First Plaintiff/First Defendant by Counterclaim v First Defendants/ First Plaintiff by Counterclaim

1 The first plaintiff, TSC Nominees Pty Ltd ('TSC') acted as trustee for a joint venture between the second plaintiff ('Chris'), third plaintiff ('Bill') and the second defendant ('Trevor'). Chris, Bill and Trevor are recorded as the shareholders of TSC and Bill was, until after the commencement of this proceeding, its sole director.[1] TSC was deregistered as a corporation on 29 September 2014 and has not, so far as is revealed, been reinstated on the Register.[2] I will refer to Chris and Bill, the continuing plaintiffs, collectively as the plaintiffs.

2 The plaintiffs seek to extend the time within which to apply set aside a judgment obtained against them in their absence, and to set that judgment aside.[3] The judgment was obtained at trial on 9 October 2015 on a counterclaim made by the first defendant, Canham Commercial Interiors Pty Ltd ('Canham Commercial') and Trevor. Neither Chris nor Bill appeared at trial and orders were made and costs were awarded against them.[4] The application by the plaintiffs was filed on 15 December 2015.

3 The affidavits in support of the plaintiffs' application, and relied upon generally by them, are numerous,[5] repetitive, conflicting, argumentative and contain many unsubstantiated assertions of a conclusory nature. In one case, in particular, the affidavit is difficult to read and follow because of its layout and verbosity.[6]

4 The defendants' affidavits[7] include an extensive affidavit as to the merits of the defendants' claims filed for the purposes of the trial and in accordance with the orders and directions made when the proceeding was set down for trial.[8]

5 I consider that for the reasons set out below, the justice of the case requires that:

(a) the application for an extension of time within which the plaintiffs may apply to set aside the judgment should be refused; and

(b) in any event, the application to set aside the judgment should be refused.

6 The proceeding has a chequered and tortured history. However, for the purposes of both applications, to extend time and to set aside the judgment, that history needs to be set out. Some of it can be summarised, some needs more extensive treatment.

7 The proceeding arises out of a joint venture between Chris and Bill, of the one part, and Trevor, on the other, entered into in about October 2009 to purchase and develop for residential purposes the land at Lot 1 and Lot 2, PS 628331A at 1 Holloway Road, Sandringham, Victoria ('the Holloway Road Project' or 'the property'). The property was purchased in the name of TSC by contract dated 25 November 2009. Chris, Bill, Trevor and a fourth joint-venturer, Simon De Vall (who later dropped out) each paid a share of the deposit payable under the contract.[9] The purchase of the property came with plans to build two town-houses. The purchase settled on 27 January 2010 with finance provided by the Bank of Queensland. TSC was a corporate vehicle for undertaking the Holloway Road Project and the profits (or losses) from the project were to be divided equally between Chris, Bill, and Trevor.

8 TSC was a company 'owned' by Trevor. That is, at the commencement of the joint venture, he was the sole director and shareholder. In about November 2009, in order to enable TSC to borrow from the Bank of Queensland, Trevor resigned as the sole director of TSC and was replaced by Bill.

9 The proceeding began as an application made by TSC, as the sole plaintiff, pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) ('TLA') to remove a caveat lodged by Canham Commercial over the property at 1 Holloway Road Sandringham, Victoria.[10] Trevor is the sole director of Canham Commercial and was later added as a defendant. At the outset, TSC, and later Chris and Bill, were represented by Nicholas Lontos of Aloe & Co Pty Ltd ('Aloe'), and from 11 April 2013, by Nicholas Lontos, solicitor, practicing in his own name ('Mr Lontos').

10 Initial directions for the filing of affidavits were made on 5 June 2012 and the application was adjourned to 14 June 2012. On 13 June 2012, the Court was provided with Interim Terms of Settlement signed by the parties on 13 June 2012 ('TOS').[11] The TOS provided for:

(a) the removal of the caveat, to enable the sale of 1 Holloway Road Sandringham, and for replacement security by Chris and Bill by the provision by them of a charge 'in caveatable form' over land at 112 Grandview Avenue, Rye, Victoria ('the Rye property');

(b) the deposit with Aloe, the then solicitors acting for TSC (and for Chris and Bill), of the sum of $84,569.40 from the proceeds of sale of the Holloway Road property 'pending the final accounting and resolution of the joint venture disputes';

(c) the proceeds of the sale of the Holloway Road Project to be used to discharge a mortgage of the Rye property so that there would be no prior encumbrance to the charge in favour of Canham Commercial; and

(d) the making of Orders for the future conduct of the proceeding.

11 Orders were made on 14 June 2012 by Cavanough J for discovery of documents by the parties by 18 July 2012, for the proceeding to be referred to the Associate Judge in charge of listings to be fixed for trial, and for mediation. There were no discovery affidavits filed in accordance with that order, but the plaintiffs' accountant forwarded a soft copy of MYOB accounts for the joint venture to a forensic accountant engaged by the defendants, a Mr Peter Doughty.[12]

12 On 27 June 2012, the proceeding was set down for trial on 13 February 2013, on an estimate of 4-5 days.[13]

13 Mr Doughty prepared a preliminary report dated 25 July 2012 on the accounting for the Holloway Road Project, concluding that there were a number of transactions that required further explanation and additional records were needed to complete the report. Despite many requests directed to Chris and Bill, these were not provided.[14]

14 By summons filed by Canham Commercial on 1 February 2013 application was made for, amongst other things, declarations and orders that Trevor was the sole shareholder of TSC; that a transfer of shares in TSC from Trevor to Bill and Chris effected on 25 November 2010 was unauthorised and invalid; for Trevor, in effect, to take over the conduct of the claims by TSC; for the joinder of Bill and Chris as defendants and for relief in favour of TSC against Bill and Chris under s 233 of the Corporations Act 2001 (oppression proceedings).

15 In consequence of this application, and complaints by Canham Commercial that the information needed by the defendant had not been provided, on 5 February 2013, the trial date was vacated and a case management conference ordered to be held on 25 February 2013. At the case management conference, orders were made for TSC to make discovery of all records relating to the Holloway Road Project (including MYOB accounting records) and Canham Commercial's summons was further adjourned to 4 April 2013.

16 In response to the order for discovery, the then sole plaintiff, TSC, delivered a box of documents to the defendant on 12 March 2013 without any listing of the contents and without any affidavit of documents. Examination of the documents led to the identification of 390 payments which required explanation from Chris and Bill. A list of these payments was sent to TSC before a mediation was held on 23 September 2013 and is referred to in the defence and counterclaim subsequently filed.[15] The reply and defence to counterclaim pleads a general denial to these payments being personal, notwithstanding that they appear to expenditure for fuel, payments to 7 Eleven and drawings by Bill and Chris.

17 On 4 April 2013, orders were made for the filing and service of grounds of opposition to the summons and for the proceeding to be referred to the Corporations List of the Commercial Court.

18 By order of Ferguson J made on 23 April 2013, the proceeding was referred, pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2005[16] to an Associate Justice for hearing and determination.

19 After further directions for the filing and service of affidavits and submissions, Canham Commercial's summons of 1 February 2013 was listed for hearing on 31 July 2013.[17] Meanwhile, on 29 July 2013, TSC applied to add Chris and Bill as plaintiffs and Trevor as a defendant to the proceeding. In addition, an application was made for the taking of accounts of the joint venture. On 31 July 2013, Randall AsJ ordered that Chris and Bill be added as plaintiffs and defendants by counterclaim,[18] that Trevor be added as a defendant and plaintiff by counterclaim, that the parties exchange accounts relevant to the joint venture, lists of discoverable documents, lists of questions and propositions in respect of the accounts, and file and serve position statements. A mediation was then ordered to take place. Despite the file not revealing whether the directions relating to the exchange of accounts, lists of documents and questions were ever followed, an unsuccessful mediation was held before Randall AsJ on 29 September 2013.

20 The proceeding then came on for further directions before Gardiner AsJ on 1 November 2013 at which time pleadings were ordered. A statement of claim, defence and counterclaim and reply and defence to counterclaim were filed, although not at the times ordered. There were delays by the plaintiffs (including TSC) in the filing and service of the statement of claim and the matter came back before Gardiner As J on 21 February 2014 when it was ordered that the plaintiffs pay $2,000.00 being the costs thrown away to the defendants.[19] These costs have not been paid. In his affidavit of 14 April 2016, Chris gives evidence that neither he nor Bill were made aware of these orders or any others by Mr Lontos.[20]

21 The plaintiffs were not only late in delivering their statement of claim, they were also slow in filing and serving a reply and defence to counterclaim, giving rise to threatening letters from the defendants' solicitor.[21] On 2 May 2014, directions were made for the filing and service of affidavits of documents, inspection of documents and the filing and service of interrogatories and answers. The defendants filed their affidavit of documents as ordered, but the plaintiffs did not. On 19 August 2014, the order for the plaintiffs to make discovery by affidavit was repeated,[22] and this was done by Chris and Bill by affidavits sworn on 26 August 2014, but not by TSC. The plaintiffs were ordered to pay the costs of the appearance on 19 August 2014. In the evidence for the defendants in the application before me, it was revealed that a bill for these costs was sent to Mr Lontos on 9 September 2014. There has never been any reply from the plaintiffs' solicitor (and they remain unpaid).[23]

22 The Court file and the evidence of the defendants' solicitor is to the effect that the plaintiffs failed to give discovery in accordance with the various orders of the Court until 26 August 2014, when affidavits of documents of Chris and Bill were filed. The catalogue given by Mr Haywood of the orders not complied with by the plaintiffs, and the attempts by the defendants to chase the plaintiffs, is extensive.[24] In answer to these matters, Chris states that neither he nor Bill were made aware of the orders, nor the correspondence that related to non-compliance with them by their solicitor, Mr Lontos.[25]

23 The proceeding came back before Ferguson J on 29 August 2014 for further directions. Her Honour ordered the parties to jointly appoint a qualified accountant to prepare a profit and loss statement and balance sheet of the joint venture by 5 November 2014, with appropriate directions to enable the accountant to have the relevant material. A judicial mediation was also ordered.

24 Pursuant to the orders of Ferguson J, by letter dated 16 October 2014, Mr Lontos and Mr Haywood jointly engaged Munday Wilkinson, Chartered & Forensic Accountants, to prepare a profit and loss statement and balance sheet.[26] Mr Wilkinson of that firm prepared a report dated 28 November 2014 which showed a loss was suffered by the joint venture of $164,245.00, but there were various payments expensed where no invoice could be located, nor an explanation for the payment. These were allocated to suspense accounts, amounting to about $321,000.00.[27]

25 A Judicial mediation was held on 1 December 2014 and was unsuccessful. After the mediation, Mr Lontos informed Chris and Bill that the proceeding would go to trial and that he would contact them in due course to advise of the trial date. Initially, Bill gave evidence that after that they (that is neither Chris nor Bill) did not hear from Mr Lontos until mid-October 2015, when he asked Chris to come into his office to see him, but did not tell him why.[28] Later evidence and cross-examination revealed this to be mistaken or untrue.

