Gall v Pham

THE DEFENDANT'S NOTICE OF THE PROCEEDINGS

1. Although personal service of the plaintiff's statement of claim had not been effected on the defendant, I was satisfied on the evidence then adduced before me that the plaintiff's compliance with orders for substituted service had, in fact, given the defendant reasonable notice of the pendency of the proceedings: [2015] NSWSC 1710 at [3].
2. On the hearing of his motion to set aside the orders entered against him, the defendant deposes, specifically, to a lack of recall of receipt of a statement of claim, a notice of listing for final hearing, or any other court document (essentially because he claims to have been in the grip of a drug addiction); but he does not deny being made aware of the prospective litigation at about the time the plaintiff's then solicitors sent to him a letter of demand on or about 6 February 2015.
3. The defendant says that he "first found out about these proceedings in or around 2014", when he was notified by his brother (James) that James had received a letter, delivered to the defendant's old residence, to the effect that the defendant was "getting sued" by the plaintiff. Acknowledging imprecision in the defendant's chronology, I infer that the letter to which James referred is that dated 6 February 2015. That letter, in any event, was expressed to have been copied to James.
4. The plaintiff's letter of demand set out in substantial detail the nature of the case which, in due course, found expression in her statement of claim.
5. Between 12 February 2015 and 17 April 2015, the plaintiff's then solicitors corresponded with Marque Lawyers (solicitors then retained on behalf of the defendant) in an attempt to settle the parties' dispute without the commencement of proceedings.
6. In due course, on 7 May 2015 the plaintiff's then solicitors sent a copy of the statement of claim to Marque Lawyers with a request that they accept service of the statement of claim on behalf of the defendant. On the same day, Marque Lawyers sent a copy of the statement of claim to the defendant (with legal advice) via an email copied to the defendant's brother, James. A follow-up letter of 13 May 2015 elicited from Marque Lawyers an email advising that they were waiting on instructions from the defendant. However, via a further email on 15 May 2015, Marque Lawyers advised that they had been unable to obtain the defendant's instructions.
7. On 10 June 2015, a Registrar made orders for personal service of the statement of claim on the defendant to be dispensed with and for steps to be taken (by way of orders for substituted service) for the statement of claim to be brought to the defendant's attention.
8. On 15 June 2015 the plaintiff's solicitors sent a copy of the Registrar's orders, and another copy of the statement of claim, to Marque Lawyers - who, on 16 June 2015, emailed the plaintiff's solicitors' letter and attachments (including the statement of claim) to the defendant and James.
9. Further orders for substituted service on the defendant were made on 9 September 2015 in conjunction with an order that the proceedings be listed for hearing on 13 November 2015.
10. In compliance with those orders, a copy of them was emailed to Marque Lawyers on 25 September 2015 and those solicitors, in their turn, on the same day emailed a copy of the orders to the defendant, with a copy to James. An inference available from that correspondence is that orders in the form of a "notice of listing" for the hearing fixed for 13 November 2015 came to the attention of both the defendant and James.
11. Even if it be accepted that the correspondence did not come to the actual, personal attention of the defendant (eg, because he did not access his emails), the significance of its despatch to James is that, in and about 2015, James was actively assisting the defendant in management of his affairs, having regard to the defendant's distraction by drugs, financial woes and marital disharmony.

THE NATURE OF THE DEFENDANT'S APPLICATION TO SET ASIDE ORDERS

1. On the hearing of his motion, the defendant (by senior counsel) disclaimed any contention that the orders of 13 November 2015 under challenge were irregular, or irregularly obtained.
2. That disclaimer implicitly carried with it an acceptance that the general power to set aside a judgment or order for which UCPR rule 36.15 provides does not apply to the facts of this case. Rule 36.15(1) provides that a judgment or order, "may, on sufficient cause being shown, be set aside by order of the Court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith". Rule 36.15(2) provides that a judgment or order "may be set aside by order of the Court if the parties to the proceedings consent".
3. The defendant's application for the orders under challenge to be set aside (made expressly by reference to UCPR rule 36.16(2)(b)) was grounded, essentially, on the present availability of evidence from the defendant which (if accepted) would displace the factual foundations of the case upon which the plaintiff secured the orders of 13 November 2015.
4. The defendant contends that, by reason of the evidence he now brings forward, he has an arguable defence to the plaintiff's statement of claim; that, although (largely because of his misuse of drugs, from which he now claims to be free) he cannot fully explain his non-appearance on 13 November 2015 or his delay in moving to have the orders of that date set aside, he has proffered a sufficient explanation of any default on his part to warrant a fresh hearing of the principal proceedings; and, weighing everything in the balance, the interests of justice require that there be a contested hearing of the plaintiff's statement of claim "on the merits".

