Default judgment was entered in the Local Court in July 2023 in Mr Goldberg's favour in proceedings which he commenced in January of that year. He sought damages, including aggravated and exemplary damages, for serious injuries he claimed he had suffered, while at a gym. Mr Hannan, an experienced professional boxer was employed as a coach and conducted the training session in which Mr Goldberg participated. Mr Goldberg claimed that it was during that session that Mr Hannan first injured him, in breach of the duty of care he was owed, while they were sparring, and then again outside the ring, when Mr Hannan assaulted him with his bare hands, breaking his jaw.
The default judgment now leaves only damages to be assessed.
Mr Goldberg brought the proceedings in January 2023, but Mr Hannan did not defend his claims, with the result that the default judgment was entered by the Court on Mr Goldberg's application. Mr Hannan later made an unsuccessful application by motion, supported by a short affidavit he had sworn in August 2023, to have that judgment set aside, after he took advice from his solicitor as well as counsel.
That application was refused at the October 2023 hearing before Dunlevy LCM, where Mr Hanan was legally represented and Mr Goldberg was not. Mr Hannan now seeks leave to appeal and to appeal that decision under s 40(2)(a) of the Local Court Act 2007 (NSW). That was opposed.
In the Local Court there was an issue about when Mr Hannan became aware of the statement of claim, he and Mr Goldberg relying on conflicting affidavit evidence about its service; as well as about when the default judgment came to Mr Hannan's attention; and whether Mr Hannan had established an evidentiary basis for the order which he sought. Neither Mr Hannan nor Mr Goldberg were cross examined about their evidence.
Mr Hannan wishes to defend Mr Goldberg's claims, on his case having bona fide defences to advance on fairly arguable matters of law and fact. He contends that his Honour erred in law in taking into account an irrelevant consideration, namely, that his affidavit did not annex a draft defence. According to Mr Hannan, the basis of his defence was adequately outlined in his affidavit. He further contended that his Honour had misapprehended the applicable legal principles; and had failed to consider whether the evidence Mr Hannan relied on raised an arguable or triable issue, as it clearly did.
Mr Hannan's case on the appeal was supported by his own affidavit evidence and that of his solicitor, Mr Yardy, who explained that while the proceedings had been commenced in January 2023, a notice of appearance was only filed on 27 July, the day before the motion for default judgment was filed. Judgment was entered by the Court on 31 July, without the parties having been heard. The motion to set aside that judgment was filed on 25 August and written submissions were advanced at the hearing on 3 October.
They identified that there was an issue about the service of the statement of claim; whether the default judgment had been obtained irregularly, given when the application for default judgment was made; and that there was a bona fide defence. Those submissions, it must be observed, advanced factual matters which Mr Hannan had not dealt with in his affidavit.
Mr Goldberg relied on affidavits he had sworn. He contended that Mr Hannan had failed to meet the onus which fell upon him in the Local Court to establish an evidentiary basis for his application, as the authorities held he had to do. He thus opposed both the leave Mr Hannan sought being granted and his appeal being upheld. His case was that Dunlevy LCM had arrived at the correct conclusion in refusing the application, given the binding authorities which had to be followed.
[2]
Conclusions
While I am satisfied that the leave that Mr Hannan requires should be granted, on the evidence I am also satisfied that his appeal cannot be upheld. That is because in the Local Court, he did not meet the onus which fell upon him to establish an evidentiary basis for the making of the order he sought, as he had to, if the default judgment was to be set aside.
In the result his appeal must be dismissed.
[3]
Issues
Mr Hannan's grounds raised a number of issues. He contended that:
1. Dunlevy LCM erred in the exercise of his discretion in failing to take into account a relevant consideration, namely, his unchallenged affidavit evidence that he had bona fide defences to each of the claims brought against him that were fairly arguable in law and fact.
2. Dunlevy LCM erred as a matter of law in taking into account an irrelevant consideration, namely, that his affidavit was not accompanied by a draft defence in circumstances where he had given unchallenged affidavit evidence setting out the basis of his defence of Mr Goldberg's two claims.