26 After the mediation on 1 December 2014, the matter was not listed for further directions immediately. The plaintiffs took no step to progress the proceeding. It was only moved on at the request of the defendants' solicitor, who emailed the Court on 11 February 2015.[29] The Court file reveals that after the plaintiffs filed their affidavits of documents on 26 August 2014, they filed no document until after the judgment on 9 October 2015, although Mr Lontos appeared at directions hearings as related below.[30]

27 The proceeding was then referred to Robson J for management and on 13 March 2015, when the matter came before his Honour, it was revealed that TSC had been de-registered as a corporation and that the amount in dispute was about $160,000.00. After expressing surprise and annoyance that a matter of this kind was in the corporations list, Robson J made orders requiring the plaintiffs to reinstate TSC on the register, that the proceeding be set down for trial on a date to be advised (possibly before an Associate Justice) and other directions, including the exchange of expert reports 28 days before the trial date. Mr Lontos appeared as solicitor for the plaintiffs at this hearing and Mr J Love of counsel appeared for the defendants. Chris attended this directions hearing.[31] He gave evidence that he drove Mr Lontos to Court on that day and attended Court, sitting in the back of the Court.[32] At the end of the hearing, he asked Mr Lontos what had happened and was told 'stuff you wouldn't understand.'[33] This also turned out to be mistaken evidence, or untrue.

28 On 31 March 2015, Sifris J ordered pursuant to r 77.05 of the Rules, and r 16.1(3) of the Supreme Court (Corporations) Rules 2013, that the proceeding be referred to an Associate Justice for hearing and determination.

29 On 15 May 2015, the proceeding came before me for trial directions. Orders were made fixing the proceeding for trial on 8 October 2015 and directions were given for the filing and service of evidence, including, again, for Chris and Bill to re-register TSC and for the filing and exchange of expert evidence.[34] At the hearing on 15 May 2015, both parties were represented, however, the plaintiffs were not personally in attendance. Mr Lontos, appeared for the plaintiffs and Mr J Love of counsel for the defendants.

30 Chris and Bill maintained in their affidavits in support of the applications that they were not informed that their proceeding had been set down for trial, nor were they informed of the orders made for the filing of affidavits and expert evidence.[35]

31 Mr Lontos believes that he telephoned Chris after the directions hearing on 15 May 2016.[36] On 18 May 2015, three days after the hearing, Mr Lontos sent a text message to Chris:

I'm not going in today so cancel this afternoon. Hearing is 8 October. Call you in the morning?[37]

32 Chris disputes ever receiving Mr Lontos' text message. Mr Lontos was usually in regular contact with Chris by both phone and text message[38] as Mr Lontos was assisting Chris in another legal matter during this time.[39] I consider this dispute in more detail when dealing with the reason for the non-attendance of Chris and Bill at trial.

33 The defendants complied with the orders for the filing of further affidavits and the delivery of an expert report, but the plaintiffs did not. The defendants served on Mr Lontos their expert report on 31 July 2015, an affidavit of Trevor on 31 August 2015, copy subpoena on 19 August 2015 and 2 September 2015 and submissions on 14 September 2015. In addition, on 1 October 2015, the defendants' solicitor sent a letter advising of the deponents required to attend for cross-examination.[40] The evidence of Chris is that neither he nor Bill were informed of the receipt of these documents by Mr Lontos, nor were they asked to do anything by way of preparation by him.[41] This evidence is also shown to be mistaken or untrue.

34 Not only did the defendants comply with the pre-trial orders, their solicitor wrote to or emailed Mr Lontos regarding compliance with those orders, or requesting inspection of discovered documents and further discovery, on 22 June 2015, 17 July 2015 (twice) and 14 August 2015.[42]

35 The proceeding came on for trial before me on 8 October 2015, as ordered. There was no appearance for the plaintiffs.[43] The defendants sought to proceed on their counterclaim. After hearing submissions from Mr J Love of counsel, and the evidence of Trevor being confirmed and supplemented, I made orders and gave reasons for the orders on 9 October 2015. The reasons for the orders, omitting irrelevant matters, were as follows:

The first plaintiff ('TSC Nominees') was deregistered on 29 September 2014 and, contrary to the orders of the Court made on 15 May 2015, there is no evidence that its registration has been reinstated. The second plaintiff ('Bill Mihalitsis') and the third plaintiff ('Chris Mihalitsis') did not appear at the trial. Further, the plaintiffs did not comply with the orders made on 15 May 2015 for the filing and exchange of affidavits, experts' reports and outlines of submissions. Accordingly, the plaintiffs presented no evidence to contest the claims made by the defendants/plaintiffs by counterclaim ('Canham parties').

The proceedings arise out of a joint venture between Bill Mihalitsis, Chris Mihalitsis and the second defendant/second plaintiff by counterclaim ('Trevor Canham') to purchase and develop the properties at 1 and 1A Holloway Road Sandringham, Victoria ('Property') which was purchased by TCS Nominees as trustee for the joint venture.

At the outset the Canham parties applied to amend the defence and counterclaim filed on 20 March 2014 by:

(a) substituting in paragraph 16 for the sum of $217,511 the sum of $310,730.15 and for the sum of $72,513 the sum of $103,576.72; and

(b) amending the prayers for relief so that the claims made by the first defendant/first plaintiff by counterclaim ('Canham Commercial') and by Trever Canham are both made against Bill Mihalitsis and Chris Mihalitsis as co-joint venturers.

These amendments were made so that the defence and counterclaim accorded with the evidence in the affidavit of Trevor Canham sworn 31 August 2015 and the Expert Report of Peter Vernon Doughty filed on 30 July 2015, both of which were proved to have been served on the solicitors for the plaintiffs at or about the time they were filed. The amendments to the prayer for relief constituted nothing more than a different legal conclusion based on the facts already in issue in the proceeding.

Trevor Canham confirmed that his affidavit sworn 31 August 2015 was true and correct and that the exhibits thereto were as stated in the affidavit. He also gave evidence that Exhibit A (tendered at the trial), being terms of settlement between TSC Nominees, Canham Commercial, Bill Mihalitsis, Chris Mihalitsis and himself dated 13 June 2012 ('Terms of Settlement') was a true copy of the Terms of Settlement entered into and exhibited in a different version (as exhibit TC8) to his affidavit sworn 31 August 2015.

The evidence establishes to the satisfaction of the Court that TSC Nominees acted as a trustee for the joint venture between Bill Mihalitsis, Chris Mihalitsis and Trevor Canham. It follows that the moneys arising from the sale of the Property referred to in paragraph 3 of the Terms of Settlement, which moneys were agreed to be placed and kept in the trust account of the solicitors acting at that time for the plaintiffs, being the sum of $84,569.40, are moneys to which the joint venturers are beneficially entitled and are not monies of TSC Nominees.

Canham Commercial claims against Bill Mihalitsis and Chris Mihalitsis the recovery of the amount held in trust as referred to in the Terms of Settlement. The evidence of Trevor Canham establishes that of that sum the amount of $83,781.40 is due to Canham Commercial plus interest thereon (in the sum of $29,194.40). It is therefore appropriate that there be orders for the payment of those trust moneys to Canham Commercial as part payment of the moneys due to it.

The evidence of the expert accountant Peter Vernon Doughty establishes that the joint venture made, or ought to have made, a profit of $310,730.15. The evidence establishes that Trevor Canham's share of that profit is $103,576.72. After allowing for drawings made by Trevor Canham against anticipated profits, in the sum of $63,210, and adding back the contribution made by him to the deposit on the purchase of the Property in the sum of $42,000, then $82,366.72, plus interest of $28,701.44, is due to Trevor Canham as his share of the profits arising from the joint venture.

Additional damages in the sum of $17,192.00 - arising from the delayed completion of the development of the Property, being additional interest and costs on loans (see exhibit TC-19 to the affidavit of Trevor Canham sworn 31 August 2015) - is due to Trevor Canham as damages for breach thereof by Bill Mihalitsis and Chris Mihalitsis.

After I had announced my judgment as recorded above, Canham Commercial and Trevor Canham adduced evidence of the making of an offer of compromise pursuant to r 26.02 of the Rules such offer having been served on 25 June 2015 on the solicitors on the record acting for the plaintiffs/defendants by counterclaim. The offer was not accepted. The judgment obtained is no less favourable to Canham Commercial and Trevor Canham than the offer. Pursuant to r 26.08 of the Rules, Canham Commercial and Trevor Canham are entitled to costs on a standard basis up to 11 am on the second business day after service of the offer, being 29 June 2015, and to costs on an indemnity basis for the costs of the proceeding incurred after that time and date.

1. At all times material from 25 November 2009, the TSC Nominees held the properties at 1 and 1A Holloway Road, Sandringham, Victoria, as trustee for the joint venture between Bill Mihaltsis, Chris Mihalitsis, and Trevor Canham.
2. The defendants have leave to amend the defence and counterclaim filed on 20 March 2014 by substituting in paragraph 16 -

(a) for the sum of $217,511 the sum on $310,730.15;

(b) for the sum of $72,513 the sum of $103,576.72

(c) by amending the prayers for relief,

In accordance with amended defence and counterclaim filed this day.

1. Within 14 days of service of copy of this order as authenticated on Aloe & Co, solicitors, the moneys held in trust by Aloe & Co pursuant to the Terms of Settlement dated 13 June 2012, being the sum of $84,569.40, together with any interest accrued thereon, shall be paid by Aloe & Co to Canham Commercial or at its direction.
2. There is judgment for Canham Commercial against Bill Mihalitsis and Chris Mihalitsis in the sum of $83,781.40 together with interest thereon, up to the date of judgment, in the sum of $29,194.40 less any amount paid to it or at its direction from the moneys held in trust by Aloe & Co, as ordered in paragraph 3 above.
3. There is judgment for Trevor Canham against Bill Mihaltsis and Chris Mihaltsis in the sum of $82,366.72 together with interest thereon, up to the date of judgment, in the sum of $28,701.44.
4. There is judgment for Trevor Canham against Bill Mihaltsis and Chris Mihaltsis in the sum of $17,192.00.
5. Bill Mihaltsis and Chris Mihaltsis shall pay the costs of the proceeding, including reserved costs, of the defendants/plaintiffs by counterclaim:

(a) on a standard basis before 11am on Monday 29 June 2015;

(b) on an indemnity basis thereafter.

1. Reserve liberty to the defendants/plaintiffs by counterclaim to apply as to the further working out of this order.

37 The solicitor for Trevor and Canham Commercial, Mr Haywood, received a cheque for the sum of $84,569.00 from Aloe on 23 October 2015 and this was handed to Trevor and paid into his bank account. It was then disbursed in payment of legal costs and expert's fees in this proceeding and for the payment of other creditors.[44] These payments were made between 5 November 2015 and 3 December 2015, with the majority paid out of Trevor's bank account by 23 November 2015.[45]

38 By summons filed 15 December 2015, the plaintiffs brought an application to set aside the judgment obtained against them on 9 October 2015 on the basis that they were unaware of the trial date.[46] The application came on for hearing, after some interlocutory steps and disputes, on 2 and 18 May 2016. One of the disputes was whether Chris and Bill should be available for cross-examination. I allowed cross-examination of Chris and Bill, which took place on 2 May 2016. In doing so, I applied the principles summarised in Matthews v SPI Electricity Pty Ltd & Ors (No 6).[47]

39 The reasons for allowing the cross-examination were, in brief, that there were relevant factual disputes which required crossexamination for their resolution and the credit of Chris and Bill was important to resolving those disputes. The particular disputes were whether Mr Lontos had telephoned Chris shortly after the interlocutory hearing on 15 May 2015 and informed him of the trial date, whether Chris received a text message sent on 18 May 2015 notifying him of the trial date, and whether Chris and Bill were or ought to have been aware of the trial date by reason of these communications.

