HEARSE & ANOR v PALLISTER & ORS

LEGISLATION CITED : Civil Procedure Act 2005 Duties Act 1997

American Home Assurance Co v Ampol Refineries Limited (1987) 10 NSWLR 13 Baker v Furlong (1891) 2 Ch D 172 Balog v Crestani (1975) 132 CLR 289 Banque Commerciale SA, En Liq v Akhil Holdings Limited (1990) 169 CLR 293 Bava Holdings Pty Limited v Pando Holdings Pty Limited (1998) 8 BPR 16,295 Bomanite Pty Limited v Slatex Corp Australia Pty Limited (1991) 32 FCR 379 Commercial Union Assurance Co of Australia Limited v Ferrcom Pty Limited (1991) 22 NSWLR 389 Dawson (1941) 41 SR(NSW) 295 Evans v Bartlam [1937] AC 473 Fekala Pty Limited v Castle Constructions Pty Limited [2002] NSWCA 297 GE Commercial Finance Australia Limited v Meredith [2009] NSWSC 327 Grundt v Great Boulder Pty Limited (1937) 59 CLR 641 Hearse & Anor v Pallister & Ors [2009] NSWSC 406 CASES CITED : Kingdon v Kirk (1887) 37 Ch D 141 Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 Narayan v Swaleh [2005] NSWSC 1248 Ng v Chong [2005] NSWSC 270 O'Brien v v Dawson (1941) 41 SR(NSW) 295 Pearce v Kelly (1919) 20 SR(NSW) 88 Shenstone v Hewson (No 2) (1928) 29 SR(NSW) 39 Stickney v Keeble [1915] AC 386 Stone v Smith (1987) 35 Ch D 188 Taylor v Raglan Developments (1981) 2 NSWLR 117 Townsend Controls Pty Limited v Gilead & Anor (1989) 16 IPR 469 Vacuum Oil Co Pty Limited v Stockdale (1942) 42 SR(NSW) 239 Walton (Stores) Limtied v Maher (1988) 164 CLR 387 Water Board v Moustakas (1987-1988) 77 ALR 193 Zhang v VP 302 SPV Pty Limited [2009] NSWSC 73

TEXTS CITED : Professor Butt - The Standard Contract for Sale of Land in New South Wales (2nd ed), LBC Information Services 1988

PARTIES : Phillip Baden HEARSE & ANOR v Mark James PALLISTER & ORS

P: R W Tregenza COUNSEL : 1D: A J McInerney 3-5D: G Curtin

P: Lander & Lander SOLICITORS : 1D: Ellison Tillyard Callanan 3-5D: Henry Davis York

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

PHILLIP BADEN HEARSE & ANOR v MARK JAMES PALLISTER & ORS

JUDGMENT (Application by first defendant to have the judgments and orders of 27 May 2008 and 2 July 2008 set aside)

(1) INTRODUCTION 1 The defendant, Mark James Pallister (to whom I shall refer as "the applicant"), makes application by notice of motion filed on 26 February 2009 for orders setting aside judgments and orders made against him on 27 May 2008 and 2 July 2008 arising out of the failure by him to complete a Contract for Sale of land dated 16 December 2004 for the purchase of residential premises at Clontarf, Sydney. 2 The application is made pursuant to Part 3.6 Rule 36.16 of the Uniform Civil Procedure Rules 2005, in particular, under Rule 36.16(2)(b). 3 The purchase price for the property was $3,800,000 and the date for completion specified in the contract was 20 February 2005.

(2) EVIDENCE 4 In support of the application, the applicant relied upon his own affidavit sworn on 7 May 2009. The exhibits to the affidavit were marked as MP-1 to MP-11 which were presented in a separate folder. 5 The applicant also relied upon the following affidavits:- "(a) Mr Mark Pallister sworn 27 May 2005; (b) Mrs Vanessa Pallister sworn 6 May 2005; (c) Mr Peter Lander sworn 16 January 2007; (d) Mr Phillip Hearse sworn 23 January 2007; (e) Mr Dennis Staunton sworn 6 November 2007; (f) Mr Michael Callanan sworn 25 February 2007." 6 The plaintiffs/respondents tendered Exhibit B being copies of email correspondence between Somerville & Co, solicitors, who formerly acted for the applicant and Mrs Pallister (formerly marked as MFI 6). 7 On behalf of the applicant, the following documents were tendered:-

(2) Exhibit 2: Document showing international travel of the applicant during the period 13 January 2006 to 21 January 2009.

(3) Exhibit 3: Bundle of correspondence/file notes for the period 26 June 2007 to 7 November 2007.

(4) Exhibit 4: Email correspondence between Somerville & Co, solicitors, and the applicant.

(3) UNDERTAKING BY THE APPLICANT 8 The applicant's undertaking provides for the payment of $100,000 into a nominated account in respect of costs arising by reason of the abovementioned judgments and orders made on 27 May 2008 and 2 July 2008. The undertaking was expressed to be given in relation to the following costs:- "(i) the Plaintiffs' costs of the Supreme Court Proceedings No 12574 of 2006 on a party/party basis payable by the First Defendant pursuant to Order 2 made on 2 July 2008; (ii) the costs of the Third, Fourth and Fifth Defendants ordered to be paid by the Plaintiffs in Supreme Court Proceedings No 12574 of 2006 and the Plaintiffs to be indemnified by the First Defendant pursuant to Order 6 made on 2 July 2008; (iii) the costs ordered to be paid by the First Defendant on the Second Cross Claim to the Cross Defendants in Supreme Court Proceedings No 12574 of 2006 pursuant to Order 7 made on 2 July 2008; (iv) the costs thrown away by reason of the application to set aside the judgment against the First Defendant and the application for a stay of the judgment against the First Defendant." 9 It was contended for the applicant that the undertaking given by him in Exhibit 1 would secure the costs thrown away in the event of the judgments and orders being set aside. Even if findings were made that the applicant's conduct was dilatory, the undertaking, it was submitted, would provide substantial security with respect to the orders previously made as well as the costs order made against the applicant. The undertaking having been given, Mr A J McInerney of counsel, who appeared for the applicant, observed the principal issue on the application was whether or not the applicant has an arguable defence to the claim brought by the plaintiffs.

