Epiroc Financial Solutions Australia Pty Limited v Kenworthy

Hearing of the Defendant's Notice of Motion

1. The hearing of the Defendant's Notice of Motion proceeded before me on 25 March 2020. The hearing proceeded under arrangements which have been put in place following the issue on 23 March 2020 by the Court of a notice entitled "COVID-19 - Changes to Court Operations".
2. The Plaintiff was represented by Ms Power of counsel. By the time of the hearing, the Defendant was unrepresented. However, detailed written submissions dated 16 March 2020 had been prepared by counsel on the Defendant's behalf and these submissions were before the Court together with all other relevant material contained in the Court Book.
3. Counsel and solicitor for the Plaintiff appeared by audio-visual link. There was no appearance by or for the Defendant. The Court was satisfied that the Defendant was aware of the listing and that the hearing was to proceed by way of audio-visual link or telephone connection. His email address had been included in emails sent by my Associate prior to the hearing informing the parties of arrangements for the hearing (MFIs 1 and 2). Efforts were made to contact the Defendant by telephone to establish a link once the hearing was underway, but there was no response (MFI 3; T3-4, 25 March 2020).
4. In these circumstances, I determined that the hearing should proceed with the Court to consider the evidence and submissions contained in the Court Book (which became Exhibit A). Counsel for the Plaintiff assisted the Court with submissions and responses to a number of questions posed by the Court.
5. At the conclusion of the hearing, I reserved my decision and indicated that judgment would be given in the matter within seven days with the judgment to be emailed to the parties and posted on Caselaw in accordance with the direction of the Chief Justice dated 24 March 2020 under Rule 36.3 Uniform Civil Procedure Rules 2005 ("UCPR").

