Court of Appeal (WA)|2003-02-26|Before: Mr P, Templeman J, Murray J, Rolfe AJ

Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano & Anor [2003] WASCA 20 (26 February 2003)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : CRAYDEN as Executor of the Estate of Sandra Irene Farnworth -v- OTTAVIANO & ANOR [2003] WASCA 20

BETWEEN : PETER JOHN CRAYDEN as Executor of the Estate of Sandra Irene Farnworth

Negligence - Personal injuries - Default judgment for plaintiff - Judgment set aside - Death of plaintiff before assessment of damages and before judgment set aside - Relative importance of prejudice and defence on merits when setting aside default judgment - Whether irreparable prejudice from plaintiff being unable to prove case - Relevance of delay in issuing proceedings - Whether defendant sending writ to insurers was reasonable response in all the circumstances

1 MURRAY J: I agree with Templeman J that, for the reasons to be given by his Honour, to which I have nothing to add, the appeal should be dismissed.

2 TEMPLEMAN J: The appellant is the executor of the late Sandra Irene Farnworth, ("the plaintiff") who claimed to have been injured at the respondent's restaurant in Northbridge, on 2 January 1994, when she slipped and fell.

3 The plaintiff brought an action against the respondents in the District Court, by a writ indorsed with a claim:

"for damages for personal injuries ... which injuries were caused by the negligence of the (respondents) and/or through the (respondents') breach of their duties under the Occupiers Liability Act 1985 as amended."

4 Although the accident happened in 1994, the action was not commenced until July 1999. The writ was served on 30 October 1999.

5 On 14 December 1999, the plaintiff entered judgment against the respondents, in default of appearance. It is not disputed that the judgment was obtained regularly, due notice having been given to the respondents.

6 On 25 January 2000, the plaintiff died, from causes unrelated to her alleged injury, and before her damages had been assessed.

7 On 18 January 2002, the default judgment was set aside by a District Court Judge, allowing an appeal from a Registrar, who had declined to make such an order.

8 The appellant now appeals against the order of the learned District Court Judge. The respondent, by Notice of Contention, contends that the Judge's decision should be affirmed on additional grounds.

9 In reasons which the Judge gave extempore, his Honour noted that after the writ was issued, the plaintiff's solicitors wrote to the respondents drawing attention to the potential for a default judgment to be entered. He continued:

"... the evidence all suggests that the (respondents) personally were doing their best to bring the matter to the attention of the insurers."

10 The Judge then said it seemed clear enough that "the vast bulk of the delay" had been on the plaintiff's side (that was a reference to the delay in commencing proceedings and in acting on the default judgment) and the delay on the respondent's side "seems to have been modest by comparison".

11 The Judge went on to consider the merits of the case and questions of prejudice. As to those matters his Honour said:

"When one turns to the merits of the matter, the defendants certainly seem to have an arguable position. It is not clear that the matter would have been resolved on the default judgment by way of a pre-trial conference, and so the defendant essentially says that it wishes to set aside for (sic: the) judgment and that the plaintiff objects to that on the basis that it will suffer prejudice.

It is not entirely clear to me what the prejudice consists of save for the plaintiff's own personal evidence. It would seem that her children and, more importantly, others, were present in the building that night and the fall would have been drawn to people's attention, and observations would have been made. It was certainly drawn to the attention of the defendants who, no doubt, had the opportunity to make observations and in due course, indeed, got expert evidence about the matter. The whole case seems to turn on the question of whether the defendants, as occupiers, were negligent in allowing the floor to be in a slippery condition."

12 The Judge concluded by saying that the balance between the parties lay in favour of the respondents. His Honour therefore exercised his discretion to set the default judgment aside.

13 The appellant appeals on five grounds. I take each one in turn.

"The learned Judge erred in law in failing to take into account that the loss of judgement entered before the deceased's death will result in the loss of rights to general damages because any fresh judgement will be entered upon a cause of action which has survived only by virtue of statute (Law Reform (Miscellaneous Provisions) Act s4) and the statute precludes recovery of damages so that the Appellant will suffer irreparable prejudice."

14 I digress to note that this ground was not argued before the District Court Judge. It was raised with the leave of the Court, without objection by the respondents.

15 Although this ground raises the question of prejudice, it is important to note that prejudice is generally a subsidiary issue in the context of an application to set aside a default judgment. The general rule is stated in Seaman on Civil Procedure, par [13.10.6]:

"... When a judgment in default has been regularly entered it is not to be set aside unless the court is satisfied that there is a defence on the merits, and instances of departure from the general rule are rare."

