Gunns Finance Pty Ltd (Receivers and Managers Appointed) (In Liquidation) v Marks-Isaacs

District Court of NSW|2016-11-11

Judgment

On 2 April 2015 I gave judgment for the plaintiff against Simon Marks‑Isaacs (see Gunns Finance Pty Ltd (Receivers and Managers Appointed) (In Liquidation) v Marks-Isaacs [2015] NSWDC 412). Mr Marks-Isaacs was not present. He applies to have the judgment set aside.
The Uniform Civil Procedure Rules 2005 provide for circumstances where a judgment may be set aside. Rule 36.15 is concerned with orders made, "irregularly, illegally or against good faith". Mr Marks-Isaacs made a faint reference to r 36.15 and the failure of the plaintiff to disclose to the Court, at the time of the ex parte hearing, the existence of a hardship program that the plaintiff had introduced to provide limited ex gratia relief to debtors in hardship. How a failure to disclose this program rendered the judgment in April 2015 irregular, illegal or in bad faith was not explained. I do not regard the non‑disclosure of the hardship program as relevant to the judgment I then gave, nor to amount to "misconduct or dishonourable conduct" or "against good faith" (see Coles v Burke (1987) 10 NSWLR 429 at 437, Kendell v Carnegie (2006) 68 NSWLR 193 at [60]) so as to enliven r 36.15.
Rule 36.16(2)(b) permits a judgment to be set aside if the judgment is given in the absence of a party. But the absence of a party alone is not sufficient; there must be something additional which makes it unjust for the judgment to remain: Northey v Bega Valley Shire Council [2012] NSWCA 28 at [13]. Matters which inform whether it is unjust to allow the judgment to remain might include the absence of notice or knowledge of the hearing, the explanation for the absence of the party, the explanation for any subsequent delay in applying to set aside the judgment, the existence of a genuine defence, the applicability of the hardship program of the plaintiff and the prejudice to the parties by the judgment remaining in force or being set aside (including prejudice to the plaintiff if the judgment is set aside).

KNOWLEDGE AND NOTICE

In the previous judgment of 2 April 2015, I found that Mr Marks‑Isaacs had notice of the hearing date (see Gunns Finance at [6]). That finding is not disputed. Rather, Mr Marks-Isaacs denies knowledge of the hearing because the addresses he provided as addresses for service were either incorrect, in the case of the physical address he gave, or not in use in the period shortly before the trial date, in the case of the post office box. Mr Marks‑Isaacs' lack of knowledge of the hearing date was not challenged, but it is clear that this was occasioned both by the defective addresses for service which he provided, and by his failure to attend a pre‑trial directions hearing (at which the trial date was set) of which he was aware. His explanation for not attending the pre-trial directions hearing was said to be the existence of the hardship program (in which he had expressed some interest to his then lawyer) and a claimed belief that the litigation was not continuing by reason of his interest in the hardship program. Even accepting that Mr Marks‑Isaacs held such a belief, of which I am not persuaded, there is no basis for it. He had made no application to the plaintiff under the hardship program even though he had notified his then current solicitor of his interest. He had received no indication that the litigation was not proceeding. He also knew from events in 2014 that the hardship program then existing had not impacted on the continuance of the litigation: he attended pre‑trial directions on two occasions in late 2014.
Accordingly, the lack of knowledge of Mr Marks‑Isaacs of the hearing date is wholly attributable to his own conduct in not turning up to the pre‑trial directions hearing and providing defective addresses for service.

EXPLANATION OF DELAY

Mr Marks‑Isaacs submitted that he became aware only in September 2016 of the judgment and that he applied, within a few weeks, to set it aside. However, correspondence indicated that he was aware in February 2016 at least, some seven or eight months before making an application. Mr Marks‑Isaacs, when confronted with this evidence, submitted that he must have overlooked it. This circumstance almost precisely (if one adopts the meaning of "eight" attributed to the word "few" in 1 Peter 3:20 KJV) mirrors the comments of Barrett JA in Northey at [38]: "It is one thing for a party who feels aggrieved to apply within a few days or perhaps a few weeks after learning of an order made in the party's absence. A party who does not apply for eight months must, of necessity, present a very much more compelling case to disturb the finality of the order in question … [and] overcome the effect of what is, in reality, a very substantial delay."
In this case, Mr Marks‑Isaacs' oversight cannot of itself overcome the effect of the very substantial delay.