Applicable Legal Principles

1. Rule 49.19 UCPR provides for review of a Registrar's decision. The principles to be applied by this Court when undertaking the review function have been considered in a number of decisions.
2. In Noble Earth Technologies Pty Limited v Hampic Pty Limited trading as Cyndan Chemicals [2012] NSWSC 935 at [39], Hallen AsJ (as his Honour then was) helpfully drew together relevant principles concerning review of a Registrar's decision: "Relevant principles drawn from authorities relating to the nature of a review are: (a) The review power conferred is not an appeal and, accordingly, is not subject to the limitations that apply to proceedings by way of appeal: Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [6], [10], [50], [52]; Al-Shennag v Statewide Roads Pty Limited [2009] NSWSC 210 per Hall J at [44]-[46]; it is 'not restricted' to a reconsideration of the primary material before the Registrar: Lollback v Brakepower Pty Ltd [2010] NSWSC 1457 at [10]. (b) It is unnecessary for the applicant for review to demonstrate any material error of fact, or principle, in the order under review. On the review, the court may exercise its powers regardless of error. However, review, in the relevant sense, involves discretionary intervention: Tomko v Palasty (No 2) at [52]; Lollback v Brakepower Pty Ltd at [13]; the discretion extends to a discretion whether, and if so, how, to intervene. (c) The conduct of the review is at large and in the discretion of the Court. Notwithstanding the foregoing, the review is not accurately described as a hearing de novo: Perpetual Ltd v Barghachoun [2010] NSWSC 108 at [3], although it involves many of the features of a hearing de novo. (d) There is an onus on a person seeking to have a court set aside, or vary, a registrar's decision to make out a case that the court conducting the review, in the interests of justice, should exercise its discretion to do so: Tomko v Palasty (No 2) per Hodgson JA at [7]. In other words, there must be a basis shown for setting aside, or varying, the decision or orders of the registrar. (e) Although on review, the Court should consider the matter afresh, it does not follow that the reasoning of the registrar should be ignored, or that variations in the material presented to her, or him, and the evidence that was adduced are irrelevant. The starting point is, therefore, the decision that is to be reviewed. The court does not merely cast that decision to one side and proceed as if it had never been made. The court will have regard to the basis on which the decision was made and the material placed before the court itself on the application for review: Wily re LED (South Coast) Pty Ltd [2009] NSWSC 946 at [24] - [26]. The real question is whether there are any grounds, or any reasons, which would warrant a review of the orders that have been made by the registrar: Al-Shennag v Statewide Roads Pty Limited at [47]. (f) What will be required to make out a case for intervention will vary depending upon the nature of the registrar's decision under review: Groeneveld v Wollongong City Council [2009] NSWLEC 149; (2009) 168 LGERA 260, per Preston CJ at [12]. However, the court should inform itself of the material before the registrar at the time when he, or she, made the decision, should consider the reasons for the decision, and then should make its own decision based on the material before it after having the benefit of the submissions of each party. (g) It is proper for the Court to exhibit a natural inhibition against the unrestrained substitution of the reviewing Court's views for those of the registrar: Westpac Banking Corp v Abemond Pty Ltd; Westpac Banking Corp v Cameron (NSWSC, 3 November 1994, unreported). (h) When it comes to matters of practice and procedure, there should be a natural inhibition against overturning a registrar's decision: Wentworth v Graham [2002] NSWSC 397; (2002) 55 NSWLR 638 at 640-641. However, where substantive error is established, then the Court would consider reviewing the registrar's decision and would make such other order as it is authorised to make: Al-Shennag v Statewide Roads Pty Limited at [46]. (i) In the case of a decision which finally determines a party's rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a Court may be more willing to intervene. It may permit further evidence to be led that does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interests of justice require this. It may decide to substitute its own discretionary decision for that of the registrar, even though no House v R (1936) 55 CLR 499 error is shown, again if it is satisfied that the interests of justice require this: Tomko v Palasty (No 2) at [5]-[9], [50], and [52]. (j) If fresh, or additional, evidence, is produced, it may be received by the court and taken into account (Fenwick v Wambo Coal Pty Limited [2011] NSWSC 176, per White J, at [46]), or the court may refer the matter back to the Registrar for consideration as a fresh application: Portal Software v Bodsworth [2005] NSWSC 1115 at [17]. The court may be more inclined to intervene on a review based on fresh evidence, changed circumstances, or where error is demonstrated in the decision under review: Tomko v Palasty (No 2) at [52]. (k) The decision of the registrar stands until it is set aside: Lawteal Pty Limited v Ofo [2005] NSWSC 984, per Malpass AsJ at [19]. (l) The registrar must give sufficient reasons for his, or her, decision: Thompson v New South Wales Land and Housing Corporation [2008] NSWSC 74 per Malpass AsJ at [9] - [16]."
3. The principles to be applied on an application to set aside a Default Judgment were summarised recently in J&M McNamee Holdings Pty Limited v Mungerie Vale Pty Limited trading as Greenwood Group Realtors [2019] NSWCA 283, where Gleeson JA (Brereton JA and Simpson AJA agreeing) said at [48]-[52]: "48 It is well established that the considerations relevant to an application to set aside a default judgment include 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 (Hope JA; Glass JA agreeing). Whether the plaintiff will be prejudiced if the default judgment were set aside is also relevant. 49 Fundamentally, the question is 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: Dai v Zhu [2013] NSWCA 412 at [83] (Sackville AJA; Barrett and Leeming JJA agreeing), citing, with approval, the remarks in Reinher Industrial Lease & Finance Pty Ltd v Jordan (Court of Appeal (NSW), 4 June 1974, unrep). 50 Two further matters referred to by Sackville AJA in Dai v Zhu should be mentioned. One is the observation by his Honour 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 default judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained'. 51 The other matter, which is related to this, is his Honour's observation 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. His Honour continued at [92]: The 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 orders of the Court. 52 It is also to be accepted that the application of these principles must now be subject to the provisions of the Civil Procedure Act 2005 (NSW). In Dai v Zhu, Sackville AJA gave as an example at [93], that there may be circumstances where it would be contrary to 'the just determination of the proceedings', referring to s 57(1)(a) of the Civil Procedure Act 2005 (NSW), to require a defendant to adduce affidavit evidence demonstrating a bona fide defence and in such cases the Court would be unlikely to reject the defendant's application to set aside a default judgment solely on the ground that no such affidavit had been filed whilst emphasising each case must of course depend on its own facts."
4. It is necessary to keep in mind, as well, ss.56-58 Civil Procedure Act 2005. In Lachlan v HP Mercantile Pty Limited (2015) 89 NSWLR 198; [2015] NSWCA 130 at [30], the Court (Bathurst CJ, Beazley P and McColl JA) said: "Sections 56-58 make plain and more prescriptive what was always the case, namely that the processes of the court are to be utilised for proper purposes and in a way that is efficient, cost effective and in accordance with the dictates of justice. Section 58(2)(vi) makes it explicit that the dictates of justice require consideration of the position of both parties. By their terms, ss 56-58 apply to the rules, including UCPR, r 1.12. As Wilson J stated in FAI General Insurance and Dixon CJ explained in Klein, where a discretion is conferred on the court in general terms, the court is required to exercise that discretion so as to 'prevent injustice' or in accordance with the judge's view of the justness of the case. These are the same concepts found in ss 56-58. These provisions have not altered the manner by which a general discretion is exercised by the court or altered the scope or purpose of provisions that confer general discretion on the judicial decision maker."