(a) The primary proceedings 10 By the Further Amended Statement of Claim, the plaintiffs claimed against Mr and Mrs Pallister, on the basis of a breach of contract in failing to complete the purchase as required by a Notice to Complete dated 22 February 2005, namely, on or before 9 March 2005. 11 The plaintiffs claimed damages in a total amount of $790,000. 12 There was no appearance at the hearing of the proceedings on 7 and 8 November 2007 by or on behalf of the applicant or his wife. The circumstances concerning the absence of an appearance on 7 November 2007 are set out in a judgment given on 7 November 2007. 13 On 27 May 2008, judgment was given in favour of Mr and Mrs Pallister in the amount of $652,922.92 together with interest and costs. 14 Judgment and orders were made on 2 July 2008 and entered on 3 July 2008 in the following terms:- "1. There is to be judgment in favour of the plaintiffs in respect of the following amounts:- (a) $507,228.82 being loss of re-sale referred to in paragraph (94) of the judgment dated 27 May 2008; (b) $126,809.11 being statutory interest; (c) $12,525.36 being interest calculated on expenditure items set out in the schedule of calculations which I have marked MFI 1; (d) Judgment not having been formally entered on 27 May 2008, the plaintiffs would have been entitled to interest in accordance with the Rules had judgment been entered on that day. Accordingly, they are entitled to interest from that date to today, which has been calculated at $6,359.63; and (e) Accordingly, there will be judgment in favour of the plaintiffs against the first and second defendant in the amount of $652,922.92. 2. I order the first and second defendants to pay the plaintiffs' costs of the proceedings on a party/party basis as agreed or assessed. 3. There is to be judgment in favour of the third, fourth and fifth defendants on the plaintiffs' claim against them and, applying the costs follow the event rule, the plaintiffs are to pay the third, fourth and fifth defendants costs on a party/party basis as agreed or assessed. 4. In respect of the first and second cross-claims, there was no appearance by either cross-claimant. The cross-defendants, being the third, fourth and fifth defendants to the plaintiffs' proceedings, have sought an order that the cross-claims be dismissed relying upon Part 29 Rule 7(4) of the Uniform Civil Procedure Rules. 5. I consider that the cross-claimants have been given notice of the proceedings and having failed to attending [sic] the hearing of the proceedings as recorded in the judgment of 27 May 2008, orders should be made dismissing the cross-claims. I make an order to that effect in respect of the first and second cross-claim. 6. In respect of the order made against the plaintiffs that they pay the costs of the third, fourth and fifth defendants, I order the first and second defendants to indemnify the plaintiffs in respect of those costs. 7. I order that the cross claimants on the first and second cross-claims pay the cross-defendants' costs in respect thereof. 8. I make an order under the slip rule at paragraph (2) of the judgment dated 27 May 2008 - at the end of the first line, 'Staunton & Thompson' is corrected to read 'Somerville & Co'. 9. I make a further order under the slip rule at paragraph (41) of the judgment dated 27 May 2008 'Paul Jonathon' should read 'Peter Jonathon'."

(b) Proceedings by Mrs Pallister to set aside orders made against her 15 On 6 February 2009, Mrs Pallister made application to set aside the orders made against her. Mr McInerney, of counsel also appeared on her behalf on that application. In determining it, I held that Mrs Pallister had an arguable defence, on the basis that she was not a party to the Contract for Sale. The circumstances concerning her failure to appear at the hearing were adequately explained and there was an absence of fault on her behalf in not appearing. 16 The judgment in respect of Mrs Pallister's application was given on 20 May 2009: Hearse & Anor v Pallister & Ors [2009] NSWSC 406. The orders that had been made against her were set aside.

(5) THE GROUNDS RELIED UPON IN THE PRESENT APPLICATION BY THE APPLICANT 17 The applicant claims that the judgments and orders made against him on 27 May 2008 and 2 July 2008 should be set aside on the bases that he has "a good arguable defence" and that he has provided a proper and satisfactory explanation for his failure to appear.

(a) The ground of "a good arguable defence" 18 On the question of "good arguable defence", it was contended that:-

(1) Mrs Pallister was not a party to the contract. The fact that her name was added to the Memorandum of Transfer did not alter that fact.

(2) The Notice to Complete was addressed to "Mark James Pallister and Vanessa Joan Pallister" . It required them to complete the purchase and to pay the balance of the purchase money on or before 12 noon on Wednesday 9 March 2005. In that respect, time was expressed to be of the essence of the contract.

(3) As the Notice to Complete was addressed to both Mr and Mrs Pallister, it called upon the applicant "to perform more than that which the giver of the notice was entitled to ask to perform, with the consequence that it was and is invalid, void and of no effect" . 19 The Notice to Complete it was contended was not effective in respect of any asserted breach by the applicant in failing to perform a contract to which Mrs Pallister was not a party. 20 The plaintiffs had, therefore, not established the conditions concerning compliance with the contract as specified in clause 9 of the contract.

(b) Explanation for the applicant's non-appearance at the hearing 21 The circumstances relied upon by the applicant were summarised in the First Defendant's Outline of Submission, 4 May 2009, paragraphs 55 and 56 as follows:- "55. Mr Pallister explains that:- (a) at the relevant time Mr Somerville acted for a number of Mr Pallister's companies and in respect of those matters Mr Somerville's firm held monies in its trust account on their behalf; (b) Mr Somerville's office advised Mr Pallister that the hearing was fixed for 7 and 8 November 2007 but did not inform him that he needed to attend the hearing; (c) Mr Pallister denies reading a Notice of Ceasing to Act allegedly sent to him by Somerville & Co or any notification from Somerville & Co advising him that they were no longer acting for him. During the relevant period he received in the order of 200 emails per day, and Somerville & Co continued to act for companies controlled by Mr Pallister; (d) Mr Pallister believed that, notwithstanding that he did not have available funds to meet the costs of counsel, a solicitor from Mr Somverville's [sic] firm would attend at the hearing on 7 November 2007, and defend the matter on his behalf; (e) Pursuant to a written undertaking given by Mr Pallister on 11 February 2009, Mr Pallister has paid $20,000 into a Controlled Monies Account in the name of Ellison Tillyard Callanan, Solicitors in respect of the following costs of the first and second plaintiffs and the third, fourth and fifth defendants in these proceedings which are set out below up to a limit of $20,000, by reason of the orders and judgment made by Hall J on 27 May 2008 and 2 July 2008: (i) the plaintiffs' costs of the Supreme Court Proceedings No 12574 of 2006 on a party/party basis payable by the first defendant pursuant to order 2 made on 2 July 2008; (ii) the costs of the third, fourth and fifth defendants ordered to be paid by the plaintiffs in Supreme Court Proceedings No 12574 of 2006 and the plaintiffs to be indemnified by the first defendant pursuant to order 6 made on 2 July 2008; (iii) the costs ordered to be paid by the first defendant on the second cross claim to the cross defendants in Supreme Court Proceedings No 12574 of 2006 pursuant to order 7 made on 2 July 2008; (iv) the costs thrown away by reason of the application to set aside the judgment against the first defendant and the application for a stay of the judgment against the first defendant. 56. In the premises, Mr Pallister submits that he has put forward a proper explanation for his failure to appear before the Court on 7 & 8 November 2007, and has remedied any prejudice suffered by the plaintiffs, and the third, fourth and fifth defendants, by securing the payment of (a) the costs order previously made against him on 2 July 2008, and (b) the costs of the present application."

