HALL -v- HALL [2007] WASC 198 (31 August 2007)

Practice and procedure - Application by defendant to set aside default judgment - Requirement that defendant show defence on merits - Whether Court must form provisional view of the outcome of the case if judgment set aside - Test to be applied - Whether defendant shown sufficient defence to warrant judgment being set aside

1 NEWNES J: This is an application by the defendant to set aside a judgment entered by the plaintiff in default of appearance.

2 The application arises out of an unfortunate family dispute. The defendant and her mother, the plaintiff, are the registered proprietors of a retirement villa (the "Villa"). The Villa was purchased in about late 1997 or early 1998. The plaintiff and the defendant became the registered proprietors on 9 January 1998. The Villa was purchased with part of the proceeds of the sale of the plaintiff's house, in which both the plaintiff and the defendant had been living. The defendant says that she prepared the house for sale, repairing, cleaning and tidying the interior, and attending to the extensive gardens.

3 The house was sold for $500,000. The plaintiff says that from the proceeds she gave $100,000 to each of her daughters, the defendant and the defendant's sister, and a further $180,000 was spent on the purchase of the Villa.

4 The defendant says that when the plaintiff decided to purchase a retirement villa she told the defendant that she wanted the defendant to have the villa after the plaintiff's death in appreciation for all the work the defendant had done over the years for the plaintiff, and before he died, for her husband, the defendant's father. The plaintiff also referred, as a reason, to a serious medical condition suffered by the defendant.

5 The defendant says that when they met the sales representative who was acting on the sale of the Villa, he told them that if the Villa was registered in both their names as joint tenants it would pass to the defendant upon the plaintiff's death without incurring the substantial fees that would otherwise be payable on its transfer. According to the defendant, the plaintiff said that that was a good idea. The Villa was subsequently duly registered in their joint names.

6 After the acquisition of the Villa, the plaintiff and the defendant moved into it together. The defendant says she spent considerable time moving their possessions in and improving the garden by transferring plants from the house. The defendant says she also spent money on the upkeep and maintenance of the Villa.

7 In support of her contention that the plaintiff intended her to have a beneficial interest in the Villa, the defendant relied upon a letter, dated 21 January 2001, written to her by the plaintiff, in which the plaintiff says, among other things, that the letter is to "explain why I am leaving you the ... [Villa]". The reasons given by the plaintiff are the help that the defendant had given to the plaintiff and her husband over the years, and for helping to prepare the house for sale and moving the plaintiff's possessions into the Villa.

8 The defendant also relied upon a letter written by the plaintiff a week earlier, on 14 January 2001, to the defendant's sister. The letter concerned a dispute between the plaintiff and the defendant's sister, the subject-matter of which is not relevant for present purposes. The defendant relied on the letter for a statement in it in which the plaintiff said in respect of the Villa that the defendant "will live here eventually."

9 The plaintiff, whom I understand to be in her 80s, has not sworn an affidavit in opposition to this application, but a statutory declaration made by her has been annexed to an affidavit of her solicitor.

10 The plaintiff's version of events, as set out in the statutory declaration, is somewhat different to the defendant's. The plaintiff denies that the defendant did anything to improve the house for sale. The plaintiff says that no significant work was carried out on the house for the purposes of its sale and none was required because it was in good condition.

11 In relation to the acquisition of the Villa, the plaintiff says she first inspected the Villa with the defendant's sister and her husband, but when she went to the real estate agent's office to sign the contract she was accompanied by the defendant. While they were there, the defendant suggested that her name also go on the title as she had a safety deposit box and could keep the title and other papers relating to the Villa in the safety deposit box if the Villa was also in her name. The plaintiff says she was still in a traumatic state from recently losing her husband and from moving from the house where she had lived for around 50 years and she accepted the proposal. The plaintiff says no one discussed the meaning of a joint tenancy or rights of survivorship, or transfer fees. She also says she was unaware at that time that the defendant suffered from any medical problems.

12 The plaintiff says the defendant has never contributed to the outgoings or taxes on the Villa and that it was never the plaintiff's intention to give the defendant any interest in the Villa or that the defendant should automatically have it on the plaintiff's death. The plaintiff says she has always considered the Villa to be hers, to be dealt with in her Will as she should decide.