Chronology of Relevant Events

1. Most of the events to which reference is to be made are not controversial. What follows in this part of the judgment is drawn from the evidence contained in Exhibit A. Chattel Mortgage Agreement and Guarantee Entered Into in March 2017
2. On or about 3 March 2017, the Plaintiff entered into a contract, by way of a chattel mortgage agreement, with Jemrok Pty Limited ("Jemrok") to finance the purchase by Jemrok of an Atlas Copco Boomer M2D Drill ("the Boomer Drill"), a type of underground drill used in the mining industry.
3. The Plaintiff advanced the sum of $1.5 million to Jemrok with Jemrok making a down payment of $150,000.00 as part of a total purchase price of $1,650,000.00. Under the contract, Jemrok was required to make repayments of $34,650.00 per month in arrears on the first day of the month for 48 months until a total amount of $1,663,200.00 had been repaid.
4. By Contract of Guarantee and Indemnity ("the Guarantee") made on or about 3 March 2017 between the Plaintiff, the Defendant, Kylie Kenworthy (the Defendant's wife) and Kyda Group Pty Limited ("Kyda Group"), the Guarantors agreed to provide to the Plaintiff a guarantee and indemnity in respect of Jemrok's obligations under the loan contract.
5. By the Guarantee, the Guarantors jointly and severally: 1. agreed to guarantee to the Plaintiff that Jemrok would pay all amounts owing to the Plaintiff from time to time when due; 2. agreed to pay to the Plaintiff on demand any such amount which Jemrok did not pay to the Plaintiff when due, along with the Plaintiff's reasonable costs of enforcing the guarantee and indemnity; and 3. agreed to indemnify the Plaintiff against any loss, cost or expense which the Plaintiff suffered due to Jemrok's failure to pay any amount on time or due to Jemrok's default under the contract, and agreed to pay such amounts to the Plaintiff on demand. Default Under Chattel Mortgage Agreement and Guarantee and Boomer Drill Repossessed in February 2019
6. On 8 February 2019, Jemrok returned the Boomer Drill to Epiroc Australia Pty Limited ("Epiroc Australia") in Burnie, Tasmania.
7. As at 12 February 2019, Jemrok had failed to pay to the Plaintiff the sum of $175,066.99 together with interest and the total secured money under the contract was $1,039,525.00.
8. On 12 February 2019, the Plaintiff notified the Defendant of Jemrok's breach and terminated the contract.
9. On 8 March 2019, receivers were appointed to the Kyda Group. The Boomer Drill is Sold to Epiroc Australia
10. On 31 March 2019, the Plaintiff sold the Boomer Drill to Epiroc Australia for the sum of $600,000.00. This figure was calculated by nomination of an estimated market value of $800,000.00 less refurbishment costs calculated at $200,000.00.
11. On 6 May 2019, an email was sent by Des Hodgetts of the Kyda Group to Geoffrey Summer of Zebs Minerals. In this email, Mr Hodgetts proposed the sale of the Boomer Drill to Mr Summer for the sum of $1,060.000.00 plus GST (Exhibit A, pages 284-285).
12. In an undated letter said by the Defendant to have been sent on 14 May 2019, Mr Summer confirmed an intention to buy "the loaders and drills belonging to your group of companies" for use at Mr Summer's nickel mining project. The Boomer Drill was listed amongst a number of loaders and drills for this purpose. Mr Summer's letter did not nominate a price which his company was prepared to pay for any loader or drill, including the Boomer Drill. The letter continued: "The purchase of the abovementioned machines are currently undergoing the final decision making process of our board. We expect to finalise this decision at our board meeting later this week. We will need to complete final due diligence around the purchase of the drills, however have agreed that the machines listed are required assets to enable production restart to commence at the Avebury mine. … Once the purchase decision is finalised this week, we are able to make funds available within 14 days." (Exhibit A, pages 295-296)
13. The evidence does not reveal that Mr Summer took any further steps towards purchase of the loaders and drills. There is no evidence that Mr Summer offered to purchase the Boomer Drill for a nominated price. I observe, of course, that the Boomer Drill had been returned to Epiroc Australia on 8 February 2019, so that it was not open to the Kyda Group to sell it.
14. On 19 June 2019, Kylie Kenworthy became bankrupt. Proceedings Commenced in Supreme Court
15. On 8 August 2019, the Plaintiff filed a Statement of Claim in this Court against the Defendant seeking judgment in the sum of $1,043,823.99.
16. On 18 August 2019, the Statement of Claim was served personally on the Defendant in Burnie, Tasmania (Exhibit A, page 17).
17. On 17 September 2019, the Defendant contacted Christopher Whitelaw, a solicitor in Burnie in relation to the Statement of Claim.
18. On 19 September 2019, the Plaintiff filed a Notice of Motion seeking Default Judgment against the Defendant in the sum of $1,097,486.05 (Exhibit A, pages 12-16).
19. On the afternoon of 19 September 2019, Mr Whitelaw wrote to the solicitors for the Plaintiff seeking an extension of time to file a Defence. Default Judgment is Given on 1 October 2019
20. The Plaintiff's application for Default Judgment was processed by the Court in the ordinary fashion and, by order made in Chambers on 1 October 2019, the Plaintiff was given Default Judgment against the Defendant in the sum of $1,096,546.65 inclusive of costs (Exhibit A, page 17A).
21. On 19 October 2019, the Defendant filed a Notice of Motion seeking to set aside the Default Judgment (Exhibit A, pages 18-21). The Notice of Motion was supported by an affidavit of the Defendant affirmed 19 October 2019 (Exhibit A, pages 22-84).
22. By letter dated 31 October 2019, the solicitors for the Plaintiff informed the solicitor for the Defendant of a number of things, including the following: 1. it was acknowledged that the Boomer Drill had been returned to the Plaintiff in February 2019 in what was said to be "poor condition"; 2. a representative of Zebs Minerals had contacted the regional manager of Epiroc Australia to ascertain whether the Boomer Drill existed, but no person from Zebs Minerals had contacted the Plaintiff nor did they ever make an offer to buy or lease the Boomer Drill from the Plaintiff; 3. in March 2019, the Plaintiff sold the Boomer Drill to Epiroc Australia for $600,000.00, with that figure calculated on the basis of market value of the drill at that time ($800,000.00) less estimated costs of repair of $219,375.63 to return the drill to useable condition; 4. both the market value and the estimated repair costs were based on a contemporaneous valuation obtained by Epiroc Australia from its Business Line Manager, with the repair costs actually incurred being $215,054.41 - an invoice and order sheet relating to these calculations accompanied the letter; 5. the Plaintiff did not account for the sale of the Boomer Drill in the Statement of Claim as calculations were based upon the termination notice served on the Defendant in February 2019; 6. the Plaintiff accepted that it was not entitled to enforce the Default Judgment without allowing a credit of $600,000.00 to the Defendant and proposed consent orders by way consent orders with an amended judgment in the total of $467,487.00 to be payable to the Plaintiff; 7. the allegations contained in the Defendant's affidavit were incorrect and the Defendant had no viable defence to the Statement of Claim.
