Cronau v Vavakis

Judgment ex tempore - revised

1. HER HONOUR: These are proceedings for defamation commenced by statement of claim filed 1 June 2018. The plaintiff was unable to serve the originating process on the defendant in person. On 17 August 2018, an order for substituted service was obtained: Cronau v Vavakis [2018] NSWSC 1642.
2. On 19 October 2018, no appearance or defence having been filed, default judgment was entered for the plaintiff and the proceedings were stood over to 23 November 2018 for the assessment of damages: Cronau v Vavakis (No 2) [2018] NSWSC 1644.
3. On 16 November 2018, the defendant filed a notice of appearance and a notice of motion seeking to vacate the hearing date for the assessment of damages and to have the default judgment set aside. This judgment determines that application. For the following reasons, I have determined that the relief sought by the defendant should be granted.
4. The application invokes the Court's authority under r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW). There was no dispute between the parties as to the proper approach to the exercise of that power. The defendant's submissions relied on the decision of McColl JA in Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43] to [46] where her Honour summarised the relevant principles as follows: 43 The Court's jurisdiction to set aside the default judgement is found in the bald terms of Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") 36.16(2)(a), providing the "court may set aside or vary a judgment or order after it has been entered if ...(a) it is a default judgment (other than a default judgment given in open court)". The fundamental (but not the only) principles guiding a court asked to exercise the unfettered discretion UCPR 36.16(2)(a) confers, are whether the applicant has a bona fide ground of defence, an adequate explanation for the failure to defend and the length of any delay: Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503 (at 506) per Hope JA (Glass JA agreeing). In the final analysis, it is necessary to consider whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits: Reinehr Industrial Lease & Finance Pty Ltd v Jordan (New South Wales Court of Appeal, 4 June 1974, unreported) cited with approval by Sackville AJA (Barrett and Leeming JJA agreeing) in Dai v Zhu [2013] NSWCA 412 (at [83]). 44 In Dai v Zhu Sackville AJA also explained (at [89]) that the rationale for the requirement that the applicant for relief demonstrate a bona fide ground of defence is that "in the exercise of its 'unfettered, though judicial, discretion' the Court will consider ...(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". His Honour also explained (at [92]) that in "determining whether the defendant has a bona fide defence on the merits, the court does not embark on a hearing of the full merits of the case...[a]ll that is necessary is for the defendant to show that the defence is asserted bona fide and that there is an arguable or triable issue [and] [t]he nature of the evidence required in a particular case may depend on the circumstances, including the cogency of the defendant's explanation for the delay or failure to comply with the orders of the court". 45 In elaboration of the last proposition it is necessary to explain that the court considering the application to set aside a default judgment is not trying the issues of fact arising upon the defence advanced, but must be satisfied that the defence is "fairly arguable in law or fact" and that the applicant is bona fide in seeking to rely upon that defence: Reinehr Industrial Lease & Finance Pty Ltd v Jordan per Street ACJ (Glass JA agreeing). 46 Finally, it should be observed that the application of these principles is subject to the provisions of the Civil Procedure Act 2005 (NSW): Dai v Zhu (at [93]); Richards v Cornford (No 3) [2010] NSWCA 134 (at [98]ff) per Allsop P (McColl JA agreeing)."