13 The circumstances in which judgment came to be entered are the subject of some controversy, but the essential facts are clear.

14 On 13 October 2006, the plaintiff's solicitors wrote to the defendant saying, among other things, that the defendant had no legal interest in the Villa and any interest she had was held on trust for the plaintiff. They said that the plaintiff wished to sell the Villa in order to purchase another unit but she was unable to do so because the defendant refused to remove her name from the title or to allow the sale unconditionally. The solicitors said that an application would be made to the Supreme Court unless, by 17 October 2006, the defendant agreed to her name being removed from the title.

15 Following receipt of that letter, the defendant instructed solicitors to respond on her behalf. They wrote to the plaintiff's solicitors on 3 November 2006 saying that there had been a voluntary disposition by the plaintiff to the defendant of an interest in the Villa and there was a presumption that the plaintiff thereby intended to benefit the defendant.

16 The plaintiff's solicitors responded on 17 November 2006, saying simply that the plaintiff denied the defendant's allegations and would proceed as advised to protect her interests.

17 There was then apparently a considerable hiatus before the plaintiff's solicitors wrote again on 15 February 2007, requiring the defendant to provide them with the duplicate certificate of title by 23 February 2007 to enable the registration of a transfer of the land from the plaintiff to her other daughter, the defendant's sister.

18 The defendant's solicitors replied to that letter on 16 February 2007, saying that as nothing further had been heard in the matter for so long their retainer had ceased.

19 The plaintiff's solicitors then wrote direct to the defendant in the same terms as their letter of 15 February 2007. The defendant responded by email on 21 February 2007 in which she said that she had already provided a duplicate certificate of title to the plaintiff and as she (the defendant) was in Margaret River it was very difficult for her to get another one from the Land Titles Office. The defendant also said that as a joint tenant she did not want the plaintiff to transfer the land to anyone.

20 On 22 February 2007, the plaintiff's solicitors wrote by email to the defendant pointing out that they wanted the original of the duplicate certificate of title and demanding production of it by 26 February 2007.

21 On 28 February 2007, there was a telephone conversation between the solicitor for the plaintiff and the defendant. The plaintiff's solicitor said he told the defendant that he required the duplicate certificate of title to the property. The defendant said that she wanted to speak to the plaintiff about it. The plaintiff's solicitor said he had instructions to issue Supreme Court proceedings against her and would do so. The defendant asked how long it would take and the plaintiff's solicitor told her she should get her own legal advice.

22 On 28 February 2007, the writ of summons in this action was issued. It was indorsed with a statement of claim claiming a declaration that the defendant holds her interest in the Villa on trust for the plaintiff and an order for partition under s 126 of the Property Law Act 1969 (WA).

23 The plaintiff's solicitors then engaged a process server to serve the defendant. The process server was unable to contact the defendant despite attending at what was understood to be her last residential address and a number of attempts to contact her on her mobile phone, which on each occasion was apparently switched off. The process server also sent the defendant an email, to which there was no response.

24 On 22 March 2007, the plaintiff's solicitors applied for an order for substituted service and that was granted on 28 March 2007. It provided for service to be effected by an advertisement in The West Australian newspaper. The advertisement was published on 2 April 2007.

25 No appearance was entered for the defendant and, on 15 May 2007, the plaintiff obtained judgment in default of appearance. The judgment includes a declaration that the defendant holds her interest in the Villa on trust for the plaintiff and an order that the defendant transfer her interest to the plaintiff.

26 The defendant says she was overseas from 14 March 2007. She says the plaintiff is aware that she travels overseas each year, usually departing in February or March, but sometimes in April, and returning in about October. The defendant says she has done this every year for about 20 years.

27 The defendant says that she received an email on 21 June 2007 from the occupant of her previous residential address saying that a letter had arrived for her. She arranged for someone to collect the letter and open it. She subsequently received an email describing the contents of the letter and then learnt that judgment had been entered against her. The defendant says that, prior to that time, she had not been aware that the plaintiff had commenced proceedings against her.