40 After the cross-examination of Chris and Bill on 2 May 2016, the hearing of the application was adjourned part-heard to 18 May 2016. On 2 May 2016, I ordered the following by consent:

2. Mr Lontos is ordered to produce to the court on 18 May 2016:

(i) his mobile telephone from which the text message was reported; and

(ii) the telephone records from 12 May 2015 to 11 June 2016 unredacted.[48]

41 Mr Lontos was also subpoenaed to give evidence on 18 May 2016.[49] He appeared in response to the subpoena, producing telephone records from 11 May 2015 to 11 June 2016 and his mobile telephone, which had been used, according to the print of a text message produced by him pursuant to a prior subpoena, to notify Chris of the trial date.

42 Rule 49.02(2) of the Rules provides that the Court may set aside any judgment or order obtained 'where a party is absent at the trial'. However, pursuant to r 49.02(3) an application under paragraph (2) 'shall be made within 14 days after the trial'. The Court may extend any time fixed by the Rules, including the 14 day period fixed by r 49.02(3),[50] 'whether or not an application for the extension is made before the time expires'.[51]

43 The exercise of the power to set aside or vary any judgment, and to extend time to enable that, is discretionary. As with the exercise of all discretions, whether conferred by statute or rule or a part of the inherent jurisdiction of the court, a discretion must be exercised judicially, that is, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation.[52] In the exercise of a particular discretion, practices or guidelines may have been developed. They are not legal rules that confine the exercise of the discretion.[53] They may, however, provide guidance (particularly where pronounced by appellate courts) so as to promote consistency in decision making and diminish the risks of arbitrary and capricious adjudication.[54]

44 Rule 3.02 of the Rules provides, so far as is relevant:

(1) The Court may extend or abridge any time fixed by these Rules or by any order fixing, extending or abridging time.

(2) The Court may extend time under paragraph (1) before or after the time expires whether or not an application for the extension is made before the time expires.

45 The overriding principle is what the interests of justice require.[55] The four major factors that have been identified as relevant to the exercise of the discretion are the length of the delay, the reason for the delay, whether there is an arguable case and the extent of any prejudice to the other party.[56] These four major factors are non-exhaustive.

46 Other factors include whether the delay was intentional or contumelious; or merely the result of a bona fide mistake or blunder; and whether the delay is that of the litigant or of its lawyers, with which the litigant should not be saddled. It may also be relevant, where the default is that of an applicant's legal representatives, to take into account any considerations personal to the applicant which might have affected its ability to safeguard its own interests, for example, by applying pressure to its lawyers.[57]

47 Where, as here, the discretion is conferred in unlimited terms, the question is whether it would be just in all the circumstances to grant or refuse the application. Necessarily, the indulgence is not granted as of course. It is for the party seeking to persuade the decision-maker to show that it should be granted.[58]

48 The statements of principle have most often arisen in the context of an application to extend time to appeal. In Trkulja v Dobrijevic & Ors,[59] the Court of Appeal summarised the law compendiously as follows:

....The guiding principle is that the discretion to extend time is given for the sole purpose of enabling the Court to do justice between the parties. The applicant, for an extension of time, must explain the delay, and the explanation must justify the delay being excused. The Court should take into account the history of the proceedings and the conduct of the parties. A relevant consideration is that, in the case of a proposed appeal, the successful party, at first instance, has a legitimate interest in the finality of the decision in that party's favour. The Court does take into account its assessment of the prospects of success of the appeal, on such an application, bearing in mind, however, that the parties are not in a position to address a full argument on that issue, nor is the Court in a position to make a detailed assessment of it.

49 The Court of Appeal in Trkulja went on to observe in relation to the circumstances of that proceeding:[60]

Furthermore, as counsel for the respondents has noted, the present proceeding has been bedevilled by delay, for most of which the applicant has been responsible. The application for an extension of time, in respect of the 23 October orders, was made almost five weeks after the expiration of the time fixed by the Rules for the bringing of an application for leave to appeal. Those time limits are of some importance. In the context of interlocutory proceedings such as these, they enable a successful party to have some certainty that the decision, gained in its favour at first instance, governs the litigation. In addition, the time limits are designed to ensure that there is no untoward delay in achieving some finality in litigation. The reason given by the applicant, for the delay, is unconvincing, and is also to be viewed in the context of the unsatisfactory manner in which the applicant has prosecuted the proceeding.

50 The relevance of finality in the litigation is better understood when it is recognised that upon the expiry of the time limited for an application to set aside the judgment or to appeal it, the successful party has a vested right to retain the judgment or order unless the application is granted.[61]

51 In cases such as this, where a defendant makes application for an extension of time in which to bring an application under r 49.02 of the Rules, a significant issue is whether the defendant knew before the date of trial that the proceeding had been fixed for hearing.[62]

52 In some cases, where the delay has not been long and the reason has been an error in the understanding of the correct procedure by the applicants' legal advisors, much has depended upon the extent to which the applicant would be prejudiced by the Court refusing its application and any prejudice to the respondents occasioned by granting it.[63] This, inevitably, brings into play the chances of the judgment being set aside, or the leave being granted, if an extension of time is granted and thus whether the applicants case is arguable.[64]

53 In considering the application to extend time within which to apply to set aside the judgment, the Court must seek to give effect to the overarching purpose prescribed by the Civil Procedure Act 2010 (Vic) ('CPA'), which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[65] In making any order in a civil proceeding, the Court must also further the overarching purpose by having regard to the object of dealing with a proceeding in a manner which is proportionate to the complexity or importance of the issues in dispute and the amount in dispute.[66] The overarching purpose has been applied in a variety of circumstances to reinforce the denial of relief to an applicant.[67] Nevertheless, the just determination of the civil proceeding is the paramount object.[68]

54 The party seeking the extension bears the onus of proving that it should be granted. An extension will not be granted if the case is hopeless, unarguable or bound to fail, because it would be futile to grant the extension in those circumstances.[69]

55 The guidelines that have been developed in the area of setting aside judgments obtained at trial where a party failed to attend, follow those identified by the Full Court in Rosing v Ben Shemesh,[70] Kostokanellis v Allen[71] and Ying v Perpetual Trustees Victoria Ltd & Ors.[72] They are, in summary:

(a) the reason why the party failed to appear when the case was heard;

(b) whether there had been any delay by the absent party in launching the application for a new trial;

(c) whether there was a bona fide issue to be tried; and

(d) whether the other party would be prejudiced by a new trial in any respect which could not be adequately compensated by a suitable award of costs and the giving of security.[73]

56 The Court of Appeal in Ying emphasised that the discretion is not fettered by these four considerations and referred to what was said by the Full Court in Kostokanellis v Allen,[74] quoting Smith J in Shepperdson v Lewis,[75] that:

...the adoption of a formula created by erecting what are merely relevant factors into arbitrary principles so as to allow the automatic production of a solution in all but the exceptional case, is a quite fallacious approach to the exercise of a discretion.

57 In Adams v Cronin,[76] Winneke ACJ, with whom Phillips and Hayne JJA agreed, said of r 49.02(2):

However, the court, in the exercise of its discretion under this rule, will rarely set a judgment aside which has been properly entered against an absent party where that party, being aware of the date of the trial, has failed to attend at court (see Conrea Nominees Pty Ltd v Doherty Supreme Court, Victoria, Southwell J, unreported 22 July 1992).

58 It is clear law that there is no point in granting the defendants' application if the case is untenable or hopeless. On the other hand, that conclusion cannot be reached on a mere conflict of affidavits.[77] Having regard to the changes brought about to the test for applications for summary judgment by the CPA, it may be that the appropriate test, as the defendants submitted, is whether the merit of the absent parties' case can be described as one having a real as opposed to fanciful prospect of success.[78] The traditional view, at least in relation to an extension of time where the time limit is procedural in character, is that expressed by Kirby J in Jackamarra v Krakouer.[79] His Honour was considering the entry of an appeal for hearing, a time limit that was procedural rather than substantive, and said that:

The party seeking indulgence bears the burden of persuading the decision-maker to grant its request. A consideration relevant to that exercise is whether the case is arguable. If it is hopeless, unarguable or bound to fail, the request for an extension of time will be refused.[80] However, this is basically because to grant it would be futile. The practice ordinarily adopted in judging the arguability of a point was described by Lord Denning MR for the English Court of Appeal in R v Secretary of State for the Home Department; Ex parte Mehta.[81] It ordinarily involves consideration of "the outline of the case":

We never go into much detail on the merits, but we do like to know something about the case before deciding whether or not to extend the time.

This description accords with my own experience of Australian practice. It appears to accord with that of the Federal Court of Australia where Mehta was cited and applied.[82] In Esther Investments,[83] Seaman J, talking of the practice of the Supreme Court of Western Australia, said that the assessment of the merits was necessarily "broad" because the Court, on an application to extend time, will ordinarily have only "limited materials and argument". Reason and efficiency support this practice. On an application to cure a procedural time default, the parties are entitled to expect that the court will deal with procedural issues and not without warning or consent turn the motion into the substantive hearing of the appeal. Were that to be a common practice, the time of the courts in reviewing the factual and legal details of cases might be doubled - first in the practice list and then, if the matter were allowed to proceed, in the substantive hearing. That would not be an efficient use of the court's time or of the parties' attention to the case. Moreover, it could work an injustice on a party if a telescoped hearing, which should primarily be addressed to a procedural question, were converted into the determination of issues of complexity and substance, the proper treatment of which may require more time than is typically available in a busy practice court.

59 It needs to be borne in mind that his Honour was considering a case of an extension of time within which to enter an appeal for hearing. In my view, the extent to which the applicant must go in establishing an arguable case where the application is to set aside a judgment entered in his or her absence, must depend on the facts and circumstances of the case. This follows in my view from the overarching consideration being the attainment of justice between the parties. In cases where the question is whether to extend time within which to appeal, the decision of the Court of Appeal in Trkulja[84] shows that the Court took into account its assessment of the prospects of success of the appeal, bearing in mind that the parties were not in a position to address a full argument on that issue, nor was the Court in a position to make a detailed assessment of it.

60 The circumstances facing the plaintiffs in this case are significantly different from those in Jackamarra. Here, there is both an extension of time application coupled with an application to set aside a judgment regularly entered. It is important in an application such as this that the plaintiffs show that their claims and defences to counterclaim raise issues that should be allowed to go to trial, having regard to, and weighing in the balance, the other considerations relevant to the application, that is; the delay, the reasons for delay, prejudice to the defendants and any other relevant consideration. In some cases, it will be necessary for the applicant to introduce more evidence, and establish with greater persuasive force, the merit of the claim or defence they have been unable to advance at trial. Even after it is established that there is such an arguable claim or defence, that is not the end of the matter.