23. On 1 November 2019, the solicitor for the Defendant issued the Plaintiff with a Notice to Produce a range of documents relating to the valuation of the Boomer Drill for the purpose of its sale to Epiroc Australia (Exhibit A, pages 113-115).
24. On 18 November 2019, the Plaintiff produced documents to the Defendant in answer to the Notice to Produce (Exhibit A, pages 116-214).
25. In November 2019, Mr Whitelaw ceased to act for the Defendant (Exhibit A, page 110).
26. On 19 November 2019, the Plaintiff filed an affidavit of Anthony Margiotta sworn 19 November 2019 which was to be relied upon at the hearing of the Defendant's application to set aside the Default Judgment (Exhibit A, pages 85-100). Mr Margiotta is the Plaintiff's Regional Manager for Australia and South East Asia, a position he has occupied since May 2018. Mr Margiotta's affidavit recounted in detail the process undertaken by the Plaintiff and Epiroc Australia to determine a fair market value less estimated refurbishment and remarketing costs. Mr Margiotta annexed the Plaintiff's written policy entitled "Collection, Repossession and Sale of Finance Equipment" as in force in March 2019. The steps taken by the Plaintiff and Epiroc Australia with respect to the Boomer Drill accorded with the policy.
27. On 11 December 2019, the Plaintiff filed written submissions to be relied upon at the hearing of the Defendant's application to set aside the Default Judgment (Exhibit A, pages 101-104). In those submissions, in accordance with the letter of 31 October 2019, counsel for the Plaintiff conceded that the quantum of the Default Judgment was in excess of the amount of the debt owing as at 1 October 2019. It was submitted that the Court could address this aspect in one of two ways: 1. by the Court noting the undertaking given by the Plaintiff to the Court not to enforce the Default Judgment without allowing a credit to the Defendant in the sum of $629,999.95; or 2. by the Court varying the amount of the Default Judgment under Rule 36.16 UCPR from $1,096,546.65 to $467,487.00.
28. It was submitted for the Plaintiff that neither of these courses required the Default Judgment to be set aside. The written submissions addressed other aspects of the application as well, submitting that a bona fide defence to the substantive claim had not been disclosed.
29. The Plaintiff's written submissions contended that the Defendant had not disclosed a bona fide defence to the Statement of Claim. It was submitted that the Defendant did not dispute that he gave a Guarantee, that there was default by Jemrok and that he received a demand for payment under the Guarantee. The Plaintiff submitted that amendment of the judgment would resolve the issue concerning quantum. Hearing Before Registrar on 17 December 2019
30. On 17 December 2019, the Defendant's application to set aside the Default Judgment came before Registrar Jones in the Common Law Division of the Supreme Court of New South Wales. Counsel appeared for the Plaintiff and the Defendant appeared unrepresented.
31. The hearing proceeded before the Registrar (Exhibit A, pages 300-311). At the conclusion of the hearing, the Registrar gave an ex tempore judgment. The Registrar rejected a submission advanced on behalf of the Defendant which went to the service of the Statement of Claim, this being an issue which is not pressed by the Defendant on the present review.
32. The Registrar then turned to presently relevant aspects of the Defendant's application (Exhibit A, page 106): "I have also taken into account considerations as to whether Mr Kenworthy has any substantial defence to the claim, and I am satisfied that the only defence that he has to the claim relates to quantum, it being the fact that he does not dispute that he was a guarantor and that there is no denial as to the existence of the loan but it only relates to quantum. On that basis I would be prepared to accept the concession by the first respondent in relation to the amount that it should act as a credit on the default judgment. I would be prepared to vary the amount of the default judgment under r 36.16 of the Uniform Civil Procedure Rules from the amount originally entered, being $1,097,486.05 to the amount of $467,487, which takes into account the credit owing on the default judgment, that credit being $629,999.05. So I accept that undertaking and have amended the amount of the default judgment to reflect those figures. On the basis of those reasons I dismiss the notice of motion and it is then a question for dealing with costs."
33. Having heard the parties on the question of costs, the Registrar ordered the Defendant to pay the Plaintiff's costs of the Notice of Motion (Exhibit A, page 310). The Present Notice of Motion is Filed
34. On 5 February 2020, the Defendant filed the present Notice of Motion in which he sought the following orders (Exhibit, page 108): "1. An order pursuant to UCPR 49.20(4) extending the time for filing this Notice of Motion up to and including the date it is filed. 2. An order pursuant to UCPR 49.19 that the decision of the Registrar on 17 December 2019 dismissing the defendants' Notice of Motion dated 19 October 2019 be reviewed. 3. An order that the default judgment entered against the defendant on 20 September 2019 be set aside. 4. An order that the defendant is to file and serve any Defence and Cross-Claim within 14 days from the date of this Order. 5. Further or other orders. 6. Costs."
35. In support of the Notice of Motion, the Defendant relied upon the affidavit of Nicholas Terracall, solicitor, affirmed 31 January 2020 (Exhibit A, pages 109-215) and the Defendant's further affidavit affirmed 25 February 2020 (Exhibit A, pages 216-311).
36. The Defendant's affidavit of 25 February 2020 included a draft Defence (Exhibit A, pages 220-224) and a draft Cross Claim (Exhibit A, pages 225-241). These were variations on an earlier draft Defence and draft Cross Claim which had been annexed to the Defendant's affidavit affirmed 19 October 2019 (Exhibit A, pages 32-50).