(6) MATTERS CONCERNING THE APPLICANT'S FAILURE TO APPEAR 22 In his affidavit sworn on 7 May 2009 in support of the present application, the applicant deposed to the following matters:- "18. Since about September 2004 my wife and I have had continuing issues in our marriage. 19. In about September 2004, my wife decided to stay in Perth and live in Perth with our children. I decided to relocate to New South Wales and then started looking for properties, some in the eastern suburbs and some in Clontarf. 20. In early August 2007, my wife and I separate and lived separately and apart. My wife resided in Perth and from time to time lived in Sydney in rental accommodation at 2 Dunara Gardens, Point Piper separately and apart from me. 21. I deny that any time between 21 December 2004 and 4 January 2005 or at any other time ringing Mr Staunton or anyone at Messrs Staunton & Thomson [sic] , solicitors, to advise him to add my wife as a co-purchaser to the Contract of Purchase or to the Transfer. 22. I had only one face-to-face meeting with Mr Dennis Staunton and received a telephone message from a female member of Mr Staunton's office requesting various bank cheques, when he advised her that he was not in a position to settle at that time. I deny any other contact with the firm of solicitors. 23. Somerville & Co act for Quiktrak Networks Limited, which is a public company and a company called Zoogle Interactive Limited. Mr Tim Somerville has acted for the two companies since May 2005. Mr Tim Somerville also acted on my behalf in respect of a takeover of a company called Zylotech Limited in 2007. 24. I am the managing director of Quiktrak Networks Limited and have a 55% shareholding in the company. I am also the managing director of Zoogle Interactive Limited and have a 50% shareholding in the company. In my capacity as a director and major shareholder of these companies I continued to instruct Mr Tim Somerville and other members of Somerville & Co who still currently act for these companies. 25. I attended the offices of Mr Tim Somerville on at least a monthly basis to either sign affidavits or meet with one of the other solicitors in the firm in respect of various matters being handled by Somerville & Co. 26. I provided Somerville & Co with factual information to prepare affidavits in the Supreme Court Proceedings. I spoke with Mr Tim Somerville regarding my defence and cross-claim in the Supreme Court Proceedings. I received a telephone call from a female member of Somerville & Co notifying me that the hearing of the Supreme Court Proceedings was to proceed on 7 and 8 November 2007. I was not asked to attend the hearing of the Supreme Court Proceedings. 27. I deny reading a Notice of Ceasing to Act. At all times I believed that Somerville & Co was still acting for me and my wife in the Supreme Court Proceedings. 28. I received a telephone call in September 2007 from Somerville & Co requesting payment of $20,000 on account so they could brief a barrister. I indicated that I was not able to pay that amount of money and asked the consequences. I was informed that the firm would not be able to brief a barrister to appear at the hearing. 29. I believed that I would be represented by a solicitor for Somerville & Co at the hearing. 30. In or about December 2007 or January 2008 I was advised by Mr Tim Somerville in his office that the firm did not attend the hearing of the Supreme Court Proceedings because they were waiting for funds and when not received they did not proceed. I was not advised that the Supreme Court Proceedings were heard in my absence or there was a judgment against me. I did not make any inquiries of the Supreme Court to find out what happened as Mr Somerville advised him that he believed the firm of Lander and Lander was no longer practising. 31. At the time when the Ceasing to Act notification was sent to me, I was receiving approximately 200 e-mails each day. At this time I was running three public companies operating in 3 countries, one with 14,000 shareholders and one with 5000 shareholders and consequently I received a large number of e-mails each day. 32. When I am travelling I might have up to 180 e-mails a day, I goes [sic] through them and deletes [sic] them from the Blackberry and when I am able to log on to the server I would sit down and go through and answer the e-mails. However I deny ever reading any notification from Somerville & Co advising me that they were no longer acting for me. 33. I always paid monies into trust at Somerville & Co on account of costs and disbursements in respect of the company transactions and had money on account in the trust account in respect of the company transactions at the time of this Notice Of Ceasing to Act in September 2007. 34. I was in Africa during the months of October and November 2007. In 2006 and 2007 I lived in South Africa, not in Australia and travelled to Australia when required. During the calendar year 1 January 2007 to 31st December 2007, I was overseas for about 302 days. In the previous year I was away for about the same length of time. I returned to Australia for two or three days at a time and then returned to South Africa."

(7) MRS PALLISTER - NOT A PARTY TO THE CONTRACT? 23 In the application brought by Mrs Pallister for orders setting aside the judgment and orders made against her, it was not disputed that Mrs Pallister had established an arguable defence based upon the proposition that she was not a party to the Contract for Sale. 24 Mr McInerney, in relation to the evidence, submitted:- '5. Mr Pallister's affidavit sworn 27 May 2005 establishes that: (a) His instructions to Mr Staunton were that he would be acquiring the property in his own right as a sole purchaser (para 9); (b) At no time did Mr Pallister and Mrs Pallister discuss adding Mrs Pallister to the contract to purchase the property, and Mrs Pallister did not at anytime attend, or have any involvement in any discussions between herself and any employee of Staunton and Thomson [sic] (para 11); (c) Mr Pallister did not at anytime request any employee or principal of Staunton and Thomson [sic] to join Mrs Pallister to the contract for the purchase of the property (para 12); (d) Mrs Pallister did not ever consent to being added to the contract to purchase the property, and it was never intended that any other party except Mr Pallister as a sole purchaser would be involved in the purchase (para 13). 6. Mrs Pallister's affidavit sworn 6 May 2005 establishes that:- (a) She was never party to the contract and never entered into any document of contractual nature concerning the purchase of the property (para 4); (b) All negotiations and matters relating to the property were, as far as she was aware, conducted by her husband, Mr Pallister, and she was not a party to those negotiations and left those matters entirely to her husband (para 5); (c) Mrs Pallister had not discussed any aspect of the transaction concerning the property with any person from Staunton and Thompson, and gave no approval for her name to be added to the contract as a joint purchaser (para 7); (d) She is not bound by the contract and has no liability under the contract (para 7)." 25 No submission was made in the present application that Mrs Pallister did not have an arguable defence on the above basis. In written submissions, Mr G Curtin of counsel on behalf of the third to fifth defendants, stated that his clients "… take no issue on this application that the question of whether or not Mrs Pallister was a party to the Contract is arguable in the relevant sense" (Written Submissions, paragraph 3). Mr Curtin added that:- "4. However, even if Mrs Pallister was not a party to the Contract, there is no arguable defence that the Notice to Complete was invalid." 26 Accordingly, on the present application, the evidence similarly establishes that it is arguable that Mrs Pallister was not a party to the contract. The submissions on the point on behalf of the applicant in that respect were to the following effect:-

(1) There was no evidence to establish that Mrs Pallister was, or ever became, a party to the contract.

(2) The applicant was described as the purchaser in the contract dated 16 December 2004. He signed it as purchaser. Mrs Pallister did not sign the contract and the contract made no reference to her.

(3) In the absence of any evidence that Mrs Pallister signed the contract, she could only have become a party to it if another person made the contract on her behalf as agent.

(4) There was no evidence that anyone purported to make Mrs Pallister a party to the contract except for the statements contained in a letter from Mr Dennis Staunton, solicitor, who acted on behalf of the applicant dated 19 January 2005 and addressed to Lander & Lander, solicitors for the plaintiffs.

(5) However, the customary method of adding a new party to the contract would be for a new contract to be signed by and exchanged on behalf of all relevant parties to it.

(6) A solicitor does not have implied or ostensible authority to contract on behalf of a client to sell land: Zhang v VP 302 SPV Pty Limited [2009] NSWSC 73.

(7) There was no evidence that Mr Staunton had actual authority on behalf of Mrs Pallister to contract on her behalf.

(8) The plaintiffs had the onus of establishing that Mrs Pallister was a party to the contract.

(9) The affidavit evidence on behalf of the plaintiffs relied upon on 7 November 2007 did not, and could not, establish that Mr Staunton had actual authority to contract on behalf of Mrs Pallister.

(10) The evidence of Mr Staunton was to the effect that the applicant instructed him to add Mrs Pallister as a transferee to the transfer and that this was done purportedly pursuant to s.18(3) of the Duties Act 1997. However, Mr Staunton did not ever communicate with Mrs Pallister nor receive instructions from anyone purporting to act on her behalf.