THE APPLICABLE LAW

1. UCPR rule 36.16 is in the following terms (with emphasis added): "36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order".
2. The defendant accepts that the only relevant rule of court open to be invoked in support of his notice of motion is rule 36.16(2)(b).
3. Because of the amplitude of the power for which rule 36.16(2)(b) provides, it is not necessary in these proceedings to do more than acknowledge the existence in the Court of an inherent jurisdiction to similar effect. In Taylor v Taylor (1979) 143 CLR 1 at 6-7, 9, 10, 15-16, 20 and 22 the High Court of Australia held that there is an inherent power in a superior court to set aside an order affecting a party who did not have a reasonable opportunity to appear before the court and to present a case in opposition to the order.
4. A convenient statement of the principles to be applied on an application under rule 36.16(2)(b) is to be found in the judgment of Barrett JA in Northey v Bega Valley Shire Council [2012] NSWCA 28 at [12]-[17] (with emphasis added): "[12] I turn, therefore, to rule 36.16(2)(b) which reflects what Griffith CJ, in Owners of SS Kalibia v Wilson [1910] HCA 77; (1910) 11 CLR 689 at 694, called "an elementary rule of justice". [13] It is not disputed that Ms Northey was absent (and was not represented) on 21 March 2011 when the order was made. But that, of itself, is insufficient to justify setting aside of the order. There must be some added factor that makes it unjust for the order to stand. [14] In arguing that a court should set aside an order that was regularly made, an applicant under rule 36.16(2)(b) must contend with the proposition that great value attaches to certainty in the outcome of litigation. It is relevant to quote what was said by Gibbs CJ, Mason J, Wilson J, Brennan J and Dawson J in University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481 at 482-3: "It may be assumed, without deciding, that the court has power to vacate its order of 22 November 1984, notwithstanding that it has been perfected. If such power exists, it must be exercised with great caution, after weighing what might otherwise be irremediable injustice against the public interest in maintaining the finality of litigation: see State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38. The present is not a case in which an order was made by mistake or as a result of fraud, or a case in which by some accident an order has been made against a party who was not heard." [15] This passage enjoins "great caution" in approaching applications of the kind that Ms Northey now presses. It also gives some examples of situations in which it may be found appropriate for the court to intervene in relation to a final order that has been perfected: where the order was made by mistake, where the order was made as a result of fraud and where, by some accident, an order has been made against a party who was not heard. [16] The central question is whether it is unjust to let the perfected order stand. The matter was put thus by Jordan CJ (Davidson J and Roper J concurring) in Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR NSW 239 at 243-4: "The question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand. If so, it should be set aside on such terms as it will minimise the possibility of injustice to the plaintiff. If not, we should not interfere." [17] Examples of cases in which such a factor indicative of injustice has been found to be at work are: (a) where the applicant proceeded to obtain the order in the face of an agreement with the respondent not to do so: Double Bay Newspapers Pty Ltd v The Fitness Lounge Pty Ltd [2006] NSWSC 226; (2006) 57 ACSR 131; (b) where the applicant proceeded to obtain the order despite the respondent's accountant having been told by the applicant that "nothing would happen" while negotiations continued: Deputy Commissioner of Taxation v Annesley Plant Hire Pty Ltd [2010] FCA 755; (c) where the applicant proceeded to obtain the order after overlooking the fact that the basis for doing so had disappeared: Workers Compensation Nominal Insurer Pty Ltd; re Deli Glenbrook Pty Ltd [2010] FCA 380; and (d) where solicitors instructed by the respondent in the proceedings failed to protect the respondent's interests: Registrar of Aboriginal Corporations v Murnkurni Women's Aboriginal Corporation (1995) 137 ALR 404.
5. This statement of principles has been applied in several cases, including Xie v DY United Pty Ltd [2013] NSWSC 48; O'Connor v Perry [2014] NSWSC 1386 and Integrated Growth Solutions Pty Ltd v Latesha Elizabeth Campbell (No. 2) [2015] NSWSC 765.
6. Although directed to an exercise of the power in UCPR rule 36.16(2)(a) to set aside a "default judgment", the observations of McCallum J in Cronau v Vavakis (No. 3) [2008] NSWSC 1973 at [5] have resonance in the context of UCPR rule 36.16(2)(b): "[5] … in my view, in determining whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits, it is appropriate for the Court to consider the relative weight of each of the individual considerations of the strength of any defence, the adequacy of the explanation for the failure to defend the proceedings and the length of any delay. So that, for example, although the Court does not embark upon a hearing of the full merits of the case, the existence of what would appear to be a strong defence would warrant a more indulgent approach regarding the adequacy of the explanation for the failure to defend. …".
7. These observations are consistent with the observations of Jordan CJ in the seminal judgment of the Full Court of this Court in Vacuum Oil Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243-244 (with emphasis added): "The present is not a case in which judgment was signed by default through some procedural omission on the part of the defendant or his legal advisors. The action followed the ordinary course, except that its coming on for trial was delayed through dilatoriness on the part of the defendant. It is one in which, the action coming on for trial in its ordinary place in the list, no one was present in Court to conduct it for the defendant, and it therefore proceeded in his absence. In such a case, when the plaintiff is in no respect in default, a new trial will not be granted save in very special circumstances: Chitty's Archbold, 10th ed, 1457; 12th ed, 1526. In every such case, the Court has an inherent and unfettered, though judicial, discretion, in the exercise of which it will, however, necessarily consider (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained: Evans v Bartlan [1937] AC 473 at 482. As a general rule (although not necessarily in every case, if some reason exists for departing from it: Collins' Book Depot Pty Ltd v Bretherton [1938] VLR 40), the Court requires an affidavit showing prima facie that the defendant has a good defence on the merits: Evans v Bartlan [1937] AC 473 at 480 and 488-489, and also an explanation of his absence which shows that justice requires that in the circumstances it should be excused. And if there has been gross negligence on the defendant's part, the Court will be the more disposed to require at least a reasonably clear case of merits to be shown, to incline it to interfere: Nash v Swinburne 3M & G 630 a t 635; Weitzel v Friedenreich 14 WN 7. It is obvious that decisions on other sets of facts are of no assistance in arriving at a decision as to how it would be proper to exercise the Court's discretion in the present case. The question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand. If so, it should be set aside on such terms as will minimise the possibility of injustice to the plaintiff. If not, we should not interfere".
8. It was from Jordan CJ's judgment that Barratt JA drew his identification of "the central question" as one "whether it is unjust to let the perfected order stand".
9. His honour's reference to University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 at 482-483 as authority for the proposition that great value attaches to certainty in the outcome of litigation, as a consequence of which "great caution" should be exercised in approaching an application under UCPR rule 36.16(2)(b) for a judgment or orders to be set aside, might be reinforced by reference to the judgment of Garling J in Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181 at [116]-[118] and [130].
10. There his Honour observed that the exercise of a discretionary power to set aside a judgment or order must necessarily pay attention to the important principle of finality in litigation.
11. The fact that "the principle of finality in litigation" may, as his Honour observed, weigh "heavily in the exercise of the discretionary power of the Court to set aside any judgment" is not inconsistent with a predisposition on the part of the Court (all else being equal) to allow proceedings to be determined on their merits.

