of Claim was arrived at, were sufficient to have the judgment set aside. Mr Horobin in that regard relied upon the decision of Brereton J in Commonwealth Bank of Australia v Harrison [2014] NSWSC 1436 especially at [2]-[4]. Mr Horobin submitted that the facts pleaded in the Statement of Claim did not permit the defendants to determine whether the amount sought in it was in fact owed.
4. When the court initially asked Mr Horobin what was the defendants' defence on the merits to the plaintiff's claim, Mr Horobin submitted that it was not up to the defendants to provide a defence on the merits in circumstances where the Statement of Claim was irregular and deficient. He also submitted that the Statement of Claim did not plead all material facts so as to allow a Defence to be filed.
5. However, the court notes that a draft Defence was exhibited to the affidavit sworn by Mrs Borg in support of the Motion. That draft Defence essentially does not admit the allegations made in the Statement of Claim. It is also noted that paragraph 2 of the relief sought in the Notice of Motion filed on 4 July 2016 was to the following effect: "The defendants are granted leave to file a Defence to the Plaintiff's Statement of Claim filed 9 October 2015 in respect of proceedings case number 2015/00294816".
6. It therefore seems that the defendants are of the view that they are able to file a Defence presumably in the form annexed to Mrs Borg's affidavit. Mr Horobin on the date of the adjourned hearing confirmed that if the judgment was set aside this draft Defence would be filed.
7. Mr Horobin submitted that it was in the interests of justice that the default judgment be set aside as it could have been entered for an amount which the defendants did not owe at the time.
8. Mr S J Pearlman, Solicitor, appeared on behalf of the plaintiff which was the respondent to the Motion. Mr Pearlman submitted as follows: 1. The Statement of Claim was not deficient on its face and sufficiently pleaded the cause of action against the defendants. The defendants were clearly aware of the case that they had to meet; 2. The decision in Fenato could be distinguished because in that case the matters which were not pleaded relating to the service of notices of assessment and the due date for payment under the Taxation Administration Act 1996 (NSW) were essential elements of the cause of action which must have been established before land tax became due and payable; 3. All of the evidence showed that the defendants were well aware of the amount sought and the circumstances in which it was owed. They also were bound by the Deed of Settlement, (see clause 4.1.4) pleaded in paragraphs 12-13 of the Statement of Claim; 4. As a matter of discretion, the default judgment should not be set aside as: 1. The defendants had paid interest on their loans for many years without problems; 2. The Deed of Settlement prevented any disputes as to the validity and enforceability of the loans; 3. No defence on the merits had been raised by the defendants; 4. The Statement of Claim sets out all matters except the interest rates applicable; 5. The defendants were aware of the standard interest rate for the second loan - Exhibit 3; 6. The plaintiff had generally made the defendants aware of the consequences of not paying amounts due under the loans; 7. Any setting aside of the default judgment would likely lead to a summary judgment application in relation to the proposed Defence.
9. Mr Horobin for the defendants submitted that whilst the loan amounts are pleaded in paragraphs 2 and 3 of the Statement of Claim, the relevant terms of the Deeds of Loan relating to interest and the percentage of the interest were not pleaded. Further, while amounts said to be outstanding are pleaded in paragraph 9, the ultimate sum sought in paragraph 14(a) of the Statement of Claim, being $175,094.75, is not particularised and a defendant is therefore unable to determine whether the amount claimed is properly sought or not. In other words, there is a jump in the pleading from the amounts set out in paragraph 9 to the amount sought in paragraph 14(a). It is noted that there are no schedules to the Statement of Claim setting out how the amount sought in paragraph 14(a) is calculated.