(11) Instructions were not given by the applicant to Mr Staunton to add Mrs Pallister as a party to the contract. His instructions to Mr Staunton were only that he was to remain the purchaser of the contract for the purpose of the contract, but that for the purpose of s.18(3) of the Duties Act , Mrs Pallister was to be added as a transferee to the transfer.

(8) THE BASIS ARGUED FOR THE GROUND OF "A GOOD ARGUABLE DEFENCE"

(a) The terms of the Notice 27 The Notice to Complete was in the following terms:- "TO: MARK JAMES PALLISTER & VANESSA JOAN PALLISTER C/- STAUNTON & THOMPSON LAWYERS 22 CENTRAL AVENUE MANLY 2095 FAX 9977 0653 PETER JONATHAN LANDER Solicitor for ROBYN MIGNON HAYES HEARSE and PHILLIP BADEN HEARSE gives you notice: 1. That ROBYN MIGNON HAYES HEARSE and PHILLIP BADEN HEASE are ready and willing to transfer to you the property situated at 83 CUTLER ROAD, CLONTARF in accordance with Contract dated 16 DECEMBER 2004. 2. You are required to complete the purchase and to pay the balance of the purchase money on or before 12 noon on WEDNESDAY 9 MARCH 2005 and in this respect time is of the essence of the Contract. 3. Peter Jonathan Lander now appoints 12 noon on WEDNESDAY 9 MARCH 2005 at the office of National Australia Bank, Level 1, Cnr. King and Elizabeth Streets, Sydney as the time and place for completion. 4. Unless you complete within the time specified in this Notice ROBYN MIGNON HAYES HEARSE and PHILLIP BAEN HEARSE will be entitled to terminate the Contract. DATED: 22 FEBRUARY 2005. Peter Jonathan Lander Solicitor for the Vendors" (b) Default provisions 28 Clause 9 of the Contract for Sale of Land, Purchasers' default, provided as follows:- "9. Purchaser's default If the purchaser does not comply with this Contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving a notice. After the termination , the vendor can - 9.1 keep or recover the deposit (to a maximum of 10% of the price); 9.2 hold any other money paid by the purchaser under this Contract as security for anything recoverable under this clause - 9.2.1 for 12 months after the termination , or 9.2.2 if the vendor commences proceedings under this clause within 12 months, until those proceedings are concluded; and 9.3 sue the purchaser either - 9.3.1 where the vendor has resold the property under a contract made within 12 months after the termination , to recover - • the deficiency on resale (with credit for any of the deposit kept or recovered and after allowance for any capital gains tax or goods and services tax payable on anything recovered under this clause); and • the reasonable costs and expenses arising out of the purchaser's non-compliance with the contract or the notice and of resale and of any attempted resale; or 9.3.2 to recover damages for breach of contract." 29 On behalf of the applicant, it was observed that clause 9 contains relevant pre-conditions to its operation and that, before the plaintiffs could claim against the purchaser or purchasers under clause 9.3 of the Contract for Sale, the plaintiffs, as vendors, had to first establish that:-

(1) The purchaser had not complied with the contract or a notice under or relating to it (in an essential respect) (ie, "the purchaser does not comply with this Contract" ) or a notice under or relating to it ( "in an essential respect" ).

(2) Termination of the Contract for Sale by the vendor serving a notice, ie, "the vendor can terminate by serving a notice" . 30 Special Condition 2(a) of the Contract for Sale provided:- "A notice to complete served by either of the parties upon the other may require completion to be effected not less than 14 days after the service of such Notice. The parties agree that such Notice shall be sufficient at law and in equity to make time of the essence for completion of this contract." 31 As observed in the First Defendant's Outline of Submissions (paragraph 46), in accordance with authority, the purpose of a Notice to Complete, given in accordance with Special Condition 2(a) of the Contract for Sale is to set a time for completion after which the defaulting party is deemed to have repudiated the contract and to show that it is equitable for the non-defaulting party to act by terminating the contract: Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 at 642 to 645, per Brennan J.

(c) The applicant's submissions as to an "arguable defence" 32 The applicant has contended on this application that he has an arguable defence, being one that is different from and narrower in scope than the grounds of defence pleaded in the Amended Defence filed on 8 March 2007. The "arguable defence" essentially raises two points, one factual and the other legal. The first (discussed above) is that the applicant's wife, Mrs Pallister, was not and is not a party to the contract. The second, in essence, is that the Notice to Complete was invalid in that it was addressed to both Mr and Mrs Pallister when, as a matter of fact and law, the applicant was the only "purchaser". Paragraph 19 of the Amended Defence filed on 8 march 2007 which, effectively, denied that the applicant was a party to the contract was not relied upon in the present application. 33 Mr Tregenza, of counsel for the plaintiffs, observed that the fact that the proposed ground of defence now sought to be relied upon was not included in the Amended Defence filed on 8 March 2007, was a matter going to the exercise of discretion to set aside the judgment. However, if the proposed defence does constitute an arguable defence, I would not regard the failure to plead it at an earlier point in time as sufficient to warrant the refusal of the application. 34 Reliance was placed on behalf of the applicant upon the principle that a Notice to Complete must deal in explicit terms with what it is that the recipient is to do and must call upon him to perform that which the giver of the notice is entitled to ask him to perform and no more: Pearce v Kelly (1919) 20 SR(NSW) 88; Shenstone v Hewson (No 2) (1928) 29 SR(NSW) 39; O'Brien v Dawson (1941) 41 SR(NSW) 295. 35 Whilst the challenge to the Notice to Complete relied upon the fact that it was addressed to both Mr and Mrs Pallister, no issue was otherwise raised as to the form of the notice. In particular, it was not contended that the terms of the notice were insufficient to convey to the reader that performance of the contract was required by the vendors by the specified date in respect of which time was of the essence and that, failing completion within that time, the vendors would be entitled to terminate the contract. The absence of such a contention as to form was presumably based upon an acceptance that there had been compliance with the requirements as discussed by Gibbs J in Balog v Crestani (1975) 132 CLR 289 at 298 to 299. See also O'Brien v Dawson (supra) at 304. 36 The applicant's contention was:- "51. It follows, therefore, that the Notice to Complete, being specifically addressed to Mr Pallister and Mrs Pallister, and proceeding on a false premise that each of them was a party to the contract, was invalid, and of no effect because it required both of them to perform obligations under a contract to purchase, on the basis that each of them was a party to that contract, in circumstances, where in truth, Mrs Pallister was not a party to the contract." ( First Defendant's Outline of Submissions, paragraph 51) 37 It was also contended that the applicant was not required to complete the contract in circumstances where the Notice to Complete called upon the applicant to perform "… more than that which the giver of the notice was entitled to ask to perform …". Additionally, the applicant contended, "… it was wrongly asserted by the vendors that both Mr Pallister and his wife, Mrs Pallister, [were parties] to the contract (which, on the evidence of each of Mr Pallister and Mrs Pallister, was incorrect) and that both Mr Pallister and his wife had to complete the contract" (First Defendant's Outline of Submissions, paragraph 53(b)). 38 In these circumstances, it was submitted that the contract was not effectively terminated by the plaintiffs and that they, by their conduct in re-selling the property to another purchaser, abandoned the contract entered into on 16 December 2004 with the applicant. 39 Accordingly, the contention was that the evidence before me on 7 November 2007 was not sufficient to establish that the Notice to Complete was effective to have made time of the essence such that the plaintiffs were entitled to terminate for the applicant's failure to perform. 40 Mr Tregenza for the plaintiffs contended that:-

(1) If Mrs Pallister was not joined as a party to the contract then the contract as between Mr and Mrs Hearse and the applicant continued in force. The reference to Mrs Pallister was "merely superfluous" if she was not a party to the contract. The notice was clear and did not ask the applicant to do more than he was already bound to do.