CONSIDERATION

1. Adopting, and applying, the statements of principle enunciated by Barrett JA in Northey v Bega Valley Shire Council (and informed by the additional observations of McCallum J in Cronau v Vavakis (No. 3), Jordan CJ in Vacuum oil Pty Ltd v Stockdale and Garling J in Weber v Aquaqueen International Pty Ltd), I am not satisfied that it is unjust to the defendant to allow the orders of 13 November 2015 under challenge to stand and, accordingly, I propose to order that the defendant's notice of motion be dismissed.
2. My reasons for reaching this conclusion are as follows.
3. First, as the defendant has expressly conceded, the orders of 13 November 2015 are not in any way irregular; nor were they irregularly obtained.
4. The principal proceedings came on for a final hearing in the ordinary course, at which time no one was present in court to conduct them on behalf of the defendant and they therefore proceeded in his absence. The plaintiff was in no respect in default in proceeding with the hearing to the point of judgment.
5. Secondly, the defendant had a reasonable opportunity to appear before the Court on 13 November 2015 and to present his case.
6. Both he and his brother James (who was helping him with management of his affairs) had express notice of the case sought to be made by the plaintiff, should the institution of proceedings be necessary in the absence of the settlement agreement, during the period (between 12 February 2015 and 17 April 2015) when the defendant was represented by solicitors retained to respond to the plaintiff's claims. Through the medium of those solicitors, notice of the listing of the proceedings for a final hearing on 13 November 2015 was sent to the respective email addresses of the defendant and James on 25 September 2015.
7. The defendant has proffered no satisfactory explanation for why he failed to provide ongoing instructions to his solicitors beyond reference to his distraction by drugs and associated personal problems. Nor has he offered any explanation as to why, if incapacitated by misuse of drugs, his interests could not have been protected by James acting as a tutor.
8. That said, the defendant has adduced no medical evidence in support of the proposition that his distraction by drugs was such as to render him incapable of providing instructions to his solicitors, or of arranging for James to protect his interests. True it is that he was not cross examined by the plaintiff on his assertions of incapacity, but those assertions were of a general character at best. I accept that the defendant had a drug problem which impacted on his personal affairs, but I remain doubtful as to the extent to which it impeded him (personally or through his supportive brother, James) from defending the plaintiff's claim.
9. Thirdly, the orders under challenge having been made on 13 November 2015, the defendant was on any view guilty of substantial delay in seeking to be let in to defend the plaintiff's claims.
10. The orders of 13 November 2015 having been made, the annuity payment due a month or so later was paid to the plaintiff rather than to the defendant, as subsequent annual payments have been. That fact alone must have alerted the defendant, almost contemporaneously, to the fact and effect of the orders now under challenge.
11. Those orders were posted on the internet in the reasons for judgment published on NSW Caselaw shortly after they were made. See Risa Gall v Andrew Minh Luan Pham [2015] NSWSC 1710 at [17]. They were freely and publicly available.
12. The defendant's motivation for contesting the orders made in favour of the plaintiff appears, at least in part, to have been a desire to keep his mortgagee at bay by asserting an entitlement to recover a lottery windfall from the plaintiff and, more recently, to impede enforcement of her claimed entitlement to compensation against his share of the proceeds of a mortgagee sale of property owned by his wife and himself.
13. On his own evidence, at or about the beginning of 2017 he consulted solicitors (JA Buda and Associates) about a letter of demand he had received from the Commonwealth Bank of Australia about defaults by himself and his wife in repayment of a mortgage debt owed to the Bank. That letter of demand, in due course, led to the Bank commencing proceedings (numbered 2017/00213372 in the Possession List of the Common Law Division) as a preliminary to sale of their mortgaged property upon exercise of a power of sale. In a defence filed on 16 October 2017 in response to the Bank's statement of claim (verified by the defendant on 16 October 2017) the defendant sought to keep the Bank at bay by pleading a case which included the following paragraphs: "(a) The judgment of Lindsay J given on 13 November 2015 was obtained ex parte based on a contract that was not enforceable against [the defendant]; (b) [The defendant] will be filing a motion in the Supreme Court of New South Wales matter of Risa Gall v Andrew Minh Luan Pham case number 2015/132078 seeking, inter alia, to set aside the orders of Lindsay J made on 13 November 2015, pursuant to rules 36.15 and 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) … ".