The background facts

1. The background facts in the matter as established on the affidavit evidence read on the Motion and other documents tendered are, in summary, as follows: 1. On 14 June 2007 Mr and Mrs Borg made application for a loan in the sum of $27,500 to invest in an investment known as the Great Southern 2007 and 2008 High Value Timber Projects upon the recommendation of their financial adviser. A similar application for finance was made on 31 May 2008 by Mr and Mrs Borg in the sum of $55,250; 2. Both applications included a provision that by signing the finance application Mr and Mrs Borg agreed to appoint Great Southern Finance Pty Ltd ("GSF") which was one of the lenders under the proposed loan and each director, company secretary and attorney of GSF, jointly or severally to be the attorney for Mr and Mrs Borg and to enter into and execute on their behalf, any documents connected with, or related to the loan deed and the loan deed itself; 3. It appears that draft deeds of loan were attached to the loan applications as they are referred to in the applications themselves (Exhibit 1, pages 175 and 209); 4. In due course a loan deed dated 1 July 2007 was entered into between GSF and ABL Nominees Pty Ltd and Mr and Mrs Borg to advance the sum of $25,500 to Mr and Mrs Borg at an interest rate of 11.5% with a default rate of 14.5%; 5. Later on 9 April 2009 a loan deed was entered into between GSF and ABL Nominees Pty Ltd and Mr and Mrs Borg to advance the sum of $55,275 to Mr and Mrs Borg at an interest rate of 12% with a default rate of 15%; 6. Both deeds of loan were executed on behalf of Mr and Mrs Borg by GSF as their attorney; 7. It seems not to be in issue that the moneys were advanced to Mr and Mrs Borg. It also appears not in issue that the loans were assigned by GSF and ABL Nominees Pty Ltd to the plaintiff in April 2009; 8. In 2009 GSF and its group of companies went into liquidation. In or about July or August 2009 Mr and Mrs Borg were advised to stop paying the loans and followed that advice (Borg affidavit paragraph 26; Exhibit 1, pages 15-16). In about November 2009 a number of the investors in the GSF Group commenced legal proceedings in the Victorian Supreme Court against the GSF Group of Companies in a class action. Mr and Mrs Borg were members of the class action; 9. On 15 September 2010 Mr and Mrs Borg received a letter from the plaintiff setting out the financial implications of non-payment of their loans (Exhibit 1, page 71); 10. It seems that until recently Mr and Mrs Borg had never received a copy of the deeds of loan which were executed on their behalf by GSF as their attorney (Exhibit 1, pages 2, 168); 11. The proceedings in the Victorian Supreme Court were slowly advanced and a lengthy trial occurred before Croft J in 2012-2013; 12. Shortly before judgment was to be handed down the matter was settled subject to approval by the court of the group settlement under the Supreme Court Act 1986 (Vic); 13. Croft J approved the settlement but annexed to his judgment the draft judgment which was about to be handed down by his Honour in the principal proceedings: see Clarke v Great Southern Finance Pty Ltd [2014] VSC 516. As part of the approval process his Honour approved a Deed of Settlement which included Clauses 4.1.1-4.1.4 which were as follows: "4.1.1 The BEN Parties [including the plaintiff here] agree to waive Interest Relating to Overdue Amounts accrued and unpaid as at the Approval Date, in respect of the Loan Deeds of: 4.1.1.1 the Lead Plaintiffs; 4.1.1.2 Group Members; and 4.1.1.3 M+K Counterclaim Claimants, insofar as those loans are between those persons and the BEN Parties. 4.1.2 The BEN Parties agree not to commence or continue debt recovery proceedings against M+K Clients until at least 30 days after the Approval Date. 4.1.3 Javelin will agree to vary the terms of the Loan Deeds of the Lead Plaintiffs and Group Members whose Loan Deeds were assigned to Javelin (collectively, Javelin Borrowers) in accordance with clause 5, whether or not a Javelin Borrower has ceased making repayments. 4.1.4 The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs' Loan Deeds and the Group Members' Loan Deeds."; 1. It is not in issue that Mr and Mrs Borg were Group Members in the class action proceedings and were subject to the Deed of Settlement; 2. During 2015 Mr and Mrs Borg retained on their behalf a Mr Gulson from DC Legal Negotiators Ltd to attempt to negotiate a settlement with the plaintiff; 3. As part of that retainer Mr Gulson sent a letter addressed to the "Bendigo Group Ltd" on behalf of Mr and Mrs Borg which referred to the "balance outstanding" as being $160,714 (Exhibit A, page 72); 4. The letter included the following statement: "We hold the appropriate authority to deal with all decisions relating to this matter"; 5. The plaintiff rejected the approach and a hardship application was made by Mr Gulson on behalf of the defendants which referred to the "current balance" being $160,714 (Exhibit A, page 79); 6. On 9 March 2016 Mr and Mrs Borg and their son (who was also an investor) offered a substantially reduced sum in full and final settlement of the claims of the plaintiff which was rejected; 7. Meanwhile Mrs Borg in her affidavit in support of the Motion stated that she recalled that some time in October 2015, her husband and her were served with a document titled "Statement of Claim". She forwarded this document by express post to Mr Gulson and did not keep a copy of the document (affidavit paragraph 46); 8. Mrs Borg states that she did not do anything else in relation to the Statement of Claim as she believed that Mr Gulson was "sorting it out" by making an application to the Financial Ombudsman Service; 9. It should be inferred that the Statement of Claim to which Mrs Borg makes reference in her affidavit is the one filed by the plaintiff in these proceedings in relation to which default judgment was obtained.