(2) In the alternative, the applicant is estopped from denying that Mrs Pallister was a party to the contract: Grundt v Great Boulder Pty Limited (1937) 59 CLR 641. Reliance was placed upon the correspondence from Mr Staunton on 19 December 2004 notifying that Mrs Pallister had been added to the contract as a joint purchaser. Reliance was also placed on Walton (Stores) Limited v Maher (1988) 164 CLR 387.

(9) THE PLEADING POINT 41 In his written and oral submissions, Mr McInerney contended that the Further Amended Statement of Claim pleaded the case against the applicant on the basis that he was jointly liable under the Contract for Sale with Mrs Pallister and not that he was severally liable and that judgment was entered upon that basis. 42 It was contended:- "5. No case has ever been pleaded that Mr Pallister was, after 19 June 2005, the only purchaser to the contract for purchase and that the Notice to Complete issued on 22 February 2005, had effect to make time of the essence to complete the contract for purchase, in his sole name as purchaser, on 9 March 2005" (First Defendant's Written Submissions in Reply). 43 Mr Curtin, on behalf of the third to fifth defendants, disputed the assertion that the liability alleged in the Further Amended Statement of Claim did not include several liability as well as joint liability. Whilst he said attention had been drawn by Mr McInerney to certain, but not all relevant, paragraphs, it was necessary to have regard, in particular, to the pleadings in terms of paragraphs 1 to 2 and 5 to 9 as well as paragraphs 27 to 30 and to the relief claimed in paragraphs 32 and 32D of the Further Amended Statement of Claim. He contended that a proper reading of the Further Amended Statement of Claim embraces a claim with either a joint or several liability basis. He submitted that if the Further Amended Statement of Claim had been ambiguous in its terms, then it was incumbent upon the applicant to establish (presumably through the advice of his solicitors) that he had considered the pleading to have the narrow construction now being contended for and that it had been his intention to advance that narrow construction at the hearing, that is, assuming that he had appeared to defend the proceedings. No evidence, it was observed, was elicited from the applicant to that effect. 44 Mr Curtin contended that a Jones v Dunkel inference would arise from the failure to elicit such evidence, citing dicta of Handley JA in Commercial Union Assurance Co of Australia Limited v Ferrcom Pty Limited (1991) 22 NSWLR 389 at 418F. 45 If, contrary to such submissions, it was held that the pleadings did not allege a several liability, then it was contended that there was no error at the hearing and nor had any arguable defence been made out. 46 It is, with respect, correct to say, as Mr Curtin submitted, that the "pleading point" only arises if the invalidity of the Notice to Complete submission is held to be arguable upon the basis relied upon in support of the application. If it is not, then there would be no point in setting aside the judgment simply on the pleading point that was raised in the course of the submissions for the applicant. 47 The Further Amended Statement of Claim recited that "the plaintiffs rely on the following facts and assertions". There then is set out a number of facts and assertions in paragraphs 1 to 26 inclusive. They include:-

(1) That the plaintiffs were the vendors of the Clontarf property.

(2) That as at December 2004, the applicant was a prospective purchaser of the property.

(3) That the plaintiffs and Mr Pallister entered into the Contract for the Sale of Land on 16 December 2004.

(4) That in January 2005, the third defendant informed the solicitor for Mr and Mrs Hearse that his instructions were that the name of the second defendant was to be added to the contract as co-purchaser.

(5) That on or before 19 January 2004, the first and second defendant "assumed joint liabilities as purchasers under the Contract" .

(6) There was a failure by Mr and Mrs Pallister to complete on the completion date (21 February 2005) and that on 22 February 2005 a Notice to Complete was served requiring completion on 9 March 2005.

(7) On 11 March 2005, the vendors terminated the contract. 48 Relief was separately sought in respect of the applicant and Mrs Pallister in paragraph 32. The claim against the first defendant was for damages as particularised. 49 In paragraph 32(B), Mr and Mrs Hearse claimed from the applicant damages as particularised in that paragraph. 50 In paragraph 32(D), an order was sought that the two defendants be jointly and severally liable in respect of orders made in favour of the plaintiffs. 51 In the Further Amended Statement of Claim, the plaintiffs can be seen as claiming contractual liability of the applicant to them in accordance with the Contract. 52 The assertion made in paragraph 13 that, on or before 19 January 2004 Mr and Mrs Pallister "assumed joint liability as purchasers under the contract", does not in terms exclude reliance upon joint and several liability as provided for in the Contract. 53 When the Further Amended Statement of Claim is read in its entirety, I do not consider that its terms precluded the claim as being one on the basis of either joint or several liability. The applicant, of course, admitted in his verified defence (paragraph 5 of the Further Amended Statement of Claim) that he entered into the contract, the subject of the Further Amended Statement of Claim. 54 Mr Curtin alternatively contended that, if it were held that the pleadings did not allege several liability, then there was no error at the hearing nor had any arguable defence been made out. The only authorities Mr McInerney relied upon for the purpose of the "pleading point" did not support the proposition advanced by him. The authorities were those referred to in Ritchie's Practice in relation to UCPR 29.7.5, namely, Stone v Smith (1987) 35 Ch D 188; Kingdon v Kirk (1887) 37 Ch D 141; Baker v Furlong (1891) 2 Ch D 172 at 178 to 179; Townsend Controls Pty Limited v Gilead & Anor (1989) 16 IPR 469 at 474 and, as well, Narayan v Swaleh [2005] NSWSC 1248 at [9] (Brereton J). 55 Aside from the decision in Narayan (supra), the remaining authorities were cases in which, in the absence of an appearance by a defendant, it was held that the plaintiff could not amend the claim that had been made to seek a different form of relief than that originally sought and notified to the defendant. 56 Mr Curtin contended that, when the relief is the same, but the cause of action is different, then an amendment (if necessary) will be granted in the absence of a party where the proposed amendment is not outside the scope of a case of which the defendant had notice. He relied, in that respect, upon the observations of Brereton J in Narayan (supra) at [11]. 57 In support of this submission, a number of judgments concerning the function of pleadings were relied upon. These were: Banque Commerciale SA, En Liq v Akhil Holdings Limited (1990) 169 CLR 293 at 297; Water Board v Moustakas (1987-1988) 77 ALR 193; American Home Assurance Co v Ampol Refineries Limited (1987) 10 NSWLR 13 at 19C and French J (as his Honour then was) in Bomanite Pty Limited v Slatex Corp Australia Pty Limited (1991) 32 FCR 379 at 391. 58 Mr Curtin also referred to the provisions of s.57 of the Civil Procedure Act 2005 which mandates the just determination and efficient disposal of the business of the Court. 59 I do not consider that, what has been termed the "pleading point" advances the applicant's position. The fundamental matter is whether or not the point relied upon, namely, the claimed invalidity of the Notice to Complete submission, is arguable or not. There would be no utility in setting aside the judgments and orders on the basis of the pleading point if the "arguable defence" (the fact that the Notice to Complete was addressed to both the applicant and Mrs Pallister) was not a defence at law of any validity. 60 In light of the conclusions I have expressed below, namely, that the basis of challenge to the Notice to Complete advanced for the applicant does not provide an arguable defence, the pleading point does not assist the applicant in the sense that no useful purpose would be served in setting aside the judgment and orders if there was, in fact, no possible defence to the action: Evans v Bartlam [1937] AC 473 at 482. Additionally, to do so would not give effect to any of the objects in s.57(1)(b) of the Civil Procedure Act.