14. Still, the defendant took another year to make good his expressed intention to move the Court for the orders of 13 November 2015 to be set aside.
15. Fourthly, a formidable barrier (in the form of the "contract" referred to in the defendant's Commonwealth Bank defence) stands in the way of any description of his defence to the plaintiff's claims as reasonably, fairly or otherwise arguable.
16. Much of the defendant's challenge to the plaintiff's claims involves his disputation of her account of conversations between them ("word against word") coupled with the fact that (albeit, perhaps, in the circumstances summarised in Risa Gall v Andrew Minh Luan Pham [2015] NSWSC 1710 at [7]) she acquiesced in the lottery win being registered in the office of NSW Lotteries in the name of the defendant.
17. However, the plaintiff's case against the defendant calls in aid a document dated 12 February 2010 - the "contract" or, perhaps more accurately, an admission by the defendant of the plaintiff's beneficial entitlement to the lottery annuity - which, she says, he signed. Written in her hand and countersigned by her, that document is in the following terms "I, Andrew Minh Luan Pham of … agree to transfer all amount of $AUD75,000 every year for the next 13 years on the 19 Dec, which will be paid by NSW Lotteries to Risa Abe [the plaintiff]. The account number registered as the account for installments is not to be changed without first notifying Risa Abe. The joint account currently registered is also not to be terminated until 2024 without discussion. All statements above are agreed and signed by Andrew Pham himself. Any changes to this contract will not be allowed without Risa Abe's consent".
18. The defendant both denies that what plausibly appears on that document to be his signature is in fact his signature, and offers (with corroboration from a friend) an alternative explanation that, for a large part of the date which the document bears (but not all day), he was engaged in drinking so much alcohol as to be beyond knowing what he was doing.
19. The plaintiff makes the point (which is available to be made, but not in any way decisive) that the defendant's denial that he signed the document is unaccompanied by expert evidence from a document examiner expressing an expert opinion as to the authenticity of the disputed signature.
20. Although the Court is not, on a hearing of the defendant's motion, trying issues of fact arising from the defendant's foreshadowed defence of the plaintiff's claims, it must be satisfied that the proposed defence is fairly arguable, and the strength or otherwise of any defence is a factor to be taken into account (in all the circumstances) in deciding whether or not to set aside orders under challenge. In this context, I am not satisfied that the defendant's proposed defence has sufficient strength to justify, or warrant, interference with the orders under challenge. It depends ultimately upon an acceptance of the defendant's word.
21. Fifthly, the defendant's plea to be allowed in to defend the plaintiff's claims is based, essentially, on a submission that subjective factors personal to him (focusing principally upon his misuse of drugs and associated problems) should be allowed to outweigh objective factors that tend in favour of the plaintiff being entitled to hold onto the orders she obtained, in a regular way and without any default on her part, in the ordinary course of the principal proceedings.
22. That the defendant is the author of his own misfortune is not, of itself, a decisive factor against a grant of the relief he seeks in his motion. But it is a factor tending against his application to be allowed to be let in to defend the plaintiff's claims when viewed in context.
23. Sixthly, the absence of any irregularity affecting the orders under challenge or the manner in which they were obtained, the absence of any satisfactory explanation as to why the defendant allowed the plaintiff to proceed to judgment without opposition, the defendant's subsequent delay in asserting the entitlements he now asserts, and the lack of a strong case, all reinforce the importance of the Court giving due respect to the principle of finality of litigation.
24. Considered cumulatively these factors lead me to the conclusion that it is not unjust to the defendant to allow the orders of 13 November 2015 under challenge to stand.
25. That conclusion is not displaced by the defendant's concession that, if let in to defend the plaintiff's claims, he would not seek to recover from her the annuity payments received by her after 13 November 2015.
26. What was determined by the orders made on that date was the plaintiff's present entitlement to an annuity payable over successive future years. The defendant's concession needs to be taken into account upon a consideration of where the interests of justice lie, but it does not tip a balance in favour of the defendant. The other factors I have identified go directly to whether it would be unjust to the defendant to allow the orders under challenge to stand. The defendant's concession goes to an imposition of terms designed to minimise the possibility of injustice to the plaintiff consequent upon a decision to set aside the orders presently operating in her favour.