3. Dunlevy LCM erred as a matter of law in the exercise of his discretion in misapprehending the legal principles to be applied in an application to set aside a default judgment. His Honour gave no proper consideration to the unchallenged evidence that Mr Hannan had established by his affidavit evidence that he had a bona fide ground of defence on the merits. His Honour also erred in failing to consider as a matter of law whether that evidence raised, as it clearly did, an arguable or triable issue in respect of both of Mr Goldberg's allegations.
4. Dunlevy LCM erred as a matter of law in failing to find that Mr Hannan had demonstrated by his unchallenged affidavit evidence a prima facie defence on the merits.
The issues which arose to be determined included:
1. Whether the leave to appeal sought should be given.
2. Whether Dunlevy LCM erred in:
1. failing to take into account or give appropriate weight to the evidence which Mr Hannan relied on to establish that he did have a bona fide defence, he having disclosed the facts he relied on, in the necessary way; and
2. taking into account an irrelevant consideration, namely, Mr Hannan's failure to have provided a draft or proposed defence.
1. Whether Mr Hannan's delay in making his application provides a just basis for now refusing his appeal.
[4]
Mr Hannan
Mr Hannan's case was that the required leave ought to be granted pursuant to s 40 of the Local Court Act because if his Honour's errors were not corrected, he would suffer a significant miscarriage of justice due to his inability to raise his bona fide defences.
Further, he submitted that those defences had been sufficiently established by his affidavit evidence, unchallenged in the Local Court, the Rules not requiring an applicant to provide a draft defence. All that was required was that he establish by his evidence that he had a bona fide defence to advance.
On Mr Hannan's case, his unchallenged affidavit evidence provided such evidence, both as to self defence and the statutory defence under s 5L of the Civil Liability Act 2002 (NSW). What the latter required was explained in Tapp v Australian Bushmen's Campdraft & Rodeo Association (2022) 273 CLR 454; [2022] HCA 11 at [104]. It required proof of only four things:
"(i) the plaintiff was engaged in a "recreational activity";
(ii) the recreational activity was dangerous in the sense that it involved "a significant risk of physical harm";
(iii) there was a risk of that activity that was obvious; and
(iv) the harm was suffered by the plaintiff as a result of the materialisation of that obvious risk."
In the Local Court it had been submitted that there were arguable facts going to all the relevant matters, disclosed in the necessary way by the affidavit evidence. They included that a police investigation had been pursued, in the course of which CCTV footage had been reviewed. It was thus argued that there could be no suggestion that the prospective defences raised by Mr Hannan's affidavit were frivolous or lacked credibility.
Mr Hannan also contended that the reasons given for the refusal of his application made no reference to his cogent evidence or the arguments which had been advanced, that demonstrating that they had either received no, or no proper, consideration.
As relevant considerations had not been taken into account, the result was real injustice to Mr Hannan, given the miscarriage of the discretion which had been exercised to refuse his application to set aside the default judgment so that he could defend Mr Goldberg's claims on their merits.
[5]
Mr Goldberg
Mr Goldberg's detailed case included, in short, that:
1. Dunlevy LCM's decision to dismiss Mr Hannan's motion to set aside default judgment reflected his view about Mr Hannan's lack of credibility. That was demonstrated by his preference for Mr Goldberg's evidence about the disputed service of the pleadings, an issue between the parties which they had addressed at the hearing and had implicitly been decided in his favour.
2. Dunlevy's LCM's conclusion reflected that Mr Hannan's application was without merit. In the Local Court he had failed to file an arguable defence supported by material facts, as the Uniform Civil Procedure Rules 2005 (NSW) required. Nor had he filed a draft defence, which would have also disclosed those facts. The evidence he had led did not disclose such facts or establish that he had a bona fide defence to advance, as it had to.
3. Merely indicating in his affidavit that self-defence and s 5L would be relied on and that CCTV footage and witnesses existed, did not satisfy the obligation which fell upon him to disclose the relevant facts on which his defence would be advanced.
4. The second ground Mr Hannan advanced was frivolous. That was because Dunlevy LCM did not take into account the fact that no defence had been filed in isolation from the total circumstances of the case which arose to be considered.