The Defendant's Submissions

1. As mentioned earlier, the Defendant did not appear at the hearing of the present Notice of Motion. The Court has considered the merits of the application by reference to the written submissions dated 16 March 2020 which were prepared on the Defendant's behalf by Mr CD Freeman of counsel. Those submissions advance the Defendant's case at its highest and were responded to both in writing and orally by counsel for the Plaintiff.
2. Counsel for the Defendant was critical of the fact that the Plaintiff sought Default Judgment in the full amount, and not the reduced amount in relation to which the Registrar confirmed the judgment on 17 December 2019. It was submitted that the Plaintiff's failure to apply the relevant discount for the purpose of the Default Judgment cast doubt as to the Plaintiff's assertion that an arm's length transaction took place between the Plaintiff and Epiroc Australia in the valuation and sale of the Boomer Drill from one entity to the other in March 2019.
3. Counsel for the Defendant noted the production by the Plaintiff of a range of documents in response to the Notice to Produce dated 1 November 2019. It was noted that no documents were produced by the Plaintiff with respect to a request for production of all valuations or appraisals of the Boomer Drill and all attempts to sell or auction the Boomer Drill in 2019. It was submitted that the Plaintiff's reliance upon the internal policy of the Plaintiff and Epiroc Australia with respect to assessment of value ought not be accepted on its face as being an arm's length process. It was submitted that, in the absence of valuations or appraisals being obtained with respect to the proposed sale of the Boomer Drill, that the process undertaken did not establish a fair market value involving an estimate of $800,000.00.
4. The Defendant submitted that the reasons of the Registrar disclosed three errors: 1. the Registrar did not consider whether there was a reasonable explanation for the original delay in filing a Defence; 2. the Registrar found that the only defence of the Defendant was as to quantum; and 3. the Registrar did not state in her reasons why leave to file a Cross Claim was not granted.
5. With respect to the second alleged error, it was submitted that the Registrar proceeded upon the basis that the credit of $600,000.00 was the end of the matter, without having regard to the terms of the draft Defence and the draft Cross Claim which had been furnished as part of the affidavit of the Defendant affirmed 19 October 2019 (Exhibit A, pages 32-50).
6. Counsel submitted that the Court would keep in mind, in the exercise of discretion whether to set aside the Default Judgment, that the Plaintiff had overstated the debt for the purpose of the application for Default Judgment granted on 1 October 2019 and that no explanation had been advanced as to how that had come about.
7. It was submitted for the Defendant that, in considering the discretion to set aside the Default Judgment, the Court would view the role of the Defendant as a surety or guarantor as being a "favoured debtor" so that the Court should "look upon his interests with a jealous eye": Webster Investments Pty Limited v Northstar Developments Pty Limited [2016] VSC 620 at [94].
8. The Defendant submitted that the task of the Court is to determine whether the draft Defence is bona fide and whether there is an arguable or triable issue. It was submitted that the current draft Defence puts into dispute the amount claimed (and that the Plaintiff was not entitled to issue a demand for the amount claimed) and that the draft Defence incorporates the terms of the draft Cross Claim as a complete defence to the claim and as a set-off.
9. Counsel for the Defendant addressed the draft Cross Claim which sought relief under Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law), including orders limiting liability and refusing to enforce the debt against the Defendant until the Plaintiff had accounted for the reasonable or fair market value of the Boomer Drill. It was submitted that a set-off arises by way of s.21 Civil Procedure Act 2005 or by way of equitable set-off. It was submitted that a claim of unconscionable conduct impeaches the title of the Plaintiff which gives rise to the set-off and that, where available, an equitable set-off operates on the judgment or diminishes or extinguishes the claim. It was submitted that there is a claim for damages by the Defendant for, amongst other things, breach of duty of care in purporting to exercise the power of sale.
10. Counsel for the Defendant identified the claims advanced in the draft Cross Claim as being: 1. a breach of duty owed by the Plaintiff to the Defendant as a guarantor to: 1. take reasonable care and not act in neglect or default when dealing with the Boomer Drill as security for the obligations of Jemrok; and 2. not to diminish or impair the value of the security; 1. damages for breach of two implied terms of good faith; and 2. unconscionable conduct in contravention of s.21 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) based on conduct alleged in the draft Cross Claim.
11. Counsel for the Defendant outlined features of these proposed claims, with particular emphasis upon the claim for damages for breach of two implied terms of good faith and the claim based upon alleged unconscionable conduct.
12. After summarising a number of statutory and other principles in these areas, counsel for the Defendant submitted that a reasonable or fair market value was not obtained with respect to the Boomer Drill. It was submitted that this is a matter for a final hearing so that there is an arguable or triable issue to be determined at such a hearing. Once that was accepted, counsel for the Defendant submitted that it cannot be reasonably asserted that there is no arguable claim for relief under the statute or in equity.
13. Counsel for the Defendant submitted that the draft Defence is based upon documents produced by the Plaintiff on 18 November 2019 in response to the Notice to Produce. It was submitted that it is difficult to see how a determination of a claim of unconscionable conduct could be dealt with on a summary basis and without a final hearing.
14. Counsel for the Defendant submitted that there was an explanation for the delay in filing a Defence with his solicitor having contacted the solicitors for the Plaintiff on the day when application for Default Judgment had been filed. It was submitted that the relevant delay is minimal and that, in any event, the Plaintiff was not entitled to judgment in the full amount claimed.
15. Reliance was placed, as well, on other evidence which pointed to pressures upon the Defendant in his personal life, including financial and health issues which were relevant to an assessment of the delay in this case.
16. The Defendant submitted that the Plaintiff had adduced no evidence of prejudice to the Plaintiff, but that the prejudice to the Defendant in not having a full hearing was significant.
17. Counsel for the Defendant submitted that, even if the Default Judgment is not set aside, there is no reason why the Defendant ought not be entitled to file and prosecute a Cross Claim unless it was held that no reasonable cause of action is disclosed.
18. It was submitted that an extension of time should be allowed for the Defendant to bring the present application and that the orders sought in the Notice of Motion should be made.