CONCLUSION

1. For these reasons, I propose to order that the defendant's notice of motion be dismissed, with costs following the event.
2. For completeness, I record that an agreed consequence of dismissal of the defendant's motion is that funds of the defendant held in court in the Commonwealth Bank proceedings, following the Bank's mortgagee sale of the defendant's property, be paid out to the plaintiff.
3. On 12 October 2018 Davies J, in the Commonwealth Bank proceedings, "by consent" of the current plaintiff and defendant, made orders to the following effect (with emphasis added): 1. Order that the Court make payment out of the funds in court to [the present plaintiff of] an amount of $186,180.53 [being part of funds paid into court by the Commonwealth Bank on 17 August 2018]. 2. Order that order 1 be stayed. 3. Order that the stay referred to in order 2 be lifted on the occurrence of the first of the following: 1. If [the defendant] does not make an application to set aside the judgment entered on 13 November 2015 in proceedings 2015/00132068 ("Judgment") by 10.30am on 29 October 2018; or 2. If an application is made by [the defendant] to set aside the Judgment, upon the final resolution of that application, including any appeals; or 3. Upon further order of the Court lifting the stay.
4. I will allow the parties an opportunity to be heard as to whether the funds to be paid out of Court are limited to the amount of $186,180.53 or whether the plaintiff is entitled to have the benefit of interest accrued on that amount and, if so, from what date.
5. In fact, the amount presently in court (excluding accrued interest) is $186,986.00.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 September 2019