Legal principles applicable

1. In Fenato, referred to above, Gzell J (with whom Beazley and Macfarlan JJA agreed) stated as follows: "[37] Counsel for the applicants argued that in order to establish his entitlement to the debt the Chief Commissioner had to establish and, consequently, had to plead as material facts the four matters submitted to Delaney DCJ and before this court. [38] The first submission upon which the Chief Commissioner relied was that there was no pleading error. It was submitted that the statement of claim clearly set out the nature of the tax the applicants owed. [39] In my view the making of an assessment is an essential element of the cause of action for money due under the Taxation Administration Act as it arises in this case. Section 14(1) of the Land Tax Management Act required the Chief Commissioner to do so and land tax does not become due and payable until a notice of assessment is served and that requires the due making of an assessment. [40] Proof of service of the notice of assessment is an essential element because land tax is not due and payable until the date specified for payment in a notice of assessment, a date which must not be within 30 days after service in terms of s 39(3) of the Land Tax Management Act. [41] The establishment of a due date on which land tax becomes due and payable is an essential element because land tax does not become due and payable before the date so specified in a notice of assessment under s 39(1) of the Land Tax Management Act. [42] It is also an essential element in a claim for interest, which runs from the end of the last day for payment under s 21(1) of the Taxation Administration Act and that is the date specified in the notice of assessment under s 39(1) of the Land Tax Management Act. [43] Failure to pay the tax on the due date is an essential element of the cause of action because under s 44 of the Taxation Administration Act the Chief Commissioner cannot recover unpaid tax unless there has been a failure to pay it as required. [44] The statement of claim failed to allege service of the notices of assessment or the due date for payment in those notices. … [63] The service of the notices of assessment and the specification of the due date for payment in the notices of assessment were essential elements of the cause of action and were not pleaded in the statement of claim. That failure is not overcome by recourse to r 14.11 of the Uniform Civil Procedure Rules. The Chief Commissioner's second submission fails. … [78] Delaney DCJ exercised a procedural discretion in refusing to set aside the default judgment. As the High Court said in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 177, "appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure." [79] It was submitted that the applicants were served with a statement of claim that clearly set out the nature of the tax that they owed for some time. They chose not to respond to it within the prescribed period. The application to set aside the default judgment was only brought after a bankruptcy notice had been served. [80] Delaney DCJ took into account the absence of a draft defence and the lack of any evidence from the applicants. His Honour also took into account the fact that Mr Macri did not give any evidence that the applicants had a good defence on the merits. [81] While these matters were relevant to his Honour's exercise of discretion the failure to plead the cause of action for moneys due under a statute by reason of the omission of essential elements was a matter that his Honour failed adequately to take into account. [82] His Honour noted the submission of the applicants that it was not sufficient for the Chief Commissioner to have pleaded merely that notices of assessment in an aggregate amount were issued, that no payments had been received, and that the land tax had not been paid. His Honour also noted the submission of the applicants that because the due dates were not identified properly no basis existed to calculate any claim for interest. [83] His Honour said of these submissions: "I reject the argument by the applicants that the statement of claim did not contain sufficient information to enable either the plaintiff's claim and the question of interest to be determined". But his Honour failed to give any reasons for that rejection. [84] A party is entitled to have the material facts constituting a cause of action summarised in the pleading so that the party knows the case it is to answer. The statement of claim in this case failed that objective and that failure, in my view, constituted sufficient cause for the purpose of r 36.15(1) of the Uniform Civil Procedure Rules and outweighed the matters on which his Honour based his exercise of the discretion. [85] The same reasoning applies to the discretion under r 36.16(2)(a) of the Uniform Civil Procedure Rules if that was the appropriate basis for decision. [86] The Chief Commissioner's fourth submission fails. [87] In my view, Delaney DCJ's exercise of discretion was vitiated and it is for this Court to re-exercise it. For the reasons set out above I am of the view that this Court should exercise the discretion under r 36.16(2)(a) or, in the alternative, under r 36.15(1) and set aside the default judgment."