28 By this application, the defendant seeks, first, to have the order for substituted service set aside on the ground that there has been material non-disclosure by the plaintiff on the ex parte application for substituted service, in that there was no disclosure that the defendant travels overseas each year in about February or March, and therefore that the method of substituted service sought and obtained would not come to the defendant's attention. Secondly, the defendant seeks to have the default judgment set aside under O 13 r 10.

29 In my view, the substance of the application lies in the power of the Court under O 13 r 10, but before turning to that it is convenient to say something about the other limb of the defendant's application.

Was there material non-disclosure by the plaintiff?

30 The courts have, for many years, required of those who seek ex parte orders a high standard of candour and responsibility. The obligation of an applicant on an ex parte application to make full disclosure of all facts material to the determination of his or her right to the relief sought, is a most serious responsibility: Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679 at 681 - 682. There is no distinction for this purpose between an order in the nature of an injunction and an order which creates or confirms rights which otherwise would not exist; the obligation of candour and diligence also exists in the latter case: Lazard Brothers & Co v Midland Bank Ltd [1933] AC 289, Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 per Mahoney AP at 677, Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639 at 648.

31 Accordingly, an applicant for an order for substituted service - which will necessarily be made ex parte - has an obligation to the Court to disclose all facts material to the Court's decision: Wiseman v Wiseman [1953] P 79, Savcor Pty Ltd v Cathodic Protection International APS (supra) at 648.

32 The extent of the disclosure required in each case will depend upon the particular facts. The applicant must make a full and fair disclosure of all matters within his or her knowledge which are material to the proceedings and which tend in favour of the other party: Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561 at 570. Materiality is to be decided by the Court and not by the assessment of the applicant or the applicant's legal advisors: Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350.

33 The duty to make full and frank disclosure of material facts is not restricted to facts actually known. The applicant must make proper enquiries and the duty of disclosure applies not only to material facts known to the applicant but also to any additional facts which the applicant would have known had such enquiries been made: Brink's Mat Ltd v Elcombe (supra) at 1356; Liberty Financial Pty Ltd v Scott [2002] FCA 345; Bell Group NV (in liq) v Aspinall (supra); Surefire Holdings Pty Ltd v Oxley Sports Drome Pty Ltd [2001] QSC 85 per Atkinson J at [14].

34 A party is not necessarily excused from the consequences of non-disclosure because it believed that the non-disclosed material was not material or because the failure to make full disclosure was unintentional: Behbehani v Salem [1989] 1 WLR 723 at 726 - 728.

35 But the failure to disclose a material fact will not necessarily lead to the order being set aside. The Court has a discretion whether or not to set aside an ex parte order where there has been material non-disclosure. Each case must depend upon its own facts and the determining factor is the interests of justice: Brink's Mat Ltd v Elcombe (supra), Savcor Pty Ltd v Cathodic Protection International APS (supra).

36 It is necessary first to identify the alleged non-disclosure and then to determine whether it was a matter material to the decision and, if so, whether it would have made any difference to the outcome: Savcor Pty Ltd v Cathodic Protection International APS, at 650.

37 In my view, the defendant has failed to establish any material non-disclosure by the plaintiff. The defendant's evidence falls well short of establishing that the plaintiff knew or had reason to believe, or failed to make reasonable enquiries as to whether, the defendant was overseas at the time the order for substituted service was obtained.

38 The defendant accepts that on some occasions she leaves for overseas as late as April. The defendant had spoken to the plaintiff's solicitor on 28 February 2007, when she was told that proceedings were about to be commenced against her. The defendant did not mention to the plaintiff's solicitors that she was about to go overseas. She said she wanted to speak to the plaintiff about the matter. The defendant had not spoken to the plaintiff by the time the order for substituted service was made or by the time the advertisement was published.

39 The fact that the process server had been unable to contact the defendant by no means led to the conclusion that she was out of the jurisdiction. On the evidence, no one to whom the process server spoke had suggested that the defendant was or might be out of the jurisdiction. Attempts to contact her by email, which would not be limited to the jurisdiction, had failed. I might note in passing that the defendant has offered no reason as to why the process server was unable to contact her by email or mobile phone, particularly given that at the time she was still in Western Australia.