16 As was said by McPherson J in National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441, at 449, the most cogent consideration is whether a defendant against whom a default judgment has been entered, has a prima facie defence on the merits:

"It is not often that a defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy period of time had elapsed provided that no irreparable prejudice is thereby done to the plaintiff: Attwood v Chichester (1878) 3 QBD 722; Rosing v Ben Shemesh [1960] VicRp 28; [1960] VR 173."

17 In Attwood v Chichester (1878) 3 QBD 722, Bramwell LJ put the position thus (at p 723):

"It is plain that a mere omission to enter an appearance within due time would not have been a bar to an early application. But it has been argued that the defendant is now too late. When sitting at chambers I have often heard it argued that when irreparable mischief would be done by acceding to a tardy application, it being a departure from the ordinary practice, the person who has failed to act within the proper time ought to be the sufferer, but that in other cases the objection of lateness ought not to be listened to, and any injury caused by the delay may be compensated for by the payment of costs. This I think a correct view."

18 Brett and Cotton LJJ delivered judgments to the same effect.

19 Assuming for present purposes that the respondents have a good defence on the merits (and this is put in issue by ground 5) the underlying question raised by this ground is whether, if the judgment is not set aside, the appellant could recover damages which were not limited by s 4 of the Law Reform Act. The appellant contends that he would be entitled to do so: the respondents contend that he could not.

20 So far as relevant, s 4 of the Law Reform Act provides:

"(1) ... on the death of any person after the commencement of this Act all causes of action subsisting against or vested in him shall survive against, or, as the case may be, for the benefit of his estate.

(2) Where a cause of action survives as aforesaid for the benefit of the estate of a deceased person, the damages recoverable for the benefit of the estate of that person -

...

(d) shall not, ... including any damages for the pain or suffering of that person or for any bodily or mental harm suffered by him or for the curtailment of his expectation of life."

21 The appellant contends that the judgment obtained by the plaintiff, "merged with, and put an end to the cause of action, and continued as a separate and independent source of liability".

22 It is well settled that a final judgment does not end with the death of the plaintiff, even though the cause of action which gave rise to that judgment would have died with him: Ryan v Davies Brothers Ltd [1921] HCA 53; (1921) 29 CLR 527.

23 However, in the present case, the appellant does not have the benefit of a final judgment. Until damages were assessed, the plaintiff's cause of action was extant, at least in part. That is so, I think, whether the judgment is regarded as interlocutory, or final on the question of liability: see the discussion in Seaman, par [63.0.24] and the authorities there cited.

24 In my opinion, the present case is analogous to Phillips v Homfray (1883) 24 Ch D 439. There, by the decree of the Vice-Chancellor, it was declared that the defendants were liable to pay compensation to the plaintiffs for various minerals the defendants had removed form the plaintiffs' land. An inquiry was ordered, so that compensation might be assessed. However, one of the defendants, a Mr R Fothergill, died before the inquiry was held. In those circumstances, Mr Fothergill's executrix sought to have all proceedings under the relevant inquiry stayed, on the ground that the claim could not be pursued against Mr Fothergill's estate, after his death.

25 In a joint judgment, Cotton and Bowen LJJ, who formed the majority of the Court of Appeal, said (at 24 Ch D 465-6):

"It was pressed upon us by the counsel for the plaintiffs that, the decree having been made and the inquiries directed during the life time of the deceased R Fothergill, his liability must be taken to have been pronounced, and that what remained to be done in the action was of a ministerial character only, and would not be affected by the maxim actio personalis moritur cum persona [a personal action dies with the person]. We cannot take this view. The claim of the Plaintiffs is in substance, so far as these inquiries are concerned, an action for trespass. The inquiries, whatever the form of language in which they are directed, are an assessment of damages, and until they have been completed the action is still undetermined. It is of the essence of the rule that claims which are indeterminate in their character shall not be pursued against the estate of a person after his death. If the claim is one for unliquidated damages, and has not been perfected by judgment at the time of the death of the Defendant, the rule applies: Smith v Eyles."

26 I consider that Phillips v Homfray is analogous to the present case, because I take the Vice-Chancellor's decree to be, in substance, a judgment in favour of the plaintiffs on the question of liability. Although there, it was the defendant who died, whereas here, it is the plaintiff, the principle is the same.

27 In my view, the principle applies in this case, with the result that whether or not the default judgment is set aside, any damages recovered by the appellant would be subject to the limitations imposed by s 4 of the Law Reform Act. The appellant would not be prejudiced, therefore, if the judgment was set aside.

"The learned Judge erred in fact and law in failing to take into account or give sufficient weight to the fact that the Appellant principal witness, the deceased, is dead."

28 The District Court Judge recognised that the death of the plaintiff would be prejudicial to the appellant's case: see the extract from his Honour's reasons which I have set out above. However, the Judge appears to have proceeded on the basis that the floor of the respondents' restaurant was "in a slippery condition". That was, however, denied by the respondents. The plaintiff's evidence about the state of the floor (at least at the point where she fell) is therefore likely to have been highly relevant.