61 In Kaur v Kooner, Judge Cosgrave observed:[85]

While I accept that having a bona fide or arguable defence on the merits is important in applications of this kind, it cannot be said as an invariable rule that such a factor must take precedence over other considerations which the Court can take into account in deciding whether or not to set aside the judgment. As has been noted in cases over many years, each case depends upon its own particular facts. I certainly do not regard the observations of Robson J, however appropriate they might have been to the matter before him, as somehow binding upon me or otherwise determining how my discretion ought be exercised.[86]

62 I agree with Judge Cosgrave that it cannot be said to be an invariable rule that the presence of an arguable defence (or in this case, claim and defence to counterclaim) must take precedence over other considerations which the Court can take into account in deciding whether or not to set aside the judgment. Each case depends on the facts and circumstances at hand and whether the presence of an arguable case is enough will depend on a balancing of the strength of that case, the other relevant factors and ultimately the attainment of justice between the parties.

63 The delay in this case is 53 days from 14 days after 9 October 2015, that is 23 October 2015 to 15 December 2015. Delay in itself may not always be important, but delay prejudicing the other party is material.[87] In the context of this case, the delay is significant because of the prejudice that will be suffered by the defendants in the event the judgment is set aside, and because the reasons for delay reflect poorly on all those involved. I will refer to the prejudice later.

64 There is a great deal of material explaining the delay. It seems to have been a comedy of errors. The facts are as follows.

65 On 9 October 2016, Mr Lontos received an email from the Court attaching the orders made and this notified him that he had missed the hearing. This made him feel sick as he had never before had anything like that happen to him.[88] Because it was late on a Friday when he saw the order emailed by the Court, he did not attempt to contact Chris at that time. He sent a text to Chris on Sunday, 11 October 2015 saying 'see you at any time after 3pm Tuesday.'[89] From this text, it is readily to be inferred that there was some other communication between them at about this time.

66 Mr Lontos then attempted to arrange a meeting with Chris and Bill in person at his office.[90] Mr Lontos gave evidence that he met with Chris on Wednesday, 14 October 2015 and told him that he had missed the trial, that judgment had been entered against Chris and Bill,[91] and that they should seek independent legal advice.[92] He did not, however, give him a copy of the judgment as in his view, Chris would not have understood it.[93]

67 The plaintiffs, however, gave evidence that Chris did not meet with Mr Lontos until 26 October 2016,[94] at which time Mr Lontos said that he had missed the trial date and had erroneously believed that the trial was set for November.[95] Chris gave evidence that he was not told by Mr Lontos of the trial date at this meeting and did not discover it until later, when given a copy of the judgment by Ms Alevizopoulos of Frenkel Partners on 19 November 2015.[96]

68 The difference between the evidence of being informed of the judgment on about 14 October 2015 or 26 October 2015 may not appear particularly important. But it shows a relaxed, even careless, attitude to the taking of requisite action. The explanation for not taking action when told of the judgment on 14 October 2015 is that both Chris and Bill were travelling to Hong Kong, and this occurred between those dates. But it also appears that on 26 October 2015, the date on which Chris said he was told by Mr Lontos of the entry of judgment, Chris discovered that his mobile telephone was not working and took it to an Optus repairer. I return to that matter later.

69 Chris then approached another lawyer, a Mr Thomas Flitner of Flitner & Company Lawyers and explained what had happened.[97] On 27 October 2015, Mr Flitner sent a letter to Mr Lontos notifying him that he now acted for the plaintiffs and requested their file (he attached an authority from Chris and Bill).[98] The authority, however, attached documentation in relation to a Magistrates' Court proceeding brought by Munday Wilkinson Pty Ltd (who had been engaged pursuant to the order of Ferguson J to prepare a joint report) against Bill, Chris, Canham Commercial and Trevor.[99]

70 There is little evidence as to what happened in response to the letter sent by Mr Flitner. Ms Alevizopoulos spoke with Mr Flitner[100] and was told that there had been no response from Mr Lontos.[101] In this way, a further period of 3 weeks slipped away before any real action was taken on behalf of the plaintiffs.

71 By mid-November 2015, when there had been no further communication from Mr Flitner, Chris approached Ms Alevizopoulos of Frenkel Partners and on about 18 November 2015, that firm was engaged to act for Chris and Bill.[102]

72 On 19 November 2015, Ms Alevizopoulos spoke to Mr Lontos and was told that he had missed the trial date and had not briefed counsel to appear, believing that the trial was in November. He told her that he had not written to the other party seeking their consent to have the judgment set aside. At that time, Ms Alevizopoulos was not aware that Mr Lontos had failed to undertake the pre-trial steps in accordance with the Court's orders. On the same day, Ms Alevizopoulos telephoned the defendants' solicitor and informed him that Frenkel Partners were taking instructions from the plaintiffs in relation to the judgment.[103] Ms Alevizopoulos undertook a number of other steps during the period from 19 November 2015 to 15 December 2015, including confirming with the Supreme Court Registry that the judgment had been given, obtaining the transcript of the hearing on 8 and 9 October 2015, and reviewing that transcript, attempting to communicate, and communicating, with Mr Flitner about what steps he had taken, obtaining a copy of the Supreme Court file and undertaking company searches.[104]

73 On 26 November 2015, a week after first contacting the defendants' solicitors by telephone, Frenkel Partners wrote notifying them that they were instructed to apply to set aside the judgment of 9 October 2015 and requested that the defendants refrain from taking any adverse steps against the plaintiffs for a period of two weeks.[105] On the same day:

(a) Frenkel Partners advised Mr Lontos that they were the plaintiffs' new lawyers and requested their file;[106] and

(b) the defendants' solicitors forwarded to Mr Lontos accounts payable in 14 days as a result of the judgment against the plaintiffs. This was copied to Frenkel Partners on 27 November 2015.[107]

74 On 30 November 2015, Ms Alevizopoulos sent an email to Mr Lontos requesting a response to their request for the file. On the same day, Mr Lontos responded and advised that the file would be ready by 2 December 2015. On 4 December 2015, Mr Lontos sent Frenkel Partners a part of the file with the remainder to be collected on 7 December 2015. In a covering letter, Mr Lontos noted that there was no appearance on the hearing date due to an error on his part and through no fault of Chris and Bill.

75 On 7 December 2015, Ms Alevizopoulos wrote to the defendants' solicitors to inform them that the plaintiffs were finalising the material for an application to set aside the judgment and noted that Aloe, who held monies on trust pursuant to the TOS entered into in June 2012, had informed her that they had released the monies held on trust pursuant to the judgment. She requested that the monies not be distributed to the defendants.[108] She also wrote to Aloe, stating her understanding that the trust monies had been released and asked for copies of correspondence between Aloe and the defendants' solicitors. Curiously, this letter is addressed to an office address and not to Aloe by name.[109]

76 Then, as I have said, the present application was filed on 15 December 2015, returnable in the Associate Judges Practice Court on 29 February 2016.

77 Ms Alevizopoulos did not receive a satisfactory response from the defendants' solicitors as to what had happened regarding the monies held on trust by Aloe. In consequence, an application was made to the Court for a mandatory injunction for the moneys previously held on trust by Aloe to be returned to trust, or alternatively, an injunction restraining the defendants from disposing of those moneys - in effect a 'freezing order'.[110]

78 The application for a freezing order was brought to the Practice Court on 22 December 2015 before Riordan J. It was supported by the affidavit of Mr John Lancefield, solicitor of Frenkel Partners.[111] It appeared from that affidavit that Ms Alevizopoulos had a conversation with Mr Haywood on 18 December 2015 in which she was told that the trust moneys had been paid to the defendants some 8 weeks previously. An undertaking was sought that the defendants would not distribute or allocate the trust moneys pending the hearing of the plaintiffs' application to set aside the judgment.[112] No undertaking was forthcoming. The material then proffered on behalf of the defendants by Mr Haywood showed that the trust moneys had been received from Aloe on 23 October 2015[113] and paid into a bank account of the defendants between 5 and 23 November 2015. There was little or no point in pressing the making of any injunctive orders, and the application was adjourned to a date to be fixed.[114] As a result of discussion with Riordan J on 22 December 2015, the defendants provided further documentation confirming the receipt, disbursement and dissipation of the trust moneys to the plaintiffs' solicitors.[115] This lead to the plaintiffs' lawyer proposing that the summons for injunctive relief be dismissed with no order as to costs. That resulted in an unproductive exchange of correspondence that need not be repeated.[116]

79 Mr Lontos did not provide the remaining portion of the file after the delivery on 4 December 2015. During the period from 7 December until 10 February 2016, Ms Alevizopoulos made numerous requests for Mr Lontos to provide the balance of the file he maintained with respect to the proceeding. On 3 February 2016, Ms Alevizopoulos telephoned Mr Lontos who informed her that he had been away and only recently returned to work. Ms Alevizopoulos enquired of him why he had not diarised the hearing date and he responded by saying that 'it was not the boy's fault, I just did not go.'[117]

80 On 4 February 2016, Ms Alevizopoulos wrote to Mr Lontos requesting that he provide an affidavit explaining why the plaintiffs' failed to appear and prepare for the trial fixed on 8 October 2015. She received no response and again wrote on 8 February 2016. On that day, Mr Lontos responded confirming that he would provide an affidavit. On 11 February 2016, Ms Alevizopoulos and a trainee solicitor attended at the offices of Mr Lontos to collect the balance of his file.[118] She had a discussion with Mr Lontos at this time and asked for his explanation for his non-attendance at trial. Mr Lontos said that he had miscalculated the date of the trial and believed it was some time in November. He also said that he was away overseas in July/August 2015, he believed that the proceeding could settle and that in those circumstances he had not attended to the various interlocutory steps prior to the hearing. He also reiterated that the plaintiffs were not at fault as they were unaware of the trial date.

81 After collecting the balance of Mr Lontos' file on about 11 February 2016, Ms Alevizopoulos undertook a painstaking review and sorting of the file but found no note of any attendance on Chris or Bill nor copies of any correspondence to them in 2015 prior to the date fixed for the trial. The file was not in chronological order and contained incomplete documents and duplicates of documents. It was in five bundles each fastened with an elastic band or a clip and placed in a single box without any index.[119]

82 On 16 February 2016, Ms Alevizopoulos wrote to Mr Lontos noting that she had not received his affidavit explaining the failure to appear at the trial. The next day, Mr Lontos responded by email confirming he had not finalised the affidavit and would send it in the next few days. On 22 February 2016, Ms Alevizopoulos wrote to Mr Lontos informing him that he would be required for cross-examination on the return date of the application, being 29 February 2016. On 24 February 2016, she again spoke to Mr Lontos enquiring as to the progress of the affidavit and was told that it would come by Friday, 26 February 2016 and confirmed that he would be at Court on 29 February 2016.

83 On 26 February 2016, Mr Lontos emailed Ms Alevizopoulos as follows:[120]

I refer to previous correspondence and discussions in relation to this matter.

I note your request that I provide an affidavit in relation to the circumstances that resulted in there being no attendance on your client's [sic] behalf at the October 2015 trial.