40 It was not at all clear, therefore, that, as at 28 March or 2 April 2007, there was any reason for the plaintiff or her solicitors to believe that the defendant had already gone overseas and, as all the other apparently available means of serving the defendant had been unsuccessful, it was not unreasonable that the order for substituted service sought was by way of advertisement.

41 Even if I were wrong in concluding that there was no material non-disclosure by the plaintiff, I would not exercise my discretion to set aside the order. The defendant knew that the plaintiff was about to issue proceedings. She said nothing to the plaintiff's solicitors about her plans to go overseas. The defendant provided the plaintiff's solicitors with an email address but did not respond to a message from the process server to that address nor to calls to her mobile telephone, at a time when she was still in Western Australia. All reasonable attempts to serve the defendant personally failed. Moreover, the dates upon which the defendant had previously departed overseas ranged over several months, up to and including April, and no firm conclusion could be drawn that it was likely that she had already left the jurisdiction when the order was made and the advertisement published. All that could have been said was that it was the defendant's practice to go overseas at some time between February and April each year. In the circumstances, I do not consider that that would have made any difference to the outcome.

42 In my view, it would not be in the interests of justice to set aside the order.

Should the judgment be set aside under O 13 r 10?

43 I turn then to the question of whether the judgment should be set aside under O 13 r 10. The first question is, what are the principles to be applied in determining whether the judgment should be set aside?

44 In Evans v Bartlam [1937] AC 473, the House of Lords pointed out that since the power to set aside a default judgment, as expressed in the rules, is not subject to qualifications, the Court should not qualify a discretion that is left unfettered.

"The discretion is in terms unconditional. The Courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion. One is that where the judgment was obtained regularly there must be an affidavit of merits, meaning that the applicant must produce to the Court evidence that he has a prima facie defence. It was suggested in argument that there is another rule that the applicant must satisfy the court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake, accident, fraud or the like. I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the court will have regard in exercising its discretion. If there were a rigid rule that no-one could have a default judgment set aside who knew at the time and intended that there should be a judgment signed, the two rules would be deprived of most of their efficacy. The principle obviously is that unless and until the court has pronounced judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by failure to follow any of the rules of procedure.

But in any case in my opinion the Court does not, and I doubt whether it can, lay down rigid rules which deprive it of jurisdiction. Even the first rule as to affidavit of merits could, in no doubt rare but appropriate cases, be departed from. The supposed second rule does not in my opinion exist."

46 To similar effect was the reasoning of Lord Russell of Killowen (at 481). His Lordship, having referred to the contention that an applicant must both show a defence on the merits and explain how judgment came to be entered, went on (at 482):

"The contention no doubt contains this element of truth, that from the nature of the case no judge could, in exercising the discretion conferred on him by the rule, fail to consider both (a) whether any useful purpose could be served by setting aside the judgment, and obviously no useful purpose would be served if there were no possible defence to the action, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained, to which he could have set up some serious defence. But to say that these two matters must necessarily enter into the judge's consideration is quite a different thing from asserting that their proof is a condition precedent to the existence or exercise of the discretionary power to set aside a judgment signed in default of appearance."

"In a case like the present there is a judgment, which, though by default, is a regular judgment, and the defendant must show grounds why the discretion to set it aside should be exercised in his favour, the primary consideration is whether he has merits to which the Court should pay heed. If merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication ... The Court might also have regard to the applicant's explanation why he neglected to appear after being served though as a rule his fault, if any, can be sufficiently punished as to terms of costs or otherwise which the Court in its discretion is empowered by the rules to impose".

48 Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 concerned an application to set aside a judgment where the defendant had failed to appear at trial, the rule being described as much stricter than in the case of a default judgment. Jordan CJ (with whom Davidson and Roper JJ agreed) said (at 243 - 244):

"The question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust 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."