5. Mr Hannan's third ground, misapprehending the applicable principles, which was interwoven with the first and second, was also without basis given the evidence and conclusions reached.
[6]
The applicable principles
The principles which applied to Mr Hannan's application were in summary:
1. On an application such as this a defendant should swear to facts which, if established at the trial, will afford a defence and should establish his bona fides in setting up that defence: Simpson v Alexander (1926) 26 SR (NSW) 296 at 301.
2. What is generally required to obtain a grant of leave from an interlocutory judgment is a demonstration that there is a question of principle, or a matter of public importance involved, or an injustice which goes beyond that which is merely arguable: Michail v Mount Druitt and Area Community Legal Centre Inc [2015] NSWCA 396 at [49].
3. Further, on an appeal from an interlocutory judgment involving matters of practice and procedure, it must ordinarily be shown "that the application gives rise to a question of principle or that the decision appealed from has worked a substantial injustice": Hassoun v Wesfarmers General Insurance Limited t/a Lumley General [2016] NSWCA 76 at [22].
4. On an application to set aside default judgment, the three relevant factors arising to be considered were identified in Dai v Zhu [2013] NSWCA 412 at [66] and [83] to be:
1. whether the applicants had an arguable defence;
2. whether they had provided an adequate explanation for the delay in filing a defence; and
3. whether the respondents would be prejudiced if the default judgment were set aside.
1. Ultimately, it is necessary to consider whether it is in the interests of justice to set aside a default judgment, in order to permit the applicant to defend a case on the merits: Dai at [83].
2. The effect of ss 56-59 of the Civil Procedure Act 2005 (NSW) is that the Act's overriding purpose, the just, quick and cheap resolution of the real issues in the proceedings, must also be taken into account in resolving what is in dispute: Dai at [84]-[88].
3. On an application to set aside a default judgment entered in the absence of a defence, what must ultimately be established is that the defendant has a bona fide defence on the merits: Dai at [92].
4. That does not require proof that a different result is likely should the judgment be set aside and a new trial ordered, but rather that it is reasonably clear that there is a defence capable of producing a different result and if that defence depends on facts, "then there should be some evidence of those facts": Magnate Projects Pty Ltd v Youma Constructions (No.2) Pty Ltd [2005] NSWCA 331 at [52].
[7]
The challenged decision
The transcript of the proceedings in the Local Court, which included Dunlevy LCM's oral decision, was in evidence. It was given immediately after the parties led their affidavit evidence and advanced their written and oral submissions.
His Honour's reasons for dismissing the motion were then very shortly given:
"And so in circumstances where a draft defence hasn't been prepared and provided to the court or to the plaintiff, and where the position of the first defendant is quite vague in terms of how the matter will be defended, and the only evidence the court has is a relatively short procedural affidavit, I HAVE DECIDED THAT THE DEFAULT JUDGMENT SHOULD BE CONFIRMED AND THE MOTION DISMISSED."
On the appeal the parties accepted that his Honour had not thereby explained how he had resolved the issue then lying between them about whether the default judgment could have been lawfully entered when it was, that depending on a dispute about service. This turned on the competing evidence which Mr Hannan and other witnesses had given about the time of service. The parties' cases also turned on the explanation for Mr Hannan's delay in making his application, an issue which his Honour also did not deal with in his reasons.
But Mr Hannan accepted in these proceedings that his evidence about these matters had not been preferred, with the result that his case about entry of judgment contrary to the applicable Rules was not accepted. No complaint was made about that conclusion. Nor was any complaint advanced about the inadequacy of the reasons which his Honour gave for the other conclusions which he arrived at.
[8]
Should the leave sought be given?
There was no issue about the Court's power to grant the leave sought or the applicable principles, which must also be approached in the context of the requirements of ss 56-58 of the Civil Procedure Act. That requires the overriding purpose there specified, the just, quick and cheap resolution of the real issues in the proceedings to be born in mind.
Mr Hannan's case was that the leave he sought should be given, he having been the victim of real injustice, because the default judgment had deprived him of a chance to resist the serious claims Mr Goldberg had advanced against him. The result, that he had not had the opportunity to pursue his case on liability, unjustly now left only the question of damages to be resolved.