After careful consideration and having taken advice I am not in a position to provide an affidavit or otherwise give evidence on the hearing of your client's [sic] application but can say that:

1. I was aware that the matter had been listed for trial on 8 October 2015.

2. The matter was not entered in my diary.

1. For reasons that I cannot further explain I came to believe that the trial date was in fact 8 November and was dealing with the matter in the belief that it was listed for hearing in November 2015.
2. Immediately after the directions hearing at which the matter was fixed for trial, which I believe was in May, 2015, I telephoned Chris Mihalitsis. I advised him of the trial date and that there was a lot of work to be done to prepare for trial.
3. I texted the date to Chris on 18 May, 2015 otherwise the trial date was never confirmed to the clients in writing or raised in discussions with Chris.
4. [sic] I did discuss with Chris from time to time the work that needed to be done in preparation for the hearing and in particular the need for expert accounting evidence which was going to be expensive. As a result I will not be in a position to support your client's evidence that there was no contact between Chris, Bill and me regarding the case between 1 December 2014 and mid October, 2015.

84 This was the first time that Mr Lontos had claimed to Ms Alevizopoulos that he had informed Chris of the trial date. Ms Alevizopoulos then sent a number of emails to Mr Lontos concerning this change in his evidence but received no response.[121]

85 The plaintiffs submitted that this was an appropriate case to extend the time for making application to set aside the judgment because:[122]

(a) they did not become aware that the trial had been conducted until Chris attended on Mr Lontos on or about 26 October 2015;

(b) the next day, the plaintiffs engaged Mr Flitner to act for them, and to obtain the file from Mr Lontos, and Mr Flitner wrote to Mr Lontos seeking the release of the file;

(c) in mid-November 2015, not having received any communication from Mr Flitner, the plaintiffs then engaged Ms Anna Alevizopoulos of Frenkel Partners who pursued the steps referred to above[123] over the following four weeks;

(d) on 26 November 2015, Frenkel Partners put the defendants on notice that an application to set aside the judgement would be made;

(e) the plaintiffs acted in as timely a manner as was reasonably available to them and Frenkel Partners acted carefully and properly in gathering the information and documents, investigating what had happened, and taking instructions and identifying relevant issues and action required to be taken to rectify the position faced by the plaintiffs; and

(f) the plaintiffs had arguable claims and defences to the counterclaim.

86 The defendants submitted, to the contrary, that:[124]

(a) the evidence in support of the application to extend the time reveals that plaintiffs had the view that a summons could be filed pursuant to r 49.02 of the Rules at any time and that the Court would grant the extension of time;

(b) when Mr Lontos became aware that he missed the trial date, he should have immediately contacted the defendants and advised that he would be making an application pursuant to r 49.02 of the Rules;

(c) there is no explanation as to why Mr Lontos did not immediately contact the Court when he realised that he had missed the trial date;

(d) the plaintiffs' submission that Mr Lontos did not show his clients the judgment is incredulous;

(e) there is no sufficient explanation as to how Mr Flitner was engaged;

(f) an alternative explanation as to why Mr Lontos did not release the plaintiffs' file to Mr Flitner is that they had not paid Mr Lontos' accounts and as a result he was retaining the file pursuant to a lien; and

(g) the plaintiffs have not substantiated their claims or defences to counterclaim.

87 The factors relevant to the application to extend the time to apply to set aside the judgment, and the application to set aside the judgment, are inextricably intertwined.

88 The first matter to consider is the delay and the explanation for it. The delay was, as I have said, over 7 weeks. The explanation for the delay shows, in my view, that the delay is not justified. The time was left by the plaintiffs to slip away whilst they went to Hong Kong and whilst Mr Flitner waited for Mr Lontos to respond. There is simply no explanation why there was such a delay between the time Mr Flitner wrote to Mr Lontos (on 27 October 2015) and the plaintiffs approached Frenkel Partners in mid-November. Further, it took considerable time for Frenkel Partners to investigate the matter sufficiently to enable them to bring the application on the plaintiffs' behalf. There is no evidence that the plaintiffs or their advisors appreciated any sense of urgency. The submissions by the defendants that they, and their advisors, assumed that time was not a factor is well justified.

89 The history of the proceedings and the conduct of the plaintiffs over the course of the proceeding is also instructive. That history, referred to at some length earlier in these reasons, shows that the proceeding has been characterised by delay and that much of it is the fault of the plaintiffs' or their legal advisors. It is not possible to determine which. The plaintiffs have shown a lackadaisical attitude to the litigation. Initially, it should be said, that was the approach of both plaintiffs and defendants. By about February 2013, the defendants were more active and kept up that activity, broadly speaking, until the trial. By contrast, the plaintiffs missed virtually every procedural date.

90 Having regard to these matters, and the matters I address in considering the question whether, if time were extended, the judgment should be set aside, in my view, the time should not be extended.

91 To extend the time and to set aside the judgment in these circumstances would be contrary to the statutory imperative under the CPA, particularly in the absence of any substantive evidence, as opposed to assertion, which discloses that the plaintiffs have a real prospect of success, or even an arguable case in their claims and defences to the counterclaim.

92 Because the question whether the time should be extended to enable the application to set aside the judgment, and that application, are inextricably intertwined, it is necessary to consider what would be the appropriate course if the time were extended.

93 I have referred above to the fact that on 13 March 2015, Robson J ordered, amongst other things, that the proceeding be set down for trial on a date to be advised (possibly before an Associate Justice). Chris attended this directions hearing. In his affidavits he indicated he did not understand what had happened.[125] He was cross-examined about what occurred at the hearing before Robson J. He said at first that he could not understand what was going on.[126] When pressed, however, Chris said that he could remember Robson J saying that 'the parties were mad, absolutely mad' to be fighting in the Supreme Court over $160,000.00,[127] and also remembered that orders were made on that occasion for the matter be set down for trial on a date to be advised before an Associate Justice.[128]

94 It will also be recalled that on 15 May 2015, I made orders setting the proceeding down for trial on 8 October 2015 before myself. On that day, Mr Lontos telephoned Chris.[129] There is no evidence as to what was said, just that the call was made on that day at 10.56am.[130] On 18 May 2015, three days after the hearing, Mr Lontos sent a text message to Chris:

I'm not going in today so cancel this afternoon. Hearing is 8 October. Call you in the morning?[131]

95 There is a very strong inference from the call on 15 May 2015 and the text on 18 May 2015, having regard to the evidence of exchanges of texts, voicemails and telephone calls referred to below, that on 15 May 2015, Mr Lontos called Chris to set up a meeting to discuss this proceeding. It is likely that on that day, Mr Lontos either spoke to Chris or left a voice message about this proceeding being set down for trial and either then or later set up a meeting on 18 May 2015, which the text message then cancelled.

96 Chris disputes ever receiving Mr Lontos' text message. Mr Lontos was usually in regular contact with Chris by both phone and text message[132] as Mr Lontos was assisting Chris in another legal matter during this time.[133]

97 The plaintiffs failed to file and exchange affidavits, expert reports and outlines of submissions in compliance with the orders of 15 May 2015, although Chris and Bill gave evidence that they had provided the relevant documents to Mr Lontos. Mr Lontos was overseas on holiday in August 2015 and did not attend to the main proceeding himself or hand over the file to another solicitor.[134]

98 The plaintiffs submitted that the reason for their default was that Mr Lontos had not advised them of the trial date or the pre-trial orders.[135] The first time the plaintiffs say that they became aware of the actual trial date, and the dates for the pre-trial steps, was when Ms Alevizopoulos of Frenkel Partners advised them.[136] Mr Lontos had initially conceded to Ms Alevizopoulos that the plaintiffs were not aware of the dates.[137]

99 The plaintiffs submitted that the evidence of Mr Lontos should not be accepted. His evidence was that he did tell Chris of the trial date and that there was a lot of work to be done in a telephone call on 15 May 2015. The plaintiffs also submitted that Chris did not receive the text message Mr Lontos sent him on 18 May 2015.[138]

(a) the Court should accept that the plaintiffs were aware of the trial date by virtue of Mr Lontos' text message of 18 May 2015,[139] and find that they deliberately absented themselves.[140] Their evidence is conflicting[141] and lacks credibility because they have failed to be truthful in respect of their reason for failing to attend the trial;[142]

(b) when Mr Lontos advised Chris on 26 October 2015 that he had missed the trial date, Chris attended Optus on the same day to destroy evidence of the receipt of the text message sent on 18 May 2015;[143]

(c) it is highly likely that Chris deliberately destroyed evidence that he was in receipt of the text message because the Optus report indicates that he had backed up his records. The backup documentation was never produced.[144]

(d) the plaintiffs unreasonably delayed filing an application to set aside judgment until 15 December 2015;[145]

(e) the plaintiffs and Mr Lontos breached their overarching obligations under the CPA by failing to comply with Court orders and file a defence and counterclaim, not prosecuting their claims diligently and failing to provide any satisfactory explanation for the breaches;[146]

(f) the plaintiffs have failed to demonstrate that they have a real prospect of success in pursuing their claims;[147]

(g) the defendants will suffer prejudice if they lose the benefit of their vested rights in the trial judgment;[148] and

(h) in the interests of justice, the summons filed 16 December 2015 should be dismissed.[149]

101 Having seen both Chris and Bill be cross-examined, and Mr Lontos give evidence and be cross-examined, and also taking into account the documentary support for Mr Lontos' evidence, I prefer his evidence to that given by Chris and Bill, where they conflicted, particularly the evidence of Chris who was the person primarily dealing with Mr Lontos. Mr Lontos was extremely embarrassed by the whole affair and the use of his telephone as his main communication tool proved that he corresponded with Chris often during the period from May to October 2015. The evidence he gave during his examination-in-chief and cross-examination was credible. Chris was evasive, unimpressive and not credible. His evidence seemed inherently unlikely insofar as it suggested that he was never told that the proceeding had been set for trial (his initial evidence), that he was never told of the date fixed for trial and did not receive the text message from Mr Lontos sent on 18 May 2015. Moreover, his evidence that when he asked about the proceeding he was told by Mr Lontos that if anything was needed to be done he (Mr Lontos) would ask for it, but otherwise was told 'stop busting my balls', is itself improbable and in conflict with the evidence of Mr Lontos given in circumstances where he was prepared to take the blame for their not attending at the trial.[150]

102 Chris' evidence about the trial date was unlikely, because although this was not the only matter in which Mr Lontos was acting for him or his family, it was the only major litigation Chris and Bill were involved in and one would expect them, particularly Chris, to be interested in the trial date, to ask about it and to know it.

103 I accept the evidence of Mr Lontos that on 18 May 2015 he sent the text notifying Chris of the trial date. There was no indication from Mr Lontos' telephone that the message had not been delivered or received. I also consider it highly probable that Chris received it, notwithstanding his protestations to the contrary. The evidence given by Chris suggests that the reason he did not receive this text message was because his mobile phone was not working properly, supported by the invoice for its repair dated 26 October 2015.[151] However, the fact that Chris took his phone for repair on the very day that he met with Mr Lontos does point to a link between something that occurred on that day when he met Mr Lontos and his apparent need to have his mobile phone repaired.

104 The evidence from Mr Lontos' telephone shows clearly and irrefutably that Chris' telephone was working satisfactorily during the period from May to early October 2015. The defendants' submitted that by taking his telephone for repair on 26 October 2015, and having it replaced in consequence, Chris ensured that there would be no evidence of his receipt of the text message of 18 May 2015. In other words, it was a deliberate attempt to destroy evidence and conceal the truth. In light of the fact that the text message appears to have been delivered, and that Chris' telephone worked satisfactorily during the relevant period, it is in my view probable that he found out on 26 October 2015 that he had received the message of 18 May 2015. I do not need, however, to find a deliberate attempt destroy evidence. Furthermore, that is a serious allegation which would require to be proved on the Briginshaw v Briginshaw[152] basis, that is a comfortable satisfaction which, in the context of the limited evidence and cross-examination in the applications at hand, has not been reached.