49 In Grimshaw v Dunbar [1953] 1 QB 408, Jenkins LJ (at 415 - 416), having considered various other factors, turned to the question of how far the judge should consider the prospects of success of the party applying for a new trial. Having given an example of a case in which it would not be appropriate to set aside a judgment, Jenkins LJ continued:

"But, short of cases of that kind, I think that a new trial should seldom, if ever, be refused merely on the ground that the applicant's case appears to be a weak one ... [A] party to an action is prima facie entitled to have it heard in his presence; he is entitled to dispute his opponent's case and cross-examine his opponent's witnesses, and he is entitled to call his own witnesses and give his own evidence before the court. Prima facie that is his right, and if by some mischance or accident a party is shut out from that right and an order is made in his absence, then common justice demands, so far as it can be given effect to without injustice to other parties, that that litigant who is accidentally absent should be allowed to come to the court and present his case - no doubt on suitable terms as to costs."

50 In Victoria, the Court of Appeal in Lau v Citic Australia Commodity Trading Pty Ltd [1999] VSCA 34, drawing on the speech of Lord Wright in Evans v Bartlam, framed the question as being whether the applicant has a defence on the merits to which the Court should pay heed. Winneke P pointed out that, absent a finding that the applicant's version was, on any reasonable view, a palpable sham, the fact that the material demonstrated the defence to be a weak one was not to say that, when all the facts were exposed, it would not turn out to be a good one. Winneke P referred with approval to the statement of Denning LJ in Hayman v Rowlands [1957] 1 WLR 317, at 319:

"The party asking for a new trial ought to show some defence on the merits, but so long as he does so, the strength or weakness of it does not matter."

51 In a similar vein, in Russo v Buck [2006] SASC 249, Doyle CJ, on an application to set aside a default judgment, put the position in this way:

"I must not turn the application into a trial of the case on affidavits. It is not for me to decide whether the claim will succeed or is likely to succeed. I must be satisfied that there is a claim to be tried. To put it negatively, I should not set aside the judgment if there is really no triable issue."

52 In Palmer v Prince [1980] WAR 61, Jackson CJ (with whom Virtue J agreed) said, referring to the speech of Lord Atkin in Evans v Bartlam, that the general rule is that where a judgment has been regularly entered it is not to be set aside unless the Court is satisfied that there is a defence on the merits; that is, the defendant must produce to the Court evidence that he has a prima facie defence - although in rare but appropriate cases even that general rule could be departed from. His Honour said that it was also relevant to the exercise of the Court's discretion that the defendant should explain the failure to comply with the rules and any delay in making the application.

53 In the same case, Burt J said (at 64), in respect of the defendant's defence, that the test in such applications is whether the facts have been sworn to by a person who would be competent to depose to them if the matter should go to trial and which, if proved, would satisfy the Court that the applicant has a good defence on the merits.

54 What must be established to make out a sufficient defence on the merits was considered by the English Court of Appeal in Alpine Bulk Transport Co Inc v Saudi Eagle Shipping Co Inc [1986] 2 Lloyd's Rep 221. In that case, the Court of Appeal (Sir Roger Ormrod and O'Connor LJ) set out the general indications to help the Court in the exercise of its discretion, bearing in mind, as the Court of Appeal pointed out, that no case can lay down rigid rules or fetters on the discretion. They were:

"(i) a judgment signed in default is a regular judgment from which, subject to (ii) below, the plaintiff derives rights of property;

(ii) the Rules of Court give to the Judge a discretionary power to set aside the default judgment which is in terms 'unconditional' and the Court should not 'lay down rigid rules which deprive it of jurisdiction';

(iii) the purpose of this discretionary power is to avoid the injustice which might be caused if judgment followed automatically on default;

(iv) the primary consideration is whether the defendant 'has merits to which the court should pay heed', not as a rule of law but as a matter of common sense, since there is no point in setting aside a judgment if the defendant has no defence and if he has shown 'merits' the 'Court will not, prima facie, desire to let a judgment pass on which there has been no proper adjudication';

(v) again as a matter of common sense, though not making it a condition precedent, the Court will take into account the explanation as to how it came about that the defendant '... found himself bound by a judgment regularly obtained to which he could have set up some serious defence'."