29 But that is not the end of the matter. The question is whether the setting aside of the default judgment would cause irreparable prejudice to the appellant: again, assuming that the respondents have a good defence on the merits.

30 In my view, there are two points here. First, I think, it could only be said that the appellant would suffer irreparable prejudice by the setting aside of the judgment, if he was thereby unable to prove his case.

31 Clearly, that would not be the position. It is not in dispute that the plaintiff fell. And there is evidence about the condition of the floor at the time. There is now evidence before the Court which was not before the District Court Judge, that the plaintiff gave instructions to a solicitor about the accident. These instructions are recorded in an attendance note. The solicitor wrote:

"Walked into restaurant fairly slowly with your 3 kids.

Flat pair of shoes on.

Slipped on the floor - like a banana peel.

Already had determined that floors

- Polished wooden floorboards

- Feet went up in air, landed on your neck and spine.

- Had walked in, gone up a few stairs.

You not prone to falling.

Lass fell about 15 to 20 years ago."

32 In my view, that evidence is potentially admissible, pursuant to s 79C of the Evidence Act 1906. It would, of course, be a matter for the trial Judge to determine the weight of the evidence, under s 79D.

33 In these circumstances, the appellant's case would be potentially stronger than that of a plaintiff in a claim arising form a fatal accident. I accept the submission of counsel for the respondents that the death of the victim of an accident is no bar to proving negligence against the person responsible.

34 The second point is this. If I am wrong in my view that the appellant would not suffer irreparable prejudice by the setting aside of the judgment, I do not think it could be said that the setting aside would be the cause of the prejudice. In my opinion, the prejudice arises from the plaintiff's premature death, from motor neurone disease (according to the death certificate). It may therefore be said that the plaintiff was herself responsible for the prejudice, in the sense that she delayed for a considerable period before commencing her action.

35 A question arose during the hearing of the appeal as to the extent to which (if at all) the Court could take judicial notice of the effect and progression of motor neurone disease. Could it be assumed that even if the plaintiff had lived, she would have been so affected by the disease as to be unable to give evidence at trial?

36 The law relating to judicial notice is summarised in Seaman par [34.7.4] as follows:

"A judge may take judicial notice of facts which are so generally known that every ordinary person may reasonably be presumed to be aware of them: Holland v Jones [1917] HCA 26; (1917) 23 CLR 149 at 151, 153. However, he or she may not have resort to such matters of fact, unless he or she gives the parties the opportunity to comment on them or to controvert them. His or her failure to do so may result in an order for a new trial: Gordon M Jenkins & Associates Pty Ltd v Coleman [1989] FCA 245; (1989) 23 FCR 38 at 47, 50; [1989] FCA 245; 87 ALR 477."

37 Motor neurone disease is defined in the Oxford English Reference Dictionary as "a progressive disease involving degeneration of the motor neurones and wasting of the muscles". However, I doubt it could be said that "every ordinary person" could reasonably be presumed to be aware of that definition. In any event, the question in the present case would relate solely to the plaintiff's prognosis. That is not a matter about which the Court could form any view in the absence of expert medical opinion. I do not think, therefore, that the Court is in a position to express any view as to the prospects of the plaintiff giving evidence, had she preceded to an assessment of damages.

"The learned Judge erred in law in taking into account delays on the part of the deceased in issuing proceedings and in taking action to assess damages."

38 As I have noted above, in exercising his discretion, the District Court Judge appears to have taken into account the plaintiff's delay in commencing proceedings and in acting on the default judgment. However, with all respect to the Judge, delay of this kind is not relevant to the question whether a default judgment should be set aside. It may be relevant to the question of irreparable prejudice, a point to which I have made reference in dealing with ground 2. However, that is not, I think, the way in which the Judge took the question of delay into account. There is, therefore, some merit in ground 3.

"The learned Judge erred in law in setting aside (the) default judgement where there was no satisfactory or any explanation for the Respondents' conduct in allowing judgement to be entered against them and further and in the alternative in taking into account dealings between the Respondents and the Respondents' insurers."

39 In my view, the District Court Judge was entirely justified in his view that the respondents, personally, did all they could to bring the matter to the attention of their insurers.

40 Although the Judge did not refer to the evidence in his judgment, his Honour said to the extent that his reasons were insufficient "they are apparent from my line of questions to counsel in any event". In the course of argument, the Judge asked a number of questions of the respondents' counsel about the respondents' failure to enter an appearance. From the answers to those questions, and from the evidence, it emerged that the probable explanation was that the respondents informed their insurance broker about the writ. He asked the respondents to send it to him, which they did. The broker then notified the insurers. But they had closed the file, there having been no proceedings commenced for a considerable period after the plaintiff's letter of demand. It seems that the insurers then lost or mislaid the files.