105 The evidence of Mr Lontos, by reference to his mobile telephone, whilst in the witness box in examination-in-chief and under cross-examination, reveals that there were numerous communications (text and voicemail) back and forth between Mr Lontos and Chris after the date of the text message of 15 May 2015 through to early October 2015.[153] Some instances of these communications are set out below.

106 On 12 June 2015 at 10.16am, Mr Lontos sent a text message to Chris saying:

Can you come in Monday afternoon? Also need a cheque to pay the accountant. They will not reduce the amount and are going to sue if they don't get paid in the next few days.

107 The reference to the accountant was a reference to Munday Wilkinson who had been engaged pursuant to the orders of Ferguson J to produce a joint report. The response from Chris was on 15 June 2015 by voice mail to which Mr Lontos responded: 'Can you make it tomorrow please. No time today'.

108 Chris responded to that: 'Yeah, okay. You kill me. The prenup, Nick, is that done? My brother is going to move in with her next week'.

109 Then a little later that day from Mr Lontos to Chris: 'I need to pay the accountant', to which Chris responded : 'Will call you after 5 pm'.[154]

110 Immediately after Mr Lontos gave this evidence from his telephone records, the following exchange occurred after a question from the bench:[155]

These texts refer a lot to you calling him or him calling you. Did that type conversations take place?---Ah, there would've been some conversations yes, Your Honour.

And do you know whether any of the conversations concerned this proceeding, given the trial date ?---The - yes.

Yes. And what mention was there?---The fact that, ah, we had to get the expert's report and affidavits prepared and, um, the matter was coming up and, um, I would be in touch with him when I got a chance to sit down and go through the file because there was a lot to go through but that's - that's the gist of it all. Sorry.

But was it made clear by you that the trial had been fixed?---Yes, it was a - he was advised - I don't think I ever discussed it and said to him in person that it's on the 8th, thinking that the message I had sent, but it was coming up in - within six months and we had a lot of work to do.

111 Then on 13 July 2015, Mr Lontos sent a message to Chris: 'need to see you on Wednesday re TSC matter, text me', to which Chris responded 'what time are you available' to which Mr Lontos responded '1.30-2pm'. Chris responded to this:

K. [meaning OK] I'll let you know but I need to know if my settlement money didn't go in and I need to know about the prenup. Call me for two secs.[156]

112 It seems that there never was a meeting in response to this request at which this proceeding was discussed. I note that by the order made on 15 May 2015, experts reports were due to be filed and exchanged by 31 July 2015. It may be that there is a link between this request from Mr Lontos and the time for the filing of experts reports.

113 On 5 October 2015, Mr Lontos sent a text message to Chris for him to come in to see Mr Lontos at his office to discuss the TSC matter urgently, to which Chris responded by text that he could not.[157] Mr Lontos explained that at this time he mistakenly believed the trial date was set for 8 November 2015, a Sunday, and that he wanted to see Chris to make a decision concerning what was happening with the TSC matter, whether to try get it ready, try to get it adjourned or try and resolve it.[158]

114 The plaintiffs did not provide funds to Mr Lontos during this period to pay Munday Wilkinson's fees for preparing the joint report. The evidence given by Mr Lontos reveals they did not properly respond to his requests for instructions regarding this proceeding in a timely manner or at all.

115 Chris attended Court when the matter was before Robson J on 13 March 2015 and clearly learnt on that occasion that the proceeding had been set down for trial on a date to be fixed. As I mention above, I accept the evidence of Mr Lontos that he sent a text message on 18 May 2015 informing Chris of the trial date. I also have found that more probably than not, Chris received that text message, whether he remembered it or the date of the trial, is beside the point. Had he not been distracted by other matters and, no doubt, his daily work, and had responded to the several messages from Mr Lontos about the need to do a lot of preparation for the trial, then the position might have been very different.

116 On 1 June 2012, Bill, as the sole director of TSC, signed an Overarching Obligation Certificate pursuant to s 41 of the CPA. There is no indication that Chris and Bill signed any such certificates when they were added as plaintiffs in the proceeding. Bill, at least, ought to have known of the obligations on parties under that Act. They each gave evidence, however, that they relied on Mr Lontos and only did anything when he asked for it.

117 It is an incident of the plaintiffs' paramount obligations under the CPA that they make all reasonable and necessary inquiries of their solicitor during the course of his retainer to ensure that they were well informed. Between the period of 13 March 2015, when Robson J fixed the proceeding for trial and the trial date on 8 October 2015 (a period of seven months), there was ample time for the plaintiffs to inform themselves or seek to be informed, rather than to wait for their solicitor to contact them. Indeed, when he did so, they (or at least Chris who was the main contact) were unavailable. They had an obligation to prosecute their claims and to provide whatever instructions were necessary to their solicitor and to make all reasonable and necessary inquiries of their solicitor throughout the litigation. They cannot escape their own independent paramount obligations by blaming their former solicitor.

118 The defendants have a legitimate interest in the finality of the decision in their favour. The Court does take into account its assessment of the prospects of success of the appeal, on such an application, bearing in mind, however, that the parties are not in a position to address a full argument on that issue, nor is the Court in a position to make a detailed assessment of it.

119 It is relevant that the legal costs already incurred[159] are disproportionate to the amount in dispute and that those costs will be compounded if the judgment is set aside and the matter remitted for further directions and re-trial. This would be contrary to the overarching purpose and may bring the administration of justice into disrepute. This is particularly the case when the plaintiffs' delay throughout the course of the proceeding prior to trial are taken into account.[160] It is likely that this is what Robson J had in mind when he commented on the fact that the parties were fighting in the Supreme Court over a relatively modest amount, some $160,000.00. Plainly, the costs were not, and are not, proportionate to the amount in dispute. The time, trouble and expense to which the parties and the Court have been put by these applications is huge. The number of affidavits that the plaintiffs have filed or relied upon, the directions hearings and the two days in Court, and the numerous written submissions are all out of proportion both to the issues and the amount in dispute.

120 I have dealt with the delay in making the application to set aside the judgment in the context of the application to extend the time for doing so. It is apparent from what I have there said that I consider that the explanation for the delay to be insufficient, in that it does not justify that delay being excused.

121 An important factor is the plaintiffs' prospects of success in their claims against the defendants and their defence to the counterclaim. In this case, the plaintiffs need to establish by evidence that their claims and defences to counterclaim are arguable, in the sense that it appears to have real prospects of success. The burden is on the plaintiffs to satisfy the Court that there is real merit in their case. If they fail in so doing, it is inappropriate to set aside the judgment. Such prospects of success must be the subject of evidence and not assertions and unsubstantiated allegations.[161]

122 The proceeding was set down for trial with the evidence to be by affidavit. Before being fixed for trial, the plaintiffs had not filed any expert evidence in support of their claims or in support of their defence to the counterclaim. Before the setting down for trial, the only evidence as to the issues arising out of the joint venture was the affidavit of Bill sworn in support of the application for removal of the caveat.[162] Self-evidently, there was nothing filed by the plaintiffs between setting down and trial.

123 Although the pleadings reveal some disputes between the parties concerning the terms of the joint venture and performance by them, respectively, of their obligations under it, these are at the periphery. The issue of central importance between the parties is whether the joint venture made a profit or loss. This is substantially a question of accounting based on proper materials, as the interlocutory orders, referred to earlier, made by Randall AsJ and Ferguson J plainly recognised.

124 The TOS signed on 13 June 2012[163] resulted in the plaintiffs agreeing to provide accounting of the project in return for the removal of the caveat. The documents necessary to enable a proper accounting of the costs of the project were never provided.

125 The defendants have, throughout the proceeding, claimed that many of the expenses Chris and Bill have attributed to the costs of construction were not shown to be of that character. Certainly, the evidence of the defendants' expert shows that those expenses have not been shown to be costs of construction.

126 The affidavit of Bill sworn 15 December 2015, in support of the present applications exhibits the plaintiffs' pleadings and Bill's affidavit sworn on 1 June 2012 for the purposes of the application to remove the caveat to demonstrate the merits of the claim in the main proceeding. Apart from the affidavits of Chris and Bill of 16 May 2013, there is no affidavit material since the filing of the plaintiffs' pleadings or the defendants' counterclaim that addresses the merit of the case sought to be made by the plaintiffs beyond mere assertions. An example is in the affidavit of Chris sworn on 14 April 2016, where he states:[164]

Whilst Haywood asserts that the joint venture made a profit and that his client is entitled to a one third share of the profit, this is not the case; the joint venture did not make a profit, but has sustained significant losses, which my brother Bill and I still carry, by reason of the conduct of Canham in breach of his obligations under our joint venture agreement, as identified in the affidavits which my brother Bill and I have sworn in this proceeding, and as set out in our Statement of Claim which has been filed.

127 Chris then refers to various affidavits, none of which address the critical difference between the plaintiffs and defendants as to the amounts allocated to suspense accounts in the jointly obtained report of Munday Wilkinson.[165] It will be recalled that Munday Wilkinson prepared a profit and loss statement and balance sheet.[166] Mr Wilkinson of that firm prepared a report dated 28 November 2014 which showed a loss was suffered by the joint venture of $164,245.00, but there were various payments expensed where no invoice could be located, or no explanation for the payment could be found. These were allocated to suspense accounts, amounting to about $321,000.00.[167] There was no adequate information concerning whether these amounts related to the joint venture project. Reference is made by Chris to the affidavit of the plaintiffs' accountant, a Mr Bill Gaganis, sworn on 20 June 2013, but this affidavit is only concerned with the issue of the change in the shareholding of TSC and says nothing about the joint venture project itself.

128 Chris also refers to paragraph 10 of Bill's affidavit of 16 May 2013, where Bill asserts that the joint venture made a loss of $260,000.00, plus interest and produces a draft financial report prepared by Vees Accounting.[168] But the evidence in that draft financial report is put in doubt by the Munday Wilkinson profit and loss account and completely set at nought by the evidence of Peter Doughty, in his Statement of Expert Evidence served for the purposes of the trial.[169] There has been no attempt to address that evidence notwithstanding the extra time given to the plaintiffs to file further evidence in support of their application since the first return date of their summons. In his affidavit of 16 May 2013, Bill concedes that a final accounting is necessary. He says that he believes a final accounting will show a loss.[170]

129 The burden is on the plaintiffs to show that if the judgment is set aside they have an arguable case, in the sense of a real prospect of success in their claims against the defendant and in the defence to the counterclaim. This requires the plaintiffs to advance cogent and credible evidence in support of their principal claims and in support of their defence of the counterclaim. The reality is that no attempt has been made to produce that evidence either prior to trial or since. Hence, both the application for leave to extend the time and the application to set aside the judgment are both undermined by the absence of evidence as to the merits of the plaintiffs' case.

130 For the purposes of this application, the plaintiffs seek to claim the joint venture made a loss but have failed to provide any particulars or evidence in support of that assertion since providing unsubstantiated draft accounts in June 2012. No expert or lay evidence has been adduced to prove that the plaintiffs have any prospect of success in prosecuting their claim or in opposing the counterclaim made against them in respect of the central question: whether the joint venture made a profit or a loss.