That was opposed by Mr Goldberg, his case being that Mr Hannan had failed to establish by his evidence in the Local Court, as he had to, that he did have a bona fide defence to advance. Nor had he adequately explained his failure to file a defence, or make a timely application to set aside the default judgment in the Local Court, that being relevant to the view Dunlevy LCM took of his evidence.
On all the evidence I am satisfied that the leave Mr Hannan sought should be given.
I have been persuaded to that conclusion by the cases which the parties advanced in the Local Court and how they were resolved. That is, by the giving of reasons which did not deal with all that was in issue between the parties and which dealt so shortly with Mr Hannan's case that he had a bona fide defence to Mr Goldberg's claims which he wished to pursue on the merits, even though there was no complaint about the adequacy of the reasons which his Honour gave.
[9]
Should the appeal be upheld?
But I have reached a different conclusion in relation to the appeal.
[10]
Injustice
The result of what Dunlevy LCM ordered, that Mr Goldberg's claims will be decided after entry of a default judgment, was relied on to advance Mr Hannan's appeal. But that cannot, of itself, establish the required injustice which must be established, notwithstanding the seriousness of what Mr Goldberg pursues against Mr Hannan.
Entry of default judgment is a course permitted by the applicable Rules when a defendant fails, as Mr Hannan did, to take advantage of the opportunity they provide to defend a claim. That is, by filing a defence within the time the Rules permit, or any extension which the Court may grant, before that time expires.
Here no extension was sought by Mr Hannan before default judgment was entered in accordance with the applicable Rules, even when a notice of appearance was filed. The timing of the filing of that notice only the day before the application for entry of default judgment, which the Local Court then dealt with promptly, as the Rules permitted, establishes no injustice. That reflects the normal operation of the Rules, no defence having been filed.
The result was that in accordance with the Rules, Mr Hannan lost the opportunity they afforded him to dispute his liability for Mr Goldberg's injuries, that leaving only damages to be assessed. To regain that opportunity, Mr Hannan had to disclose on an application to set aside the default judgment, the facts which he claimed gave him a bona fide defence.
There is no injustice in that requirement, or the refusal of an application if the onus which falls on an applicant to make the necessary disclosure is not met.
[11]
Delay
Mr Goldberg relied on Mr Hannan's further delay in making his application to set aside the default judgment, to resist his appeal. That can be dealt with shortly.
There is no appeal against the rejection of the case Mr Hannan advanced in the Local Court about service of the statement of claim or entry of default judgment not being available under the Rules, at the time Mr Goldberg made his application.
Mr Hannan's delay in making his application to set aside that judgment was not dealt with by Dunlevy LCM. But that was explained by the further time taken while he obtained advice from both his solicitor and counsel. That Mr Goldberg suffered any prejudice as a result, other than possibly having to establish his case on liability on the merits, if Mr Hannan's application to set aside the default judgment succeeded, is not apparent. This is because his damages case has not yet been heard.
I am thus satisfied that the timing of Mr Hannan's application to set aside the default judgment alone could not provide a just basis for refusal of his appeal.
[12]
Did Mr Hannan meet the evidentiary onus which fell upon him?
I have reached a different conclusion about the dispute over the evidence on which Mr Hannan relied in the Local Court to meet the onus which fell upon him on his application to set aside the default judgment.
What Mr Hannan had to do to satisfy that onus was to swear to facts which, if he established them at the trial, would provide a defence. That would also establish his bona fides in setting up that defence.
I am not persuaded that the conclusion which his Honour finally arrived at, that Mr Hannan had not met that onus, was incorrect, given the paucity of the evidence he advanced. The short affidavit he relied on to meet his evidentiary onus may conveniently be quoted in its entirety:
"1. I am the first defendant.
2. I did not become aware of the court proceedings until on or about 10 July 2023 when former girlfriend who resides at 12-20 Rosebery Avenue, Rosebery contacted me to advise me that some paperwork intended for me had been served on her at her residential address - I have not lived at the Rosebery address for more than 12 months.