55 The Court of Appeal rejected the proposition that it is sufficient for the defendant to show "an arguable defence", as that expression is understood in connection with applications for summary judgment, saying that the House of Lords in Evans v Bartlam "clearly contemplated that a defendant who is asking the Court to exercise a discretion in its favour should show that he has a defence which has a real prospect of success".

"In our opinion therefore to arrive at a reasoned assessment of the justice of the case the court must form a provisional view of the probable outcome if the judgment were to be set aside and the defence developed. The 'arguable' defence must carry some degree of conviction."

57 It is significant, however, that in that case the Court of Appeal was not concerned with significant disputes of fact on the affidavit evidence and therefore considered that it was in a position to form a view as to the defendant's prospects of success. When the Court came to apply its own test to that case (at 224) it referred to: "The real question is whether it is a 'prima facie' defence ... a 'serious' defence ... or has merits to which 'the Court should pay heed' ..."

58 In Allen v Taylor [1992] 1 PIQR P255, a differently constituted Court of Appeal took a somewhat different approach. Dillon LJ (with whom Steyn LJ agreed), having referred to the above passages from The Saudi Eagle, said "[i]t is quite impossible to be dogmatic about the extent to which the court must be satisfied of the validity of the suggested defence. There must be numerous cases where the issue will turn entirely on the assessment of the facts at trial; each party's case would carry conviction if it stood alone and without conducting a trial the court is not able to say which will succeed."

59 In Day v RAC Motoring Services Ltd [1999] 1 All ER 1007, Ward LJ, referred to The Saudi Eagle and Allen v Taylor, and to The Supreme Court Practice 1999, at par 13/9/18, where the editors said that the view in Allen v Taylor was not easily reconcilable with the robust approach of The Saudi Eagle and was a dilution of it. The learned editors said the preferred view was that unless potentially credible affidavit evidence demonstrates a real likelihood that a defendant will succeed in fact, no "real prospect of success" is shown and relief should be refused. Ward LJ went on (at 1013):

"For my part, I am a little concerned about that note. I think it is yet another move of the goalposts. This may be largely a matter of semantics and it would be better if the differences in language in these cases could be viewed as the emphasis in a particular case to the particular facts of that particular case. Perhaps the best guidance of all is in Sir Roger Ormrod's judgment that this is not a rule of law but a matter of common sense. Thus, it is usually easy to identify the case which is hopeless and say 'there is no real prospect of success'. I add the emphasis to make the point that one is looking at the matter negatively. The approach is distorted if one uses 'real prospects of success' as a positive test. That wrongly encourages a test of judging fact on affidavit and then coming to a provisional view of the probable outcome. I agree, however, that the arguable case must carry some degree of conviction but judges should be very wary of trying issues of fact on evidence where the facts are apparently credible and are to be set aside against the facts being advanced by the other side. Choosing between them is the function of the trial judge, not the judge on the interlocutory application, unless there is some inherent improbability in what is being asserted or some extraneous evidence which would contradict it."

60 In the same case, Butler-Sloss LJ did not consider The Saudi Eagle and Allen v Taylor to be in any way in conflict, saying that the statement of Sir Roger Ormrod that the "arguable" defence must carry some degree of conviction simply meant that if it did not carry a degree of conviction, it was not going to be a reasonable defence and it would not be proper to set aside the judgment to allow the defendant to raise it.

61 In Western Australia, in Rollond v Bank of Western Australia Ltd, unreported; FCt SCt of WA; Library No 980498; 3 September 1998, Malcolm CJ (with whom Kennedy and Owen JJ agreed) said (at 36) that in an application of this sort the primary question must be "whether the applicant has a sufficient defence on the merits". Malcolm CJ referred with apparent approval to the statement in Kostokanellis v Allen [1974] VicRp 71; [1974] VR 596 that the primary consideration was whether the applicant has merits to which the Court should pay heed. Having considered another aspect of the matter, Malcolm CJ then turned to the merits of the applicant's defence. His Honour referred to The Saudi Eagle and, in particular, the statement of Sir Roger Ormrod that it is not sufficient for the defendant to show an "arguable case" but that in order to arrive at a reasoned assessment of the justice of the case, the Court must form a provisional view of the outcome if the judgment were set aside. Malcolm CJ concluded (at 41) that:

"[F]or an application to set aside a default judgment to be successful, the defendant must present a credible defence demonstrating that, if the default judgment was set aside and the matter was argued on its merits, the defendant would have a real prospect of success."