(10) CONSIDERATION OF THE QUESTION OF A "GOOD ARGUABLE DEFENCE" 61 The approach to an application to set aside judgment entered in an action where there has been failure by the defendant to appear at a hearing is well-established. It has been held in such a case that where the plaintiff is in no respect in default, a new trial will not be granted, save in very special circumstances: Vacuum Oil Co Pty Limited v Stockdale (1942) 42 SR(NSW) 239 at 243 per Jordan CJ. However, in every such case, it has also been held that the Court has an inherent and unfettered, though judicial, discretion in the exercise of which it will necessarily consider:

(1) Whether any useful purpose would be served by setting aside the judgment.

(2) How it came about that the applicant found himself bound by a judgment regularly obtained: Vacuum Oil (supra) per Jordan CJ at 243 applying Evans v Bartlam (supra) at 482. 62 In Evans v Bartlam (supra), Lord Russell of Killowen observed that in relation to the question as to whether any useful purpose could be served by setting aside a judgment, obviously no useful purpose would be served if there was no possible defence to the action. 63 The "arguable defence" in this case is not, of course, one dependent upon the determination of actual or potential disputed issues of fact. It is directed to the efficacy of the Notice to Complete upon the basis referred to above. 64 Jordan CJ observed in Vacuum Oil (supra) that 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 merit to be shown in order to incline it to interfere (at 243). Accordingly in Vacuum Oil (supra) at 244:- "… the question is whether, upon the material that has been placed before (the Court) 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 …" 65 The broad power under part 36 Rule 36.16 to set aside a judgment or order is not one to be applied according to rigid rules as to what must be proved to warrant such an order being made: Evans v Bartlam (supra). However, the concepts of an "arguable defence" and an explanation for a failure to appear at the hearing are matters that a court will usually have regard to in the exercise of the power to set aside judgments and orders. 66 It is also accepted that the primary consideration in an application such as the present is whether the point sought to be raised by the applicant has some merit. If so, a court will not, prima facie, desire to let a judgment pass on which there has been no proper adjudication: Evans v Bartlam (supra) at 489. That primary consideration must be at the forefront in the analysis in the present proceedings. 67 The issues of "reasonable explanation" and "delay" are, accordingly, to be approached with that in mind. Whilst delay is contrary to the need for certainty in relation to the making of final orders, it is to be considered in terms of the general merits, if any, shown by the applicant: GE Commercial Finance Australia Limited v Meredith [2009] NSWSC 327 at [17] per Einstein J. 68 The issue of prejudice arising from the expenditure of time and costs by the respondents will emerge if the judgment and orders are set side. However, in that respect in these proceedings, I am required to bring into account the undertaking made by the applicant which would significantly offset any such prejudice. 69 The issue of "arguable defence" in this application is best considered by reference to:-

(2) The principles by which the validity of a Notice to Complete must be determined.

(4) The fact that the Notice to Complete was addressed to both Mr and Mrs Pallister - an irregularity?

(1) The terms of the contract 70 The applicant is identified on p.1 of the contract as the "purchaser". If "the purchaser" referred to two or more persons, clause 20.4 of the contract provided:- "20.4 If a party consists of two or more persons, this contract benefits and binds them separately and together." 71 The entitlement of a party under clause 15 of the contract to serve a notice to complete where there are two purchasers may be exercised by enforcing a contractual obligation to complete the sale against the purchasers either severally or jointly. In this respect, Professor Butt in The Standard Contract for Sale of Land in New South Wales (2nd ed), LBC Information Services 1988 in respect of clause 20.4 of the standard form of contract has observed:- " Joint and several rights This clause creates 'joint and several' rights and liabilities. That is the clear meaning of a provision that, where a party consists of two or more persons, the contract 'benefits and binds them separately and together'. In the absence of a provision such as the present clause, the general presumption is that the liability of two or more promisors is joint, not joint and several. Where liability is joint, normally all the promisors must be joined as defendants ( Kendall v Hamilton (1879) 4 AC 504; Pilley v Robinson (1887) 20 QBD 155; Norbury Natzio & Co Limited v Griffiths [1918] 2 KB 369. … The principle is subject to any contrary rules of court); and if one of the promisors dies the liability devolves upon the survivors, the representatives of the deceased being under no liability. The position is different where, as under the present provision, liability is joint and several. The promisee then has the option of suing the promisors collectively or individually ( Beecham v Smith (1858) EB & E 442; 120 ER 574; Owen v Wilkinson (1858) 5 CB (NS) 526; 141 ER 213; Ex parte Honey (1871) 7 Ch App 178); and if one of the promisors should die, the personal representatives of the deceased are liable jointly and severally with the survivors. Needless to say, this puts the promisee in a more favourable position than where the promisors are merely joint. In particular, under a contract for sale where the liability of the purchasers is expressed to be joint and several, the vendor may enforce the whole contract against only some of the purchasers (As in Georgostathis v General Credits Limited (1980) 33 AQCTR 21)." 72 In the present case, the vendors had a contractual right to seek to enforce any alleged liability under the contract against the applicant on a joint or several basis.

(2) Principles relating to Notices to Complete 73 The efficacy of a notice to complete may be impaired by the form of the notice. The following principles are derived from the relevant case law:-

(1) The true function of a notice to complete is not substantive, that is, to vary existing contract rights and liabilities. It is evidentiary, namely, to enable the innocent party to demonstrate, by reference to the other party's non-compliance with the notice to complete, viewed in the light of a past history, that the other party has repudiated his obligations under the contract, thus entitling the innocent party to terminate it: Taylor v Raglan Developments (1981) 2 NSWLR 117 at 131 per Powell J (as his Honour then was) citing, by way of example, Stickney v Keeble [1915] AC 386, Stonham, Vendor and Purchaser, paragraph 1469 at 746.

(2) Notices to complete are not documents of which any great formality is required: Balog (supra) at 296 to 299 per Gibbs J.

(3) Clarity is required as to the effect and the operation of a notice to complete. It also must have clarity with respect to the identity of persons to whom the notice is directed and deal in explicit terms with what it is the recipient is to do and must call upon him or her to perform that which the giver is entitled to ask him to perform and no more: Pearce v Kelly (supra); Shenstone v Hewson (No 2) (supra) and O'Brien v Dawson (supra).

(4) It is a basic requirement of the notice that it conveys appropriate information to "the promisor of the obligation" : Carter & Harland , Contract Law in Australia (4th ed) (2002) cited in Ng v Chong [2005] NSWSC 270 at 10. A notice to complete must state with reasonable explicitness what is required to be done: Fekala Pty Limited v Castle Constructions Pty Limited [2002] NSWCA 297 at [24].