The Plaintiff's Submissions

1. Counsel for the Plaintiff made detailed written and oral submissions. Counsel submitted that the critical issue on the present application was whether the Defendant had disclosed a triable or arguable defence to the Defendant's claim. The Plaintiff: 1. did not oppose a grant of an extension of time to file the present Notice of Motion; 2. did not oppose the tender of additional evidence at the hearing of the present Notice of Motion (with some specified areas of objection); 3. accepted that the present review should proceed effectively as a de novo hearing of the application to set aside the Default Judgment; 4. did not contend that the evidence before the Court failed to explain the delay in filing a Defence in the proceedings.
2. With respect to the Defendant's complaint that the Registrar had not addressed the Defendant's wish to rely upon a Cross Claim (see 50 above), it was submitted that it was and remained open to the Defendant to bring proceedings if he saw fit, and that this did not bear upon the question whether the Default Judgment should be set aside.
3. With respect to the Defendant's submission that the original Default Judgment was flawed because the quantum of the judgment was not discounted by the sum of $600,000.00, the Plaintiff submitted that this aspect was addressed by the Registrar on 17 December 2019 so that the sum of the Default Judgment presently sought to be set aside reflects the true quantum of the Defendant's indebtedness to the Plaintiff.
4. Counsel for the Plaintiff addressed, in written and oral submissions, the two causes of action flagged by the Defendant which relied upon factual allegations, being: 1. the assertion that the Defendant had a ready and willing purchaser for the Boomer Drill who was prepared to pay a higher price than the value attached to the equipment by Epiroc Australia for the purpose of the sale to that entity; 2. the assertion that the actual sale of the Boomer Drill from the Plaintiff to Epiroc Australia was not made in good faith.
5. Counsel for the Plaintiff took the Court to documents summarised earlier (at [21]-[22]) concerning the Defendant's assertion that Mr Summer of Zebs Minerals was prepared to purchase the Boomer Drill for a price in excess of the Epiroc Australia purchase price and submitted that the evidence relied upon by the Defendant in this respect went nowhere near such a claim.
6. With respect to the Defendant's attempt to impugn the sale of the Boomer Drill from the Plaintiff to Epiroc Australia, counsel for the Plaintiff referred to the documentation produced by the Plaintiff in response to the Notice to Produce by the Defendant which revealed a detailed explanation of the process of assessment and audit which led to the determination of the nett figure of $600,000.00. It was submitted that there was no evidence which served to cast doubt or impugn this process with the evidence being all one way on this topic.
7. Counsel for the Plaintiff submitted that no bona fide arguable or triable issue had been advanced by the Defendant which constituted a basis to resist liability under the Statement of Claim and to advance an arguable defence to that claim.
8. The Plaintiff submitted that the Defendant's Notice of Motion should be dismissed.