3. My residential address is XXX.
4. After being made aware of the plaintiff's claim I sought legal advice from Kenneth Vardy, Solicitor as to the best course of action.
5. I was advised by Mr Vardy that he would contact the plaintiff to request that he not seek judgement until I had some time to prepare a defence.
6. Mr Vardy spoke with the plaintiff by telephone on 27 July 2023 to advise the plaintiff that Mr Vardy would be representing me. The plaintiff advised Mr Vardy that he was busy and that he would call him straight back. The plaintiff did not return Mr Vardy's call.
7. Mr Vardy filed a Notice of Appearance to represent me in the matter on the same day, 27 July 2023.
8. On 8 August I had my first opportunity to meet with Mr Vardy at his office to discuss the matter in detail. It was determined at that meeting that I had a valid defence to this claim:
First count
a. I deny that I breached any duty of care owed to the plaintiff and that any alleged injury did not come about as a result of assault or battery but in the course of recreational activity engaged by the plaintiff in respect of which I will rely on section 5L of the Civil Liability Act 2002.
Second count
b. My conduct was carried out in self-defence and in response to an assault on me by the plaintiff. I intend can produce CCTV footage and witness statements attesting to the p[plaintiff's [sic] assault and my act in self-defence.
9. I was only made aware that judgement had been entered when advised by Mr Yardy on 11 August 2023. Mr Yardy discovered that judgement had been entered by chance when retrieving the plaintiff's claim from the online court for reference when drafting a letter to the plaintiff seeking further and better particulars.
10. Neither I, nor my Solicitor, Mr Yardy were served with the plaintiff's notice of motion for default judgement, dated 31 July 2023 or the subsequent Notices of Listing dated, 31 July 2023 and 2 August 2023 which had all been addressed to 12-20 Rosebery Avenue, Rosebery NSW 2018.
11. The reason why there has been a delay in bringing proceedings to set aside judgement is:
a. I was only made aware of the default judgement on 11 August 2023.
b. Due to work commitments, I have been unable to attend my solicitor's office to sign this Affidavit until this day 25 August 2023.
c. This is the first opportunity I have had to bring proceedings to set aside judgement and I believe the delay has been reasonable."
This explains why Dunlevy LCM described the affidavit as a "short procedural affidavit". The highlighted passages explained the advice Mr Hannan had been given that he had valid defences, that no doubt reflecting his instructions, including about the existence of CCTV footage and the availability of witness statements.
But those passages did not disclose the facts on which Mr Hannan would rely to advance those defences. Even if the submissions which were advanced by his solicitor at the hearing about other facts were relevant, so was that they were not ones that Mr Hannan had sworn to, as he needed to do.
The relevant written submissions were also brief:
"The first defendant has clear grounds of defence in respect of each of the counts of damages asserted by the plaintiff.
First count
Any injury alleged to have been sustained by the plaintiff took place in the course of the plaintiff's pursuit of recreational activity in the form of sparring.
The first defendant was not made aware of any harm sustained by the plaintiff whilst sparring and is in any event not liable for harm alleged by the plaintiff pursuant to s5L of the Civil Liability Act (the "CLA"), nor is a duty of care owed by the plaintiff in the circumstances in which the plaintiff was warned of the risks - of which the plaintiff had.
Second count
In respect of the plaintiff's second count of damages the first defendant will rely on the defence of self-defence in the relevant circumstances in which the plaintiff, having suffered a bruised ego proceeded to accost, threaten and ultimately strike the first defendant at the conclusion of the sparring session and once outside of the ring and all safety equipment had been removed. The first defendant responded with a single blow in self defence which had the desired effect of discontinuing the plaintiff's assault on the first defendant.
The first defendant intends to produce evidence of the same by way of CCTV footage and witness statements provided by other attendees of the class.
Significantly, the court is also advised that the NSW Police, having reviewed CCTV footage and interviewed witnesses, preferred the version of events offered by the first defendant and declined to press charges in response to the plaintiff's complaint."
Those submissions plainly went beyond Mr Hannan's evidence and can also only have reflected his instructions. In oral submissions what was put was that counsel's advice had been obtained, and that it "tends" to Mr Hannan having such two defences.