(5) The test as to whether a notice to complete should be regarded as clear and equivocal in its terms was whether a reasonable recipient of a notice of that type reading it against the background of the dealings between the parties and of all the circumstances of its receipt would have understood the effect of the notice: Bava Holdings Pty Limited v Pando Holdings Pty Limited (1998) 8 BPR 16,295 at 16,304 per Santow J as applied by Hamilton J in Ng v Chong (supra) at 9.

(6) Each notice must be construed in the light of its nature and of its own peculiar circumstances: Ng v Chong (supra) at 10.

(7) A notice to complete must deal in explicit terms with what it is that the recipient is to do and must call upon him or her to perform that which the giver is entitled to ask him or her to perform and no more: Pearce v Kelly (supra).

(8) The notice must give to the recipient the clear impression that time is of the essence and that if he does not complete, the other party may rescind.

(3) The terms of the Notice to Complete 74 As noted above, no submission was made on behalf of the applicant that the substantive terms of the notice were deficient or lacked clarity. The sole basis relied upon for challenging its efficacy was the fact that it was addressed to both the applicant and Mrs Pallister on the basis, or the implicit assumption, that Mrs Pallister was a party to the contract when she was arguably not a party to it. As earlier noted, the notice being addressed to both, so the argument went, meant that the notice was defective and was invalid. 75 It follows from what is stated in the preceding paragraph that this was not a case in which it was contended that the terms of the Notice to Complete were such as to create confusion or doubt in the applicant's mind. Indeed, the evidence in the primary proceedings indicated that he fully understood the Notice to Complete and its function. Exhibit M to Mr Staunton's affidavit sworn on 6 November 2007 is a copy of an email from the applicant dated 28 February 2005 to his solicitor in which he stated, inter alia:- "We are in limbo ourselves at present and as per my last email we are prepared to advance the funds on the basis that the vendor extend settlement for up to 60 days and agree to interest as per my last email. As they have not agreed to this we will simply continue to try and settle by the 9th and if unable to do so then will deal with this situation then. I will have our Perth lawyers contact you in the next day or so." 76 In a further email from the applicant to his solicitors dated 8 March 2005 (Exhibit M to Mr Staunton's affidavit), he stated:- "Thanks for the email and the offer of help, but I can't think of any reason to be able to set the notice aside, we will most likely find some legal argument to drag out the matter for a while in due course. hereunder correspondence between me and the vendor in response to her email hereunder. I don't think I have a lot of options here. we are not in a position to settle, having made an offer which i think was commercially sensible, which they have rejected and as such as much as i'd rather not we'll be forced to slug it out in which case even if they win any victory will be rather hollow for them and certainly won't make them better off than accepting the offer i made earlier. So thanks for the offer but i don't think there is much we can do except wait the action to follow which i'll then have my perth lawyers handle. if you'd like to send them one more letter noting our last offer so be it, but this letter does the same thing. i'd also be happy to pay a further sum to settle the matter once and for all without the need for legal recourse should the offer be reasonable if you would like to make the suggestion. …" 77 Mr Curtin on behalf of the third to fifth defendants contended, in my respectful opinion, correctly, that the evidence establishes that the applicant clearly understood the terms of the Notice to Complete and its significance. 78 Mr Curtin also contended that, on the applicant's own case, he was firmly of the view that Mrs Pallister was not a party to the contract. In those circumstances, he submitted, the inclusion of her in the Notice to Complete was without significance in circumstances in which he saw it as "a superfluous name (which) did not detract from the import of the Notice to Complete". (Submissions, transcript, 7 May 2009, p.52).

(4) The fact that the Notice to Complete was addressed to Mr and Mrs Pallister - an irregularity? 79 Mr McInerney contended, as noted above, that the plaintiffs' case on the Further Amended Statement of Claim was pleaded upon the basis that both Mr and Mrs Pallister were joint purchasers. He submitted that no case was pleaded that, after 19 January 2005, the contract was only with the applicant. 80 The contract by clause 15 both imposed obligations upon "the parties" to complete the sale/purchase by the completion date. That clause also conferred a right on a "a party" to serve a notice to complete provided the latter party was entitled to do so. 81 In the present case, there was no dispute but that Mr and Mrs Hearse were entitled, as vendors, to serve a Notice to Complete. They did so by serving a notice as previously discussed. Mr Pallister accepted that he was "a party" to the contract. As also earlier noted, the respondents to the present application accepted that there was an arguable defence that Mrs Pallister was not a party to the contract. 82 In those circumstances, the Notice to Complete was addressed and served upon "a party" and, arguably, a "non-party". 83 The fact that it was jointly addressed to someone who was, arguably, a "non-party" did not, in my opinion, for that reason alone, mean that the Notice to Complete failed to meet the requirements for a valid Notice to Complete. The combined effect of the contract (clause 15) and the Notice to Complete issued under its terms was that a party to the contract was given the information that is essential for a valid Notice to Complete. 84 The fact that Mrs Pallister was named in the Notice to Complete, in other words, neither detracted from the terms of the Notice nor created confusion for the applicant as the contracting purchaser. The inclusion of Mrs Pallister's name on the Notice to Complete was nugatory in its effect so far as the validity of the Notice to Complete was concerned. 85 The Notice did not, in being addressed to the applicant and to Mrs Pallister, in any way impose an obligation or condition upon the applicant requiring him to "… perform more than that which the giver of the notice was entitled to ask …" as was contended in the written submissions made on his behalf. 86 The "false premise", assuming for the purpose of the present application it be so (that Mrs Pallister was also a party to the contract along with the applicant), was accordingly one without consequence. The applicant had on 16 December 2004 assumed a contractual obligation as purchaser of the property. The Notice to Complete addressed to him validly imposed an obligation on him to complete the purchase by the specified date. If there was no purchaser of the property other than himself, then the Notice to Complete could only have been taken as being directed to him. The evidence referred to above (paragraph [75]) reveals that the applicant understood that the Notice applied to him and that he had appreciated its legal significance and its effect. 87 Whether or not Mrs Pallister was a party to the contract, the fact that the Notice to Complete was addressed to her and the applicant did not affect is efficacy. As a party to the contract, he was bound by its terms. The Notice to Complete was issued pursuant to clause 15 and Special Condition 2(a). By its terms (paragraphs 1 to 4), it stated the matters necessary for a valid notice. The fact that Mrs Pallister was included as an addressee did not have the consequence that it imposed or purported to impose some additional obligation upon the applicant. It did not, in other words, require them to "perform more than that which the giver of the evidence was entitled to ask to perform …". 88 Accordingly, the Notice to Complete, in being addressed to "Mark James Pallister and Vanessa Joan Pallister" was not rendered ineffective to make time of the essence and require the applicant to complete the purchase by the specified date. The applicant does not, in my opinion, have an arguable defence upon the basis relied upon in this application.

(11) EXPLANATION FOR THE APPLICANT'S FAILURE TO APPEAR AT THE HEARING 89 The conclusion on the issue of "arguable defence" means that the application must fail in seeking to have the judgment and orders in favour of the plaintiffs set aside. However, the issue of an explanation for the applicant's failure to appear at the hearing was the subject of much evidence and there remains an issue concerning the dismissal of the second cross-claim. I will, accordingly, deal with that issue below.