Resolution of Competing Submissions

1. I have kept in mind the principles to be applied by this Court when undertaking a review of the Registrar's decision as well as principles to be applied on an application to set aside a Default Judgment as summarised in the decisions referred to earlier in this judgment (at [8]-[9]).
2. In particular: 1. in exercising the review function, I have kept in mind that where (as here) confirmation of the Default Judgment would have a decisive impact on the Defendant's rights in the proceedings commenced by Statement of Claim, the Court may be more willing to intervene: Noble Earth Technologies Pty Limited v Hampic Pty Limited trading as Cyndan Chemicals at 39; 2. in considering whether the Default Judgment should be set aside, I have considered whether it is in the interests of justice to allow the Defendant to defend the proceedings on the merits - in this respect, in exercising judicial discretion, I have considered whether any useful purpose would be served by setting aside the Default Judgment: J&M McNamee Holdings Pty Limited v Mungerie Vale Pty Limited trading as Greenwood Group Realtors at [49]-[50].
3. It is necessary for the Court to consider the evidence on the application to determine whether the Default Judgment should be set aside.
4. The critical issue on the present application, as it was before the Registrar on 17 December 2019, is whether the Defendant has disclosed an arguable or triable defence to the Plaintiff's claim. It is necessary to keep in mind that the Court is not undertaking a hearing on the merits or a final hearing with respect to these issues: J&M McNamee Holdings Pty Limited v Mungerie Vale Pty Limited trading as Greenwood Group Realtors at [51]. The question for determination is whether, applying the relevant principles, the Defendant has a bona fide arguable or triable defence to the Plaintiff's claim so that he should be allowed back in to defend the claim.
5. There is no issue that the Plaintiff advanced the principal sum to Jemrok for the purchase of the Boomer Drill and that the Defendant and his wife and the Kyda Group guaranteed the loan. There is no doubt, as well, that there was default under the loan so that it was open to the Plaintiff to seek to enforce the Guarantee against the Defendant.
6. An important step in the chronology of events is that, on 8 February 2019, the Boomer Drill was returned to the Plaintiff with repossession taking place at that time. From that date, the Boomer Drill was the property of the Plaintiff and the Plaintiff was entitled to sell the equipment.
7. Insofar as the Defendant seeks to rely upon events in May 2019 in support of an argument that Mr Summer of Zebs Mineral was prepared to purchase the Boomer Drill for a sum in excess of $1 million, it is necessary to keep in mind that the Boomer Drill was not able to be sold by the Defendant at that time. However, the relevance of evidence on this aspect relates to the Defendant's suggestion that, as at May 2019, the Boomer Drill was worth more than the sum for which it was sold by the Plaintiff to Epiroc Australia.
8. The difficulty for the Defendant with respect to this evidence is that it rises no higher than a suggestion that the Defendant was prepared to sell the Boomer Drill in May 2019 to Mr Summer for just over $1 million. An undated letter suggests that Mr Summer was prepared to purchase a number of items of equipment, including the Boomer Drill, subject to due diligence, but without there being any evidence as to the sum of money which Mr Summer would have been prepared to pay even if due diligence was completed.
9. I am conscious that the task which the Court is presently undertaking is not one of a final hearing of the claim and any defence. However, the Defendant has had an opportunity to gather evidence which is contained in two affidavits affirmed by himself and an affidavit affirmed by his most recent solicitor. There is no evidence at all from Mr Summer on this issue, nor any actual evidence which suggests that the Boomer Drill was valued at the figure for which the Defendant asserted he wished to sell it to Mr Summer.
10. Even allowing for the low threshold involved in determining whether there is a triable issue on this aspect, I am not persuaded that a triable or arguable issue is identified bona fide with respect to this aspect of the case.
11. The second aspect upon which the Defendant seeks to rely is a claim of absence of good faith and/or unconscionable conduct relating to the circumstances in which the Boomer Drill was sold by the Plaintiff to Epiroc Australia. Both the Defendant and the Plaintiff pointed to documents produced by the Plaintiff in response to the Defendant's Notice to Produce.
12. The written submissions for the Defendant identified the legal framework upon which reliance was sought to be placed in this respect. As counsel for the Plaintiff submitted correctly, it is necessary to consider the factual material which is relied upon in support of this legal framework.
13. Once again, I keep firmly in mind that the Court is not undertaking a final hearing of the matter. The question is whether there is disclosed a triable or arguable defence to the Plaintiff's claim. The documents produced include a mining equipment audit which particularises the state of the Boomer Drill (Exhibit A, pages 118ff). It will be recalled that the letter of 31 October 2019 from the Plaintiff's solicitors asserted that the Boomer Drill was in "poor condition" and the mining equipment audit documentation appears to bear this out. The Defendant did not adduce any evidence to suggest that the description of the Boomer Drill contained in the audit is incorrect. I bear in mind, in this respect, that the Boomer Drill had been in the possession of the Defendant until it was returned on 8 February 2019.
14. In addition, the mining equipment audit was accompanied by a series of photographs of the Boomer Drill which appear to disclose its condition at the time of the audit (Exhibit A, pages 129ff).
15. The affidavit of Anthony Margiotta sworn 19 November 2019, which was before the Registrar at the hearing on 17 December 2019, disclosed the process undertaken to determine the value of the Boomer Drill for the purpose of the sale of it to Epiroc Australia on or about 31 March 2019. As noted earlier (at [36]), Mr Margiotta's affidavit attached the written policy of the Plaintiff concerning collection, repossession and sale of finance equipment as in force in March 2019 (Exhibit A, pages 90-91).
16. There is no evidence to suggest that the Plaintiff failed to comply with this policy in the process of estimating the fair market value of the Boomer Drill less estimated refurbishment and remarketing costs. A tax invoice for the Boomer Drill in the sum of $600,000.00 plus $60,000.00 GST is annexed to Mr Margiotta's affidavit (Exhibit A, page 93). Also annexed to Mr Margiotta's affidavit is a spreadsheet recording refurbishment costs that were incurred (totalling $215,054.51) and comparing those against estimated refurbishment costs (Exhibit A, pages 94-95).
17. The Plaintiff's policy document provided for a mechanism for determination of the "estimated fair market value" (Exhibit A, page 91). I have considered what was said in MMAL Rentals Pty Limited v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 at [47]-[61] with respect to the concept of "fair market value". The present context involved a large and specialised piece of mining equipment. There is no indication in the evidence of any industry practice for valuation of such equipment which could be called in aid in this case. What was done here involved application of the standard policy of the Plaintiff where mining equipment manufactured by Epiroc Australia had been repossessed.
18. Whilst acknowledging that these are documents of the Plaintiff and Epiroc Australia, no evidence is adduced by the Defendant which seeks to impugn the calculations disclosed in the documents. The evidence reveals that Epiroc Australia was the manufacturer of the Boomer Drill. There is no evidence at all from any person indicating a willingness to pay more than the sum paid by Epiroc Australia for the Boomer Drill. As noted already, there is no evidence from Mr Summer on this aspect which assists the Defendant. Further, there is no evidence of any type beyond the Defendant's suspicions which would provide a foundation for a triable or arguable case on this aspect.
19. In reality, what the Defendant seeks to achieve is to put the Plaintiff to strict proof at a final hearing of the matters disclosed concerning the valuation of the Boomer Drill. The problem for the Defendant is that the material emanating from the Plaintiff has been in the possession of the Defendant and his legal representatives since November 2019, and no evidence whatsoever has been advanced which seeks to impugn or cast doubt upon the approach adopted in the valuation of the Boomer Drill nor the quantum which emerged from that process. Nor is there any evidence which suggests the existence of valuation or other evidence if the Defendant has time to seek it.
20. In saying this, I emphasise once again that the Court is not undertaking a final hearing of the matter. However, in circumstances where the Defendant has had an opportunity to adduce evidence on these aspects and has done so, then the absence of evidence which bears on these matters is significant to the outcome of this application.
21. In approaching the present application, I have effectively put to one side the approach adopted by the Registrar on 17 December 2019. The Registrar's reasons were brief. I accept that the Registrar addressed the question of whether there was an arguable defence as being the critical issue to be considered on the application. This was the central issue to be considered at that hearing where the issue of delay was a secondary aspect only.
22. In undertaking the review required by law, I have had regard to all factors which bear upon an application to set aside Default Judgment by reference to the entirety of the evidence before the Court on the present application.
23. I do not think that the Defendant's application is advanced by an argument that the Plaintiff's original application for Default Judgment was based upon an erroneous figure. The solicitors for the Plaintiff informed the Defendant's solicitors about this on 31 October 2019 with the letter making clear that an amended judgment would be sought in the sum $467,487.00 and proposing that consent orders be signed to reflect that figure (Exhibit A, pages 96-98).
24. Accordingly, the Defendant attended the hearing of his application to set aside the Default Judgment on 17 December 2019 being well aware of the Plaintiff's approach on this issue. The process adopted by the Registrar reflected an appropriate amendment to the quantum of the judgment, and the material now before the Court confirms the appropriateness of that quantum.
25. I am not satisfied that it is in the interests of justice to set aside the Default Judgment and to let the Defendant back in to defend the Statement of Claim. It would not serve any useful purpose to allow this to occur in these proceedings. Nor would such an approach accord with the dictates of justice: s.58 Civil Procedure Act 2005.
26. I am not satisfied that the Defendant has discharged the onus which he bears to demonstrate an arguable or triable defence to the Plaintiff's claim by way of set-off or otherwise. If I had been so satisfied, I would have accepted that the Defendant's delay in filing a Defence was appropriately explained. However, the Defendant has been unsuccessful in the principal argument advanced on this review.
27. It remains open to the Defendant, if he sees fit, to bring proceedings to reflect the foreshadowed argument in the draft Cross Claim. That issue is not controlled or determined by the Court's decision on the application to set aside the Default Judgment.