62 Subsequently, in Parker v Transfield Pty Ltd [2000] WASCA 382, Malcolm CJ (with whom Ipp and Wallwork JJ agreed) repeated (at [3]) that test, which he described as a reformulation of the test in Palmer v Prince that the issue is whether there is a reasonably arguable defence on the merits such that the default judgment should not be allowed to stand. Malcolm CJ concluded in that case that the respondent had demonstrated that they had a credible defence and would have a real prospect of success, although ultimately the outcome at trial would depend upon whether the respondent's evidence was accepted.

63 It is apparent that what a defendant will generally be required to show by way of a defence on the merits has been expressed in a number of ways that, in their terms, are not always easy to reconcile. There are, however, two fundamental principles that I think have never been doubted. The first is that the discretion is unfettered and no hard and fast rules can be laid down as to how it is to be exercised. The second is that the discretion is to be exercised so as to do justice between the parties, having regard to the particular circumstances of the case.

64 It seems to me, with respect, that there is force in the suggestion of Ward LJ in Day v RAC Motoring Services Ltd that the different verbal formulations in the cases are properly to be viewed as emphasis in the context of the facts of the particular case. It is obvious that the weight or emphasis to be given to the various factors that fall for consideration in the exercise of the discretion will vary from case to case, as the circumstances differ. And the circumstances may differ very widely; for example, from cases where there is a serious question as to the defendant's bona fides through to cases of a simple oversight by the defendant, or its agent, which it promptly seeks to remedy.

65 Given particularly the general nature of the discretion, it would, in my view, be wrong to place too much store on the precise terms in which the test has been expressed from time to time, isolated from the particular factual circumstances.

66 Again, with respect, it seems to me there is obvious force in the observation of Ward LJ that courts should be very wary about attempting to come to a provisional view as to the probable outcome of a defence involving issues of fact, based on the affidavit evidence available on an application of this nature, unless there is some inherent improbability in what is being asserted or some extraneous evidence which would contradict it. The evidence before the Court on such an application is necessarily limited and generally untested by cross-examination, and it is not appropriate to seek to resolve disputed questions of fact on the affidavit evidence: Lau v Citic Australia Commodity Trading Pty Ltd (supra).

67 I do not, however, understand the decisions of the Full Court in Rollond v Bank of Western Australia Ltd and Parker v Transfield Pty Ltd to require such a course to be undertaken. That is, I do not understand the statements in those cases to the defendant having a "credible defence" which would have "a real prospect of success" to be referring to a provisional view as to probable findings of fact at trial. Rather, I understand the Court to mean that it must appear from the affidavit material before the Court that the defendant's case is not inherently incredible and that if the defendant's evidence were accepted at trial the defendant would have a real prospect of success.

68 It is necessary then to turn to the defence sought to be advanced by the defendant in this case.

69 It was submitted on behalf of the plaintiff that the defendant had failed to show a sufficient defence to the plaintiff's claim, given the direct evidence of the plaintiff that she did not intend to give the defendant any interest in the Villa.

70 The defendant relies upon a presumption of advancement to contend that she has a beneficial half interest in the Villa.

71 It was not in issue on this application that a presumption of advancement will arise where the legal title to property which is paid for by a mother is vested in the name of an adult child: see Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538.

72 The operation of the presumption can, of course, be rebutted by evidence of the actual intention, at the time of purchase, of the person who provided the purchase price. Evidence may also be given to support the presumption of advancement.

73 In order to ascertain the true intention of the person who paid the purchase price, the Court will receive evidence from that person as to their intention and will receive evidence of the circumstances surrounding the transfer, for example, the relationship of the parties and statements made by them. Evidence of acts and statements of the parties made before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, will be admissible either for or against either party. But in respect of subsequent acts and declarations it must be established that they are against the interests of the person doing the act or making the statement. They are not admissible in favour of the person doing the act or making the statement: Calverley v Green [1984] HCA 81; (1984) 155 CLR 242, Bryson v Bryant (1992) 29 NSWLR 188 at 215.