2. In my opinion this case is different to Fenato as the matters complained of by the defendants in the present case were not essential elements of the cause of action such that the debts in question did not become payable before they were established. I agree with the submission of Mr Pearlman on this point. However, the Court of Appeal emphasised that a defendant is entitled to have the material facts pleaded in order to know the case alleged against him or her.
3. In Arnold v Forsythe [2012] NSWCA 18 Sackville AJA (with whom McColl and Young JJA agreed) stated as follows in paragraphs [81]-[84]: "[81] The appellant's contention receives support from Fenato v Chief Commissioner of State Revenue [2010] NSWCA 80 ; 78 NSWLR 20. In that case, the Chief Commissioner obtained a default judgment on a statement of claim seeking an order for unpaid land tax and interest. The statement of claim did not plead the fact of service of the notices of assessment, nor the due date for payment specified in the notices. [82] Gzell J, with whom Beazley and Macfarlan JJA agreed, held that: • the service of the assessments and specification of the due date for payment were essential elements in the Chief Commissioner's action for money due pursuant to a statute (at 26 [39]); • by failing to plead these matters, the statement of claim omitted essential elements in the cause of action (at 28 [61]-[63]); • the pleading deficiencies constituted an irregularity in giving the judgment and attracted the court's power under r 36.15(1) to set aside the judgment (at 30 [75]); and • the defendant was entitled to have the material facts pleaded in order to know the case alleged against him and the Chief Commissioner's failure to do so justified setting aside the default judgment (at 30-31 [84]). Gzell J did not need to decide whether a failure to plead material facts entitles a defendant to have a default judgment based on that pleading set aside ex debito justitiae (at 29 [71]-[72]). [83] I do not read the decision in Fenato v Chief Commissioner as establishing that a failure to plead any material fact in a statement of claim will necessarily constitute an irregularity for the purposes of r 36.15. The significance of such a failure may depend on the nature of the material facts omitted and whether the pleading, despite the omission, sufficiently identifies the case pleaded against the defendant. If it were otherwise, challenges to default judgments could be made in cases where the pleading defects were of little practical importance and created no prejudice to the defendant. If a pleading defect entitles a defendant as of right to set aside a default judgment based on the pleading (a matter left open in Fenato v Chief Commissioner), applications to set aside judgments are likely to turn on fine pleading points in a context divorced from that in which the relevant principles were developed. [84] In the present case, however, the omissions in the statement of claim went to the very foundations of the respondents' cause of action against the appellant. By reason of the omissions, the case the appellant was required to meet was not clear. On the authority of Fenato v Chief Commissioner, this would have been a sufficient reason to conclude that the default judgment had been given irregularly. In a case where the appellant has an arguable defence, the appropriate order would have been to set aside the default judgment."
4. On the basis of the reasoning in Arnold, the significance of a failure of a party to plead material facts depends on the nature of the material fact omitted and whether the pleading, despite the omission, sufficiently identifies the case pleaded against the defendant. A court should avoid applications to set aside judgments turning on fine pleading points. However the question in the end is whether by reason of the omissions in the pleading, the case the defendant was required to meet was not clear. In my view this must be judged at the time a Defence was required to be filed.
5. In Zakaria v Dr Noyce [2012] NSWSC 981, Davies J stated at [24] the following: "[24] Ordinarily irregularity is concerned with a failure to comply with the Rules of Court: Arnold v Forsythe [2012] NSWCA 18 at [88]. That will extend to the position where, for example, default judgment has been obtained on a Statement of Claim that does not properly plead a debt or liquidated sum: Arnold at [59]; or does not plead an essential element of the cause of action: Fenato v Chief Commissioner of State Revenue [2010] NSWCA 80 ; (2010) 78 NDWLR 20 at [39] and [63]. In addition, a judgment entered for more than is due will be irregular: Alexander v Ajax Insurance Co Ltd [1956] VLR 436; H R Turner & Son Pty Ltd v Rhodes [1970] 1 NSWR 305."