DEFENCE

Mr Marks‑Isaacs swore an affidavit verifying his original defence. That defence denied almost all the allegations in the claim including, for example, that he executed applications for finance, that those applications were accepted and the terms of those applications. This defence, if genuine, might raise a question of the justice in not setting aside the judgment. However, Mr Marks‑Isaacs, who appeared for himself before me, did not press that defence before me. He said that his defence to the claim was based on the non‑disclosure by the plaintiff of certain material matters regarding the prospects of the investment failing.
Mr Marks‑Isaacs' application for hardship also suggests an acceptance of the existence of the debt.
These matters are inconsistent with the sworn assertion that the loan arrangements were never entered into by the defendant. The circumstance that Mr Marks-Isaacs has sworn an affidavit denying facts he now seems to concede does not assist him in this application. It is also relevant to the existence of a defence.
No defence, in the form of a document, has been provided to the Court in the course of this application. The only documented defence before the Court is one that is disowned by the defendant. It is difficult for a court to find a genuine defence of the type foreshadowed by Mr Marks‑Isaacs without at least a draft of the proposed defence.

THE HARDSHIP PROGRAM

The plaintiff did not accept that the hardship program it had instituted was relevant to the setting aside of the judgment. However, Mr Marks‑Isaacs relied upon that program as a factor influencing his conduct and I consider it as relevant on this application. However, there are two matters concerning this hardship program that do not assist Mr Marks‑Isaacs.
First, the hardship program might apparently still be available. The evidence discloses that after the judgment, the hardship program was nevertheless pursued by Mr Marks‑Isaacs (although he was, he says, unaware of the judgment) and considered by the plaintiff. It follows that the existence of the judgment does not, or at least did not, prevent that alternative form of ex gratia relief potentially being available to him.
Secondly, Mr Marks‑Isaacs does not appear to have reasonably pursued his hardship application. The application that he submitted was of a most cursory nature, referring only to two unattached letters dated two years previously and a "more recent period of unemployment". No details of the period of unemployment or of Mr Marks‑Isaacs' income, expenses, assets and the like were provided, even though it was apparent, on the documents he provided to the Court, that the hardship program, at least in his case, depended on his financial position. When the plaintiff sought from Mr Marks-Isaacs his recent past tax returns to assess his financial position, those returns were not provided. In submissions to the Court Mr Marks‑Isaacs said that those returns remained unavailable as they had not yet been prepared.
In these circumstances, it is unsurprising that the hardship application was not successful. There was no evidence that Mr Marks-Isaacs has reapplied. It is thus not a matter that can assist Mr Marks‑Isaacs in this application.

PREJUDICE

Mr Marks‑Isaacs presently has a judgment against him and perhaps an outstanding bankruptcy notice.
On the other hand, the plaintiff has an unsatisfied judgment. It has suffered the costs of obtaining that judgment and the costs of resisting it being set aside. Costs in Federal Court proceedings regarding the bankruptcy notice have also been suffered. The plaintiff has been delayed in obtaining the fruits of its judgment.
Mr Marks‑Isaacs makes no offer in respect of those costs. Rather, he says the plaintiff should, in fairness, meet them because they were aware that he was absent on the occasion of the judgment on 2 April 2015. I do not regard that as a reason why the plaintiff should bear the costs of the successful proceedings.

CONCLUSION

Mr Marks-Isaacs' explanation for his delay in making this application has been found to be faulty - seven to eight months of delay lacking any proper explanation. He has put forward no defence in a form that can be assessed. The hardship program of the plaintiff might still be available to him, but his steps in respect of it - his failure to disclose his financial circumstances - indicate that he has no particular interest in pursuing it.
Whether Mr Marks‑Isaacs' application to set aside the judgment would have resulted in a different outcome had a proposed draft defence and a more complete and satisfactory explanation of his delay been provided is not known. It is appears that without legal advice a defence at least cannot be created. In any event, on the application before me I am persuaded that this is not a case where the judgment, although given in the absence of Mr Marks‑Isaacs, should be set aside.

COSTS

On the last occasion Mr Marks‑Isaacs was ordered to pay costs on an indemnity basis because of the contractual entitlement to that effect.
For the same reasons as given in my earlier judgment (see Gunns Finance at [11]) and because of the lack of any real merit in this application, I propose to make the same order in respect of costs, namely, that costs of and incidental to the application should be paid by Mr Marks-Isaacs on an indemnity basis.

ORDERS

Accordingly, the orders of the Court are: 1. Dismiss the defendant's notice of motion filed 4 October 2016 and decline to set aside the judgment of 2 April 2015. 2. The defendant pay the costs of and incidental to the notice of motion on an indemnity basis. 3. Note that the existing stay of the judgment of 2 April 2015 expires today and is not continued.

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: 14 December 2016

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Judgment (10 paragraphs)

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