74 I consider that on the evidence before me the defendant has a reasonable prospect of success on her defence that she has a beneficial interest in the Villa by reason of the presumption of advancement.

75 On the defendant's case, the plaintiff made clear her intention that the defendant should have such an interest in oral statements made before or at the time of the acquisition of the Villa.

76 The plaintiff denies any such intention, but her explanations as to how the defendant came to be registered as a joint tenant are not necessarily entirely consistent.

77 In the letter of 13 October 2006, the plaintiff's solicitors say they are instructed:

1. on the day appointed to attend the offices of the agent in connection with the purchase documentation, you [the defendant] escorted our client, your mother, to the agent's office;
2. at the agent's office, your mother was asked for her full correct name for inclusion to the title to the property;
3. when our client finished providing her requested details to the agent, you asked for your name to be added as well to the title;
4. our client did not realise the implications of paragraph 4 above and made no queries of you or expressed any concern because you were (and are) her daughter;
5. our client has discovered that both she and you had been listed as joint owners of the property and recently understood the implications of this when she investigated selling the property;
6. it was never intended by our client to purchase the property jointly or in any manner with yourself".

78 In her statutory declaration of 19 February 2007, the plaintiff appears to put it somewhat differently. There she says:

"12. On the day I was to sign the paperwork for the purchase of the Unit, [the defendant] accompanied me to the Real Estate Agent's office.

1. Whilst we were there she said to me that I should put her name on the title for the Unit as she had a safe deposit box and could keep the paperwork for the Unit in the safe deposit box if her name was on the title.
2. I was in a traumatic state having recently lost my husband and selling the Rea Street property which we had built and lived in for around 50 years, and accepted [the defendant's] proposal."

79 Those apparent differences may, of course, be readily explained when the relevant evidence is heard and I am conscious, too, that the plaintiff is of advanced years and the events referred to took place some years ago. But such matters serve to emphasise that the ultimate outcome of the case, if the judgment is set aside, will depend upon findings of fact that cannot be assessed at this stage.

80 Similarly, the defendant's counsel argued that the plaintiff's letter to the defendant of 21 January 2001 - in which the plaintiff explains why she is "leaving" the Villa to the defendant - is consistent with the defendant's case, as is the letter to the defendant's sister of 14 January 2001 where the plaintiff says in respect of the Villa that the defendant "will live here eventually".

81 Of course, that correspondence is some time after the transaction and it is capable of referring to a bequest by will. But again it emphasises that the issue of the plaintiff's intention can only properly be ascertained when all the relevant evidence is heard, and can be tested, at a trial of the action.

82 There were other matters that the defendant's counsel contended showed clear discrepancies between the plaintiff's statutory declaration and the statements made in her letters of January 2001, which reflected adversely on the plaintiff's credibility. I do not think it is necessary to go into those for present purposes. Suffice it to say that they are matters for trial.

83 In the circumstances, it appears to me that the defendant's case is not inherently improbable and if her evidence were accepted at trial the defendant would have a real prospect of success.

84 I should mention, lest it be thought it has been overlooked, that on both sides there was evidence which was not directly addressed by the other side in their affidavits. While those were referred to in argument, and each counsel sought to make something of them, I do not think that in this case the determination of the application is advanced by an examination of those instances. The essential case sought to be made by each party is clear and, as I have said, turns on questions of fact that can only properly be canvassed and determined at a trial.

85 I should also say, for completeness, that no point was taken by the plaintiff about any delay in bringing this application and it was not suggested that the plaintiff would suffer any substantial prejudice if the judgment were set aside. I also did not understand the plaintiff to contend that the defendant must provide a satisfactory explanation for her failure to enter an appearance to the writ. In any event, I consider that that has been satisfactorily explained.

86 I consider that the interests of justice require that the default judgment be set aside. I will hear the parties on what further orders should be made to facilitate the resolution of the action and on costs.