131 The plaintiffs have failed to establish the most significant element necessary to establish that there case has merit, namely, a basis for the expenditure said to produce a loss for the project actually being a proper cost of construction. It is not enough for the plaintiffs to assert that they may have a meritorious claim and defence to the counterclaim. There must be some proper basis for the assertion, and in this case that turns on establishing that the expenditure they say was related to the construction of the town houses, and which their own material does not support, was so related. One way in which that could have been achieved, but was not, was by the production of expert evidence supported by underlying material of the kind advanced by the defendants at trial. They have had ample time and opportunity to do so.

132 Accordingly, as the burden lies upon the plaintiffs to satisfy the Court that there is a proper justification for an order setting aside the judgment, and they have not discharged that burden, the vested rights of the defendants to uphold their judgment ought not to be disturbed.

133 The plaintiffs maintain that the only prejudice suffered by the defendants is the costs thrown away by the setting aside of the judgment. They accept that the payment of those costs is a necessary condition of an order setting the judgment aside.

134 There is, however, prejudice other than the costs of the defendants thrown away by the setting aside of the judgment. In the first place, the moneys held and trust by Aloe have been released and disbursed and this occurred almost entirely before Frenkel Partners informed the defendants' solicitors that the plaintiffs proposed to apply to set aside the judgment. Those moneys have been used to pay creditors of the defendants. If the judgment were set aside the defendants would be prejudiced by having to repay that sum into trust. There was no submission that this would not be required.

135 In the second place, even if the terms of the setting aside of the judgment did not require that course, as is conceivable, there is evidence from Trevor of the effect of this litigation upon him:[171]

(a) this proceeding has put his life in limbo for 4 years and has been detrimental to his personal and business life;

(b) after the trial concluded, he has been able to focus on his business and get it back on track;

(c) if there were a new trial, it would affect his business and personal life detrimentally and cause enormous stress on his family;

(d) his business as a project manager would be disrupted by necessarily attending to the preparation for and attendance at a new trial; and

(e) the preparation for a new trial would be extremely stressful and difficult to manage with his business commitments.

136 It is a well-known and often recognised feature of litigation that it is stressful, particularly to people running small businesses, and creates considerable anxiety for the participants.[172] It is inherently stressful for any party, in particular an individual.[173] When a proceeding concludes with a trial there is often, and in this case there was, as Trevor deposed, a sense of overwhelming relief.[174] Justice cannot always be measure in money and I am entitled to weigh in the balance the strain that further litigation imposes on Trevor.[175]

137 These matters give rise to real prejudice to the defendants, particularly Trevor, if the judgment is set aside. In the past, matters of this kind have too often not been given their due weight. The finality in litigation which is valued in the administration of justice and which is a matter to be taken into account in cases of this kind, are also matters of real importance to the lives of the litigants. The anxiety and stress that Trevor has deposed he has suffered through this litigation, and which would return to be suffered if the judgment is set aside, is a 'real life' illustration of the importance of finality in litigation.

138 Taking into account all the matters identified above, I consider that the justice of the case requires that the application for an extension of time within which the plaintiffs may apply to set aside the judgment should be refused. If I am wrong in that conclusion, for the reasons given above, the application to set aside the judgment should be refused.

139 I will make orders accordingly. At present, there is no apparent reason why the costs should not follow the event. I will ask the defendants to submit draft minutes of order, and hear the parties as to the costs of the applications if that is necessary.

[1] Affidavit of Bill Mihalitsis sworn 15 December 2015 ('Bill's December 2015 affidavit'), exhibit 'BM-3'.

[2] It was deregistered by ASIC pursuant to s 601AB of the Corporations Act 2001: Bill's December 2015 affidavit, exhibit BM-3.

[3] Pursuant to rr 3.02 and 49.02, respectively, of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules'). These Rules were remade in the same terms in 2015.

[4] Order of AsJ Derham made on 9 October 2015.

[5] Affidavits of Bill Mihalitsis sworn 1 June 2012, 16 May 2013, 15 December 2015 and 14 April 2016. The affidavits of Chris Mihalitsis sworn 16 May 2013, 19 February 2016, 14 April 2016, and 16 May 2016; affidavit of Bill Gaganis sworn 20 June 2013, Nicholas Lontos sworn 30 July 2013, Anna Alevizopoulos sworn 15 February 2016, 20 April 2016, two affidavits sworn 16 May 2016 and the affidavit of John Lancefield sworn 21 December 2015.

[6] Chris' affidavit sworn 14 April 2016.

[7] Affidavits of Trevor Canham sworn 2 February 2013, 31 August 2015, 23 February 2016 and 17 March 2016. Affidavits of Craig Alan Haywood sworn 22 December 2015 and 23 February 2016.

[8] Affidavit of Trevor Canham sworn 31 August 2015.

[9] Affidavit of Trevor Canham sworn 1 February 2013, [17] (Trevor's February 2013 affidavit'); Exhibit TC-2 to the affidavit of Trevor Canham sworn 31 August 2015 ('Trevor's August 2015 affidavit').

[10] The proceeding was commenced by Originating Motion and summons filed 1 June 2012. The land at 1 Holloway Road is more particularly described in Certificate of Title Volume 1183 Folio 334.

[11] Affidavit of Bill Mihalitsis sworn 15 December 2015, exhibit 'BM-5'. At the time the Registrar of Titles was the second defendant. He had indicated that he did not intend to appear in the proceeding.

[12] Affidavit of Haywood sworn 23 February 2016, [12].

[13] Order of Daly AsJ made on 27 June 2012.

[14] Expert Report of Peter Doughty, 29 July 2015, Annexure C, p.22; Affidavit of Haywood 23 February 2016, [13]-[15].

[15] There is a copy of the list in exhibit CAH-9 to the affidavit of Haywood of 23 February 2016.

[17] Order of Randall As J made 17 May 2013.

[18] Curiously there was no formal counterclaim filed at that time.

[19] The defendants' had commenced the preparation of an application to dismiss the plaintiffs' claim because of the failure to file and serve a statement of claim as ordered. The delay was more than 2 months: see the correspondence dated 19 February 2014 in exhibit CAH-2 to the affidavit of Haywood sworn 23 February 2016.

[20] Affidavit of Chris, 14 April 2016, p. 9, [(S)].

[21] See exhibit CAH-2 to the affidavit of Haywood sworn 23 February 2016.

[23] Affidavit of Haywood 23 February 2016, [32]. In mentioning this I am conscious that under r 63.20.1 the defendants were not able to tax these costs until the proceeding is completed.

[24] Affidavit of Haywood 23 February 2016, [21]-[22].

[25] Affidavit of Chris, 14 April 2016, p.30-32.

[26] Although there is nothing as to this appointment on the Court file, it is referred to in the affidavit of Chris sworn 14 April 2016 at [4(a)(iii)] on p. 5 and exhibit CM-1 to that affidavit.

[27] Exhibit CM-2 to affidavit of Chris sworn 14 April 2016.

[28] Affidavit of Bill sworn 15 December 2015, [10]-[11].

[29] Affidavit of Haywood, 23 February 2016, [55] and exhibit CAH-3.

[30] This is also the evidence of Haywood in his affidavit of 23 February 2016, [56].

[31] Affidavits of Chris, 19 February 2016 [8]-[9], 14 April 2016, p.24. Transcript 2 May 2016, p. 22.14; Affidavit of Haywood, 23 February 2016, [37]-[38], and exhibit CAH-5 at p.6.9.

[32] Transcript, 2 May 2016, p.23.19-21.

[33] Chris' affidavit of 19 April 2016 at [9], read with his affidavit of 14 April 2016 at p.41, [(ii)].

[35] Affidavits of Chris, 19 February 2016, [5], 14 April 2016, p. 26 [(h)-(i)]; Affidavits of Bill, 15 December 2015, [11], 14 April 2016, [4].

[36] Transcript, 18 May 2106, page 23, lines 21-22.

[37] Exhibit 1, Record a text message sent by Mr Lontos to Mr Chris Mihalitsis on 18 May 2015_._

[40] Affidavit of Haywood sworn 22 December 2015. The solicitor for Bill and Chris examined the file kept by Mr Lontos and confirmed receipt of these documents: see Affidavit of Chris, 14 April 2016, p.29 [(iii)].

[41] Affidavit of Chris, 14 April 2016, p.28-30.

[42] Exhibit CAH-2 to the affidavit of Haywood sworn 23 February 2016.

[43] As a precaution, on 28 September 2015, Robson J made orders referring this proceeding to me for hearing and determination pursuant to r 77.05 of the Rules.

[44] Affidavit of Haywood sworn 22 December 2015, [3]-[4].

[45] Affidavit of Trevor sworn 17 March 2016, exhibit TC-1.

[46] Affidavit of Bill Mihalitsis sworn 15 December 2015 in support of Summons filed 15 December 2015, paragraphs 10 to 13.

[47] [2013] VSC 422 [23]-[29], see also Yunghanns v Elfic Pty Ltd, [2000] VSC 113; (2000) 1 VR 92, particularly at [18].

[48] There had previously been a subpoena issued pursuant to Order 42A of the Rules for Mr Lontos to produce those records. He produced them in redacted form without excuse or explanation.

[49] Subpoena to give evidence filed on 12 May 2016.

[50] Crotty v Clarke [1897] VicLawRp 109; (1896) 22 VLR 594 at 606 (Williams, Holroyd and Hood JJ).

[52] See for example in relation to the discretion as to costs, Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 537.

[53] Ying at [68]- [70]; Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 519, 537; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 86.

[54] Norbis v Norbis at 519 (Mason and Deanne JJ).

[55] Jackamarra v Krakouer (1998) 195 CLR 516 at 527 (Gummow and Hayne JJ and at 539 Kirby J); Trkulja v Dobrijevic & Ors [2015] VSCA 281 [27] (21 October 2015).

[56] Palata Investments Ltd v Burt & Sinfield Ltd [1985] 1 WLR 942; Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196; Jackamarra v Krakouer (1998) 195 CLR 516 at 542-543 (Kirby J); State of Victoria v Davies [2003] VSCA 65; (2003) 6 VR 245 [23] (per Batt JA); Vimplane Pty Ltd v Cirss [2005] VSC 45 [29].

[57] Jackamarra v Krakouer (1998) 195 CLR 516 at 543 (Kirby J).

[59] [2015] VSCA 281 (Kyrou and Kaye JJA and AJA) at [27] ('Trkulja') citing at fn. 4 - Hughes v National Trustees Executors and Agency Co of Australasia Limited [1978] VicRp 27; [1978] VR 257, 263 (McInerney J); Gallow v Dawson [1990] HCA 30; (1990) 93 ALR 479, 480 (McHugh J); Jackamarra v Krakouer (1998) 195 CLR 516, 512-2 [9] (Brennan CJ and McHugh J), 539-543 [66] (Kirby J); Cooper and anor v Sztainbok [2009] VSCA 73 [20] (Dodds-Streeton JA).

[61] Vilenius v Heinegar (1962) 36 ALJR 200, 201; Hughes v National Trustees, Executors & Agency Co of Australasia Ltd [1978] VicRp 27; [1978] VR 257, 263.