Conclusion

1. As mentioned earlier (at 65), the Plaintiff does not oppose an extension of time for the Defendant to file the present Notice of Motion. It is appropriate to grant that extension. However, the Defendant has been unsuccessful on the present application. It is appropriate that orders be made confirming the Default Judgment and dismissing the Notice of Motion.
2. The ordinary rule is that costs should follow the event. There is no reason why the Defendant should not pay the Plaintiff's costs of the Notice of Motion.
3. In the event that the Court reached this conclusion with respect to the application, counsel for the Plaintiff requested the Court to make provision in the Court's orders for written application to be made for a special costs order. I will provide for such an application in the orders to be made.
4. I make the following orders: 1. pursuant to Rule 49.20(2) UCPR, time for the Defendant to file a Notice of Motion is extended to 5 February 2020; 2. pursuant to Rule 49.19 UCPR, the Default Judgment ordered on 17 December 2019 is confirmed; 3. the Defendant's Notice of Motion filed 5 February 2020 is dismissed; 4. the Defendant is to pay the Plaintiff's costs of the Notice of Motion; 5. if the Plaintiff wishes to apply for a special costs order, written submissions in support of that application should be furnished by email to my Associate and served by email upon the Defendant on or before 9 April 2020 with the Defendant to furnish submissions in reply by email to my Associate and the Plaintiff on or before 23 April 2020; 6. the Court will thereafter determine any application for a special costs order on the papers.

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: 31 March 2020