6. In Sargeant v HE & FG Campbell Agricultural Machinery Repairs [2016] NSWSC 544, Adamson J stated as following at [35]-[37]: [35] The statement of claim did not plead a cause of action. It did not comply with UCPR, r 14.7. Nor did the draftsperson seek to plead facts in short form, as provided for in UCPR, r 14.12. Ms Burnheim adequately raised those matters before the Magistrate. Her Honour did not address the argument in the reasons. [36] It was held in Fenato v Chief Commissioner of State Revenue [2010] NSWCA 80; 78 NSWLR 20 that deficiencies in a pleading could constitute an irregularity in giving the judgment and could thereby attract the Court's power in UCPR r 36.15 to set aside the judgment: at [75] per Gzell J (Beazley P and Macfarlan JJA agreeing). In Arnold v Forsythe [2012] NSWCA 18, the appellant argued that if a plaintiff obtains default judgment on the basis of a statement of claim that omits material facts necessary to support the pleaded cause of action, the judgment is given irregularly and is thus susceptible to being set aside pursuant to UCPR r 36.15. It was not necessary for the Court of Appeal to decide this point, but Sackville AJA (McColl and Young JJA agreeing) said, at [84]: In the present case, however, the omissions in the statement of claim went to the very foundations of the respondents' cause of action against the appellant. By reason of the omissions, the case the appellant was required to meet was not clear. On the authority of Fenato v Chief Commissioner, this would have been a sufficient reason to conclude that the default judgment had been given irregularly. In a case where the appellant has an arguable defence, the appropriate order would have been to set aside the default judgment. [37] Mr Reynolds' answer to the ground relating to the inadequacy of the statement of claim was that Mr Sargeant must have been able to discern the case he had to meet because he set out in his affidavit his defences to the claim. I do not regard the detail in Mr Sargeant's affidavit as pertinent to overcome the well-founded objections to the statement of claim. The statement of claim was embarrassing and inadequate. It failed to identify a cause of action; if the claim was for breach of contract, it failed to identify the parties to the contract, or the term breached. Its omissions were sufficient to empower the Magistrate to set aside default judgment pursuant to UCPR r 36.15."

Consideration

1. In my view, in the present case, the Statement of Claim in question did not plead all the necessary material facts required in order to make clear to the defendants the case they were required to meet.
2. As well as the matters actually pleaded, the Statement of Claim should have also pleaded the following: 1. The applications for finance signed by Mr and Mrs Borg; 2. The provisions in those applications for finance permitting GSF or one of its directors or its secretary to sign the Deeds of Loan on behalf of Mr and Mrs Borg as their attorney; 3. The fact that the Deeds of Loan were signed in that manner; 4. The interest provisions under the Deeds of Loan including the rates of interest; 5. The relevant parts of Clause 4.1 of the Deed of Settlement approved in the Victorian Supreme Court including the amounts agreed to be waived falling within the term "Interest Relating to Overdue Amounts" within Clause 4.1.1; 6. That such amounts were indeed waived in the totals said to be owing by Mr and Mrs Borg; 7. The amounts said to be owing as capital and interest with a schedule or particulars setting out the calculation of the interest so that Mr and Mrs Borg could understand the amounts claimed against them and assess whether they were accurate or not.
3. The claims made were not run of the mill claims in debt but claims made in the context of complex transactions signed for Mr and Mrs Borg as their attorney and where there had been a settlement approved by the Victorian Supreme Court. In my view these matters needed to be set out in some detail in the Statement of Claim with a calculation of the amounts claimed so that Mr and Mrs Borg could understand the precise case made against them. In my opinion, within the principles in Arnold v Forsythe at [84], the omissions in pleading the material facts resulted in the case Mr and Mrs Borg were required to meet being not clear at the time a Defence was required to be filed. At that time there is no evidence that the defendants had copies of the executed Loan Deeds.
4. Further, the failure to plead the material facts constituted an irregularity within Part 36.15 (1) of the UCPR.
5. I then turn to consider the question whether in all the circumstances I should exercise my discretion to set aside the default judgment which has been entered in favour of the plaintiff against the defendants.