[62] Kaur v Kooner [2013] VCC 1789 [39] (Cosgrave J); Conrea Nominees Pty Ltd v Doherty (Unreported, Supreme Court of Victoria, Southwell J, 22 July 1992); Adams v Cronin (Unreported, Victorian Court of Appeal, Winneke ACJ, JD Phillips and Hayne JJA, 6 September 1996).

[63] Bendigo Bank v Csizmadia-Estok [2007] VSC 112 [24] (Warren CJ).

[64] See also Advaland Pty Ltd v Bitcon and Anor [2015] VSC 235 [40].

[67] See for example Feiglin v Ainsworth [2015] VSCA 326, particularly at [55]; Sullivan v Greyfriars Pty Ltd [2015] VSCA 196 [6]; National Australia Bank Limited v Pathway Investments Pty Ltd & Anor [2012] VSCA 168 [56]; see also Northern Health v Kuipers [2015] VSCA 172 [22].

[68] National Australia Bank Limited v Pathway Investments Pty Ltd & Anor [2012] VSCA 168 [56].

[69] See for example Loizou v University of Melbourne [2000] VSC 1 [34]; Advaland Pty Ltd v Bitcon and Anor, [2015] VSC 235 [41].

[70] [1960] VicRp 28; [1960] VR 173; See also Evans v Bartlam [1937] AC 473; Grimshaw v Dunbar [1953] 1 QB 408.

[71] [1974] VicRp 71; [1974] VR 596.

[72] [2012] VSCA 316 [39] ('Ying').

[73] [1960] VicRp 28; [1960] VR 173, 176 (Herring CJ, O'Bryan and Dean JJ).

[74] [1974] VicRp 71; [1974] VR 596, at 605; Ying at [70].

[75] [1966] VicRp 59; [1966] VR 418, at pp. 423-4.

[76] Adams v Cronin (Unreported, Court of Appeal, 6 September 1996).

[77] Vimplane Pty Ltd v Cirss [2005] VSC 45 [38].

[78] Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158.

[79] (1998) 195 CLR 516, 540 [66]('Jackamarra').

[80] Foreman v Federal Commissioner of Taxation (1983) 69 FLR 386, 387-388.

[81] [1975] 1 WLR 1087 at 1091; [1975] 2 All ER 1084 at 1088.

[82] See Jess v Scott (1986) 12 FCR 197 at 191-192.

[83] (1989) 2 WAR 196 at 205.

[84] [2015] VSCA 281 [27] (Kyrou and Kaye JJA and AJA).

[85] [2013] VCC 1788 [62].

[86] The reference to the observations of Robson J were to what he said in the case of Euroasia (Pacific) Pty Ltd v Michael [2008] VSC 153, to the effect that if the defendant against whom judgment had been entered had an arguable defence, then notwithstanding delay by the defendant and prejudice to the plaintiff, the defendant would have received leave to defend.

[87] Grimshaw v Dunbar [1953] 1 QB 408, 415 (Jenkins LJ).

[88] Transcript, 18 May 2016, p.90.7-15.

[89] Transcript, 18 May 2016, p.92.14-16.

[90] Affidavit of Bill sworn 15 December 2015, page 4, paragraph 11.

[91] Transcript, 18 May 2016, p.93.6-9.

[92] Transcript, 18 May 2016, p.27.4-5 and p.33.15-28.

[93] Transcript, 18 May 2016, p.93.10-13.

[94] Affidavit of Bill sworn 15 December 2015, [12].

[96] Affidavit of Chris sworn 19 February 2016, [7].

[97] Bill's affidavit of 15 December 2015, [13].

[98] Affidavit of Bill Mihalitsis sworn 15 December 2015, exhibit 'BM-10'.

[99] Affidavit of Bill, 15 December 2015, exhibit 'BM-12'.

[100] Affidavit of Bill, 15 December 2015, [15]; confirmed by affidavit of Ms Alevizopoulos sworn 15 February 2016, affidavit of Ms Alevizopoulos sworn 16 May 2016 [6(b)].

[101] Affidavit of Ms Alevizopoulos sworn 16 May 2016 [6(b)].

[102] Affidavit of Bill Mihalitsis sworn 15 December 2015, [14].

[103] Exhibit BM-11 to the affidavit of Bill Mihalitsis sworn 15 December 2015.

[104] Affidavit of Ms Alevizopoulos sworn 16 May 2016, [5]-[12].

[105] Exhibit AA-14 to the affidavit of Ms Alevizopoulos sworn 16 May 2016 and Exhibit BM-12 to the affidavit of Bill Mihalitsis sworn 15 December 2015.

[106] Affidavit of Bill Mihalitsis sworn 15 December 2015, exhibit 'BM-12'.

[107] Exhibit BM-12 to the affidavit of Bill Mihalitsis sworn 15 December 2015.

[108] Affidavit of Bill Mihalitsis sworn 15 December 2015, exhibit BM-12.

[109] Affidavit of Anna Alevizopoulos sworn 16 May 2016, [13(b)], exhibit AA-18.

[111] Affidavit of John Lancefield sworn 21 December 2015.

[112] Affidavit of John Lancefield sworn 21 December 2015, exhibit JL-2.

[113] Affidavit of Haywood sworn 22 December 2015.

[114] Order of Riordan J dated 22 December 2015.

[115] Affidavit of Ms Alevizopoulos sworn 16 May 2016 [16(d)], exhibit AA-19.

[116] Affidavit of Ms Alevizopoulos sworn 16 May 2016 [18], exhibit AA-21. Ms Alevizopoulos also gives evidence regarding an attempt by Mr Haywood to tax the costs ordered to be paid by the plaintiffs by the judgment of 9 October 2015. There is nothing to be gained by referring to any of this material.

[117] Affidavit of Anna Alevizopoulos sworn 20 April 2016, [8(h)].

[118] In her affidavit of 15 February 2016 this is said to have occurred on 10 February 2016. In her affidavit of 20 April 2016 it is said to have happened on 11 February 2016.

[119] Affidavit of Anna Alevizopoulos sworn 20 April 2016 [12]-[14].

[120] Affidavit of Anna Alevizopoulos sworn 20 April 2016, exhibit AA-11.

[121] Exhibit AA-11 to the affidavit of Anna Alevizopoulos sworn 20 April 2016 and paragraph 11 of that affidavit.

[122] Second and third plaintiffs Outline of Submissions dated 29 April 2016, 18 May 2016 and 6 June 2016.

[123] Those steps were initially set out in the affidavit of Bill sworn 15 December 2015.

[124] Defendants' Outline of Submissions dated 29 April 2016 and 4 June 2016.

[125] Chris' affidavit of 19 April 2016 at [9], read with his affidavit of 14 April 2016 at p.41, [(ii)].

[126] Transcript, 2 May 2016, p.25.4-8.

[127] Transcript, 2 May 2016, p.26.13-19.

[128] Transcript, 2 May 2016, p.27.1-7; p.27.22-24.

[129] Transcript, 18 May 2106, page 22, lines 14-26.

[130] On that day, this proceeding was the first matter dealt with in Court. It is possible that the matter had been dealt with by 10.50am.

[131] Exhibit MFI-1 Document purporting to record a text message sent by Mr Lontos to Mr Chris Mihalitsis on 18 May 2015_._

[132] Transcript, 18 May, page 8, lines 27-30.

[134] Transcript, 18 May 2016, page 34, lines 10-15. Plaintiffs' further submissions dated 6 June 2016, paragraph 6.

[135] Plaintiffs' Outline of Submission dated 29 April 2016, page 12, paragraph 8(f).

[136] Plaintiffs' Outline of Submission dated 29 April 2016, page 12, paragraph 8(f).

[137] Plaintiffs' Outline of Submission dated 29 April 2016, page 12, paragraph 8(f)(vi-vii).

[138] Plaintiffs' Outline of Submission dated 29 April 2016, page 12, paragraph 8(f)(vi-vii), Affidavit of Chris Mihalitsis sworn 14 April 2016, page 46, sub-paragraph 4 (cc)(iii).

[139] Defendants' submissions dated 4 June 2016, page 3, paragraph 4.

[140] Defendants' Submissions dated 29 April 2016, page 16, paragraph 52.

[141] Defendants' submissions dated 4 June 2016, page 1, paragraph 2(e).

[142] Defendants' submissions dated 4 June 2016, page 1, paragraph 2(k).

[143] Defendants' submissions dated 4 June 2016, page 1, paragraph 2.

[144] Defendants' submissions dated 4 June 2016, page 9, paragraph 28.

[145] Defendants' submissions dated 29 April 2016, page 18, paragraph 64(c).

[146] Defendants' submissions dated 4 June 2016, page 1, paragraph 2(f).

[147] Defendants' submissions dated 4 June 2016, page 1, paragraph 2(g).

[148] Defendants' submissions dated 4 June 2016, page 1, paragraph 2(h).

[149] Defendants' submissions dated 4 June 2016, page 1, paragraph 2(l).

[150] Transcript, 18 May 2016, p. 37.10-17.

[151] Affidavit of Chris sworn 14 April 2016, p.45-46, exhibit CM-7.

[152] (1938) 6 CLR 336. See also s 140 of the Evidence Act 2008.

[153] Transcript, 18 May 2016, pp. 4-14.

[157] Transcript, 18 May 2016, pp 10-11.

[159] Refer to the Affidavit of Trevor Canham sworn 17 March 2016 which refers to the legal costs up to trial being in the order of $155.878.36 bearing in mind that the amount in dispute was approximately $160,000.

[160] Refer to the Affidavit of Craig Alan Haywood sworn 23 February, 2016 at paragraphs 11 to 29.

[161] Jackamarra v Krakouer (1998) 195 CLR 516, 521 (Brennan CJ and McHugh J).

[162] Affidavit sworn 1 June 2012. The other affidavits concerned an issue raised by the defendants as to the circumstances in which Trevor had been removed as the sole shareholder in TSC and replaced by Chris, Bill and himself. Chris and Bill's affidavits of 16 May 2013 asserted the joint venture made a loss and contained no real substantiation of that assertion.

[163] Affidavit of Bill Mihalitsis sworn 15 December 2015, exhibit 'BM-5'.

[165] So far as the evidence reveals, the plaintiffs have failed to pay their share of the cost of this report

[166] Although there is nothing as to this appointment on the Court file, it is referred to in the affidavit of Chris sworn 14 April 2016 at [4(a)(iii)] on p. 5 and exhibit CM-1 to that affidavit.

[167] Exhibit CM-2 to affidavit of Chris sworn 14 April 2016.

[168] Exhibit BM-41 to the affidavit of Bill sworn 16 May 2013.

[170] Affidavit of Bill sworn 16 May 2013 [11].

[171] Affidavit of Trevor sworn 23 February 2016, [17]-[21].

[172] Ketteman v Hansel Properties Ltd [1987] AC 189, 220; Berowra Holdings Pty Ltd v Gordon [2006] HCA 32; 225 CLR 364 [37]; GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710, 715-716; Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 [100]; Richards v Cornford (No 3) [2010] NSWCA 134 [42].

[173] Richards v Cornford (No 3) [2010] NSWCA 134 [42].

[174] Affidavit of Trevor sworn 23 February 2016 [21].

[175] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 [100].