No reference was then made to Tapp, which was relied on in these proceedings to explain what a s 5L defence involves. But what was there decided makes plain that such a defence depends on evidence that the harm suffered was the result of the materialisation of an obvious risk, rather than as the result of assault. That was not addressed by what Mr Hannan disclosed.
On his limited evidence I am satisfied that contrary to the case advanced for Mr Hannan, Dunlevy LCM was correct in concluding that he had not met the onus which the authorities explain fell upon him.
They required Mr Hannan to do more than identify the defences which he wished to advance. Both of those defences depend on facts. He thus not only had to disclose those facts, but also swear to their existence, in order to establish his bona fides in setting up his proposed defences.
That he did not do.
Without such a disclosure of the facts Mr Hannan wished to rely on to advance his defences, that those defences were arguable could not be determined.
On the appeal it was argued that what Mr Hannan had disclosed was still sufficient, because "the undisputed evidence before the magistrate was, a response to an assault, a denial and two types of evidence supporting the rejoined defence of self defence". Further, "no requirement would be made by Mr Hannan in pleading that defence to disclose the nature and type of evidence that he sought to call in support".
That cannot be accepted, given what the authorities require be disclosed and sworn to, on an application to set aside a default judgment. Mr Hannan did not disclose, as he needed to, that a factual basis for the defences which he wished to pursue existed. He had to do more than merely indicate that he wanted to defend Mr Goldberg's claims and that after taking advice, he intended to rely on arguments advancing s 5L of the Civil Liability Act and self-defence.
The facts which made those defences arguable were not established by his disclosure that either CCTV footage or witness statements existed. Particular facts which a defendant discloses may or may not meet the onus of establishing that there is a bona fide defence to advance. That is for the Court to determine, on the facts which are disclosed by the evidence. On what Mr Hannan disclosed, it was not possible for Dunlevy LCM to arrive at the required satisfaction.
One convenient way for such facts to be disclosed on an application to set aside a default judgment is undoubtedly by the provision of a draft defence which a defendant deposes he or she seeks to pursue. That is because under the Rules such a pleading must contain a summary of the material facts on which the defendant relies: r 14.7. It must also state the effect of any spoken words referred to, so far as material: r 14.9. And it must plead specifically any matter that if not pleaded specifically, may take the plaintiff by surprise: r 14.14(2)(a).
Mr Hannan has still not provided any draft defence.
The authorities establish that he did not need to do so, in order to succeed on his application or the appeal. But having elected to pursue that course in the Local Court, the facts which he would rely on to establish defences capable of producing a result different to that which had flowed from entry of the default judgment, had to be disclosed by the evidence which he gave.
It was not sufficient for Mr Hannan to merely disclose that having taken advice, he wished to advance self-defence and a defence under s 5L. Nor was a disclosure that CCTV footage and witness statements existed.
In the result, while it may be accepted that neither the Rules nor the applicable authorities required Mr Hannan to provide a draft defence in order for his application to set aside the default judgment to succeed, his Honour did not err in refusing his application. The required disclosure of the facts which Mr Hannan proposed to rely on in advancing a defence under s 5L and in reliance on self-defence not having been made, his application could not succeed because the evidence he relied on was incapable of establishing that he had bona fide defences to advance.
Mr Hannan has thus not shown that Dunlevy LCM was wrong in concluding that he had not met the onus which fell upon him on his application. That is so notwithstanding that the result is that he will not have the opportunity he belatedly sought to resist Mr Goldberg's case on liability. In all the circumstances which arise to be considered, that outcome is not unjust.
[13]
Costs
The usual order under the Rules is that costs follow the event. In this case, that is an order that Mr Hannan bear Mr Goldberg's costs of these proceedings, as agreed or assessed.
Unless the parties approach to be heard within 14 days with short written submissions, that will be the Court's order.
[14]
Orders
For these reasons I order that:
1. Leave to appeal is granted;
2. The appeal is dismissed; and
3. Unless the parties approach to be heard within 14 days with short written submissions, the Court's order will be that Mr Hannan bear Mr Goldberg's costs of the proceedings, as agreed or assessed.
[15]
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: 22 April 2024