6. On the evidence: 1. Copies of the Loan Deeds have recently been provided to the defendants by the plaintiff (Exhibit 1, pages 231-257); 2. Copies of loan repayment schedules (showing no recent transactions) have been provided by the plaintiff to the defendants (Exhibit 1, pages 259-268); 3. The defendants are generally aware of the case made against them by the plaintiff. However, how the total sum claimed in the Statement of Claim was arrived at is unclear; and 4. The draft Defence attached to Mrs Borg's affidavit does not on its face provide a prima facie defence on the merits.
7. The following comments are made on these matters. First, it seems that the copies of the Loan Deeds and the schedules were only provided to Mr and Mrs Borg via their solicitors on 21 July 2016 (Exhibit 1, page 168), well after default judgment had been entered. Further, the particulars in the loan schedules do not set out how the amount claimed in the Statement of Claim was arrived at.
8. I also take into account the fact that the above appellate authorities appear to display a fairly strict attitude to the need for a plaintiff to set out in detail in the Statement of Claim the material facts pleaded against a defendant so that a defendant understands the case which he or she has to meet.
9. It seems to me that the following matters are significant in the exercise of the discretion: 1. The Statement of Claim does not plead all material facts; 2. The defendants did not have copies of the executed Loan Deeds at the time a Defence was required to be filed; 3. It is not clear from the Statement of Claim how the total sum claimed was arrived at, particularly what was the interest component claimed; 4. It was not clear from the Statement of Claim whether the interest to be waived under the Deed of Settlement had in fact been waived in the amount claimed in the Statement of Claim; 5. At the time a Defence was to be filed no reasonable defendant could ascertain from the Statement of Claim whether the amount claimed was justified, particularly in the absence of access to the Deeds of Loan and particulars of the amount claimed.
10. While the defendants may have had access to drafts of the Loan Deeds (as it seems they were attached to the loan applications) the drafts did not include the usual and default rates of interest. These were only included in the Loan Deeds themselves (compare Exhibit 1, pages 194 and 229 with pages 241 and 257). While the letter dated 30 July 2008 from Great Southern Finance Pty Ltd to the defendants provides details of the second loan and the repayment details relating to it (see Exhibit 3), particulars of only the standard interest rate, not the default rate, were supplied. No details were provided in relation to the default rate for the second loan or the standard or default interest rates for the first loan.
11. Mr Horobin submits that without knowledge of these matters the defendants could not assess whether the amount claimed in the Statement of Claim was accurate and thus owing. This was particularly the case where that amount was not divided into principal and interest. He submits that it was not in the interests of justice that defendants should be bound by a judgment entered in reliance on such a Statement of Claim.
12. In my view, there is some force in these submissions. Without knowledge of the terms of the Loan Deeds executed on their behalf the defendants could not have assessed whether the amount sought was payable.
13. Having regard to all of the above matters, in my view in exercising my discretion the judgment entered on 21 March 2016 against the defendants should be set aside. It is not to the point that any Defence filed may be faced with a summary judgment application. Each application must be considered on its merits.
14. I make the following orders: 1. The judgment entered on 21 March 2016 against the first and second defendants in respect of proceedings 2015/00294816 is set aside. 2. The defendants are granted leave to file a Defence in the form exhibited to Mrs Borg's affidavit sworn 4 July 2016 within 14 days. 3. The plaintiff is granted leave to file an Amended Statement of Claim within 28 days; 4. The defendants are to file a Defence to any Amended Statement of Claim filed and served by the plaintiff within 28 days of service of that Amended Statement of Claim; and 5. The costs as agreed or assessed of the defendants' Notice of Motion filed 4 July 2016, are to be the defendants' costs in the cause.
15. In my view the last order relating to costs is the appropriate costs order in the circumstances in the exercise of my discretion. While costs usually follow the event, no substantive defence has been raised by the defendants and it may be that ultimately they have no defence to the claims of the defendants. Further, no steps were taken by the defendants until fairly recently to seek particulars of the claim. The defendants will be entitled to their costs of the Motion filed 4 July 2016 in the event that they are successful in the proceedings.

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: 29 August 2016