41 In my view, although it is legitimate to criticise the insurers for their slack procedures, the insurers' conduct does provide a satisfactory explanation for the respondents' failure to enter an appearance to the writ.

42 The case is similar in some respects to Attwood v Chichester (supra) there, the defendant was a married woman who had signed a cheque and a bill of exchange at the request of her husband. The defendant was sued upon those documents and was served with the writ. The defendant handed the writ to her husband, who promised to attend to it. He did not do so and judgment was entered against the defendant in default of appearance.

"I should have thought that if the defendant had lain by intentionally, she could not be now allowed to appear; but the neglect to defend must be attributed to her husband, and she cannot be considered to have been guilty of such laches as to disentitle her to relief ..."

" ... I draw the inference that when [the defendant] handed the writ to her husband, she did not understand its meaning, and that she did not know the consequences of suffering judgment by default."

45 It may be said here, that the respondents, who are conducting a business, might reasonably be expected to have a better understanding of the consequences of failing to act on a writ than a married woman would have had in 1878. Indeed, counsel for the appellant drew attention to the fact that the writ contains a warning against the consequences of failure to enter an appearance. So it does, in terms which are familiar to lawyers:

"WE COMMAND YOU, that within TEN (10) days after the service of the writ on you, exclusive of the day of such service, you cause an appearance to be entered for you in our District Court in an Action at the suit of the above named Plaintiff; and take notice that in default of your so doing the Plaintiff may proceed therein and judgement may be given in your absence."

I accept that the command to enter an appearance is clear. However, the consequences of defaulting in that obligation are, in my view, not nearly as clear as they might be. What is a lay person to understand from the words "the plaintiff may proceed therein"? In my view, it is by no means clear that the plaintiff may proceed without any further notice to the defendant. To tell a defendant that "judgement may be given in your absence" suggests that there may well be some proceedings to which the defendant will be invited: and that only then, in the defendant's absence, is there a risk of judgment being given against him or her.

46 The writ does not say words to the effect that if an appearance is not entered, the plaintiff may obtain a judgment against the defendant without any further notice.

47 But even if the warning was clear (or if the present respondents in fact understood the warning) it seems to me that they acted reasonably, in all the circumstances, by sending the relevant documents to their insurer.

"The learned Judge erred in law in concluding that the Respondents had a good defence on the merits, alternatively in failing to give reasons for so concluding."

48 As I have already noted, this is a crucial issue because a defendant against whom a default judgment is entered, who has a good defence on the merits, will normally be given leave to defend.

49 As I have also noted, it was the view of the District Court Judge that the respondents had "an arguable position". However, that appears to have been on the basis that the floor was in fact in a slippery condition.

50 In my view, however, the respondents' defence is stronger than the Judge appreciated.

51 The respondents' case (which I take from the affidavit of the second named respondent) is that:

1. The plaintiff "did not seem to walk in a normal manner and did not appear to be very secure on her feet";

2. The area of the floor where the plaintiff fell is an area where "many people" walked each night;

3. No one else, including customers or staff members, has ever slipped at the restaurant.

4. The area of the floor where the plaintiff fell appeared to be clean at the material time.

5. The floor of the restaurant was cleaned at the end of every evening and was never polished.

52 I emphasise that in setting out these matters, I do not suggest that, at trial, the defence would be made out. Clearly, however, if what the respondents contend is accurate, they have a good defence on the merits.

53 In all the circumstances, I am of the opinion that this appeal should be dismissed. In summary, I am of the opinion that the respondents' failure to enter an appearance does not reflect any want of diligence on their part. They have a good defence on the merits and should be permitted to defend on that basis. Furthermore, if the judgment were to be set aside, the appellant would not, in my view, suffer irreparable prejudice. Although this case is unusual, it is not one of those rare cases in which the Court will decline to set aside a judgment entered in default of appearance when there is a defence on the merits and the failure to enter an appearance has been explained.

54 Although I have reached my conclusion by a slightly different route from that taken by the District Court Judge, I am satisfied that his Honour's decision was correct. The appeal should therefore be dismissed. It is not necessary therefore to deal with the Notice of Contention.

55 ROLFE AJ: I have had the advantage of reading the judgment of Templeman J in draft form. I agree with his Honour's reasons and the orders he proposes.

Reform (Miscellaneous Provisions) Act 1941

Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano & Anor [2003] WASCA 20

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Judgment (85 paragraphs)

Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano & Anor [2003] WASCA 20 (26 February 2003)

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