(a) Events leading to the notice of ceasing to act given by Somerville & Co to the applicant 90 Evidence was given by Mr Somerville, solicitor, and Ms Joanna Baqleh, solicitor, on the communications between Somerville & Co and the applicant concerning the hearing scheduled for 7 and 8 November 2007. Ms Baqleh was employed by the firm Somerville & Co. 91 The evidence to which I have referred dealt with the attempts made by the firm, prior to the filing of a Notice of Ceasing to Act, to obtain monies from the applicant on account of the firm's costs and counsel's fees. 92 Somerville & Co commenced to act for the applicant in relation to the proceedings instituted by Mr and Mrs Hearse in February 2007. Mr Somerville initially took instructions from the applicant. Some time after that, Ms Baqleh acted in relation to the matter on his behalf. 93 In 2007, Somerville & Co also acted for the applicant's companies in relation to litigious and commercial matters. Different solicitors of the firm undertook the corporate work. 94 Somerville & Co wrote to the applicant requesting money (initially $15,000) for preparation fees both for the firm and for counsel's fees. 95 Exhibit 3 contains correspondence sent by Somerville & Co by email to the following email addresses: mpallister@mobileemail.vodaphone.com.au and to vanessap@mobileemail.vodaphone.com.au. The relevant correspondence was as follows:-

• 26 June 2007, recording, inter alia:- "As advised previously, we will require you to deposit approximately $15,000 into our trust account to cover counsel's fees and our fees for preparing for hearing. Please advise us once you have deposited this money, so that we may commence preparing for hearing. …"

• 2 July 2007:- "… As advised previously, we will not be in a position to start preparing for hearing until you finalise our outstanding costs and deposit at least $15,000 into our trust account, to cover Counsel's and our fees for preparing for hearing. ..."

• 27 July 2007:- "We refer to our previous correspondence. Our outstanding costs have not been paid and we have not, received your payment to deposit into trust, for Counsel's fees and our fees for preparing for hearing. We enclose a letter from Lander & Lander dated 26 July 2007. Before we can do any further work in this matter, you will need to make the payments referred to above. …"

• 13 August 2007:- "… We confirm that the matter has been listed for hearing, on 7 and 8 November 2007. You have not advised us as to whether the costs agreement and fee disclosure for Andrew Coleman, our barrister, is satisfactory to you. You have also failed to deposit money into our trust account to cover Counsel's fees, and our fees for preparing for hearing. Pursuant to Mr Coleman's costs agreement, the estimate of his total fees for preparing for and attending at the hearing, is $17,500. Accordingly in order for us to resume acting on your behalf, in this matter, you will need to deposit approximately $30,000 into our trust account, to cover your legal fees. As previously stated, we have ceased to prepare the matter for hearing. We are now preparing the documents to file in court and serve on the other parties, whereby we cease to be on the record as your solicitors."

• On 21 August 2007, a letter was sent enclosing, by way of service, a Notice of Intention of Ceasing to Act. The evidence of Mr Somerville was to the effect that the same letter was sent by ordinary mail dated 25 September 2007 addressed to Mr and Mrs Pallister at 2 Dunara Gardens, Point Piper NSW 2027. A copy of the letter is included in Exhibit 3.

• On 4 September 2007, Ms Baqleh made a handwritten note of an attempt to speak to the applicant. The note was in the following terms:- "I left a message for Mark to return my call."

• On 4 September 2007, a letter was sent to Mr and Mrs Pallister by email which provided :- "… Please contact us to advise whether you would like us to resume acting on your behalf in this matter."

• On 2 November 2007, the applicant sent an email to Mr Somerville entitled "fees owing to this firm" . The email stated:- "thank you for this. it is the pallister vs hearse matter that I would like an actual statement showing all invoices and payments applied as a number of payments have been deducted from my visa card and I wish to see they have been applied to this account as the deductions from my credit card don't have a reference to an invoice. this would be generated on myob or an accounting package just showing all entries against the account. regards mark pallister"

• On 7 November 2007, a note of a phone call to the applicant was made. It read "I rang Mark's mobile and left a message for him to ring me." Mr Somerville gave evidence that the note was made by him after endeavouring to speak to the applicant. He said in evidence that he left the message "Hello, it's Tim Somerville, please ring me urgently" . He said that the applicant did not return his call. He said, in evidence, that the purpose of this call was to tell the applicant "one more time that the matter was in for hearing today" .

(b) Contact between Somerville & Co and the applicant following the hearing dates 96 Mr Somerville's evidence was that he could not recall having a meeting with the applicant in December 2007 or January 2008. He said that he had never had a conversation with him, so far as he could recall, in which he advised Mr Pallister that the firm did not attend at the hearing on 7 and 8 November 2007. He confirmed that at no time, on or after 7 November 2007 did he ever advise the applicant that his firm had not attended the hearing on 7 November 2007. 97 The applicant was cross-examined by Mr Curtin in relation to events following 8 November 2007 and, in particular, concerning events following advice he received from his wife in October 2008 that judgment had been entered in favour of Mr and Mrs Hearse in the proceedings against him and Mrs Pallister. 98 He agreed that, though he would have been in the offices of Somerville & Co in the period between 7 November 2007 and December 2007/January 2008, he was too busy to make the inquiry. He responded "I know it's unusual. I do not have a very good explanation". 99 The applicant conceded that he did not take any steps in December 2007 or January 2008 to ascertain whether or not judgment had been entered in the proceedings. He was conscious of the fact that he was, not only defending the proceedings, but that he and Mrs Pallister had an interest as claimants in that they had instituted cross-claims against their former solicitors. The applicant stated in evidence in relation to the hearing dates that he had an understanding that "if I needed to be there, I would be asked to go". He conceded that he was aware that one of the possibilities was that the proceedings would be heard on a final basis on 7 November 2007. He acknowledged that he understood after 7 and 8 November 2007 that there was a possibility that judgment could have been entered against him in his absence and that, additionally, judgment may have been entered on the cross-claims against the solicitors. 100 He conceded that he took no steps whatever until at least 10 October 2008 to find out what, in fact, had occurred. He said that on or about 10 October 2008, upon receiving a call from Mrs Pallister, he became aware of the fact that judgment had been entered against her and he then assumed that judgment had also been entered against him. 101 The applicant further agreed in cross-examination that, subsequently to 10 October 2008 and before 9 February 2009, he took no steps to retain a lawyer for the purposes of making an application to set aside the judgment. 102 The evidence was that other members of the firm, Somerville & Co, acted for the applicant's companies and in 2007 he would have visited the offices of Somerville & Co from time to time. Notwithstanding the possibility that judgment may well have been entered against him and that he remained in touch with the firm, Somerville & Co, he did not make any inquiry as to what had happened in the proceedings brought by Mr and Mrs Hearse. He agreed that he arrived back in Australia on 11 November 2007 before leaving again in 5 February 2008. He agreed he made no inquiry about the proceedings in that period. 103 The applicant said it was a busy period in his life but he had "… no good explanation as to why" he did not make such inquiry.

(c) Were the emails from Somerville & Co received by the applicant? 104 The applicant's evidence was that he did not receive the correspondence referred to in paragraph [95]. He said he did not receive a copy of the Notice of Ceasing to Act. In seeking to explain how that could have come about, he said in evidence in chief that the email address mpallister@mobileemail.vodaphone.com.au was not an email address that he used in 2007. He said he had no explanation as to why Somerville & Co would have used that address to communicate with him in 2007. He said that in 2007 he used the email address markp@quiktrak.com.au, an address he said he had used since 2004. He said that, as far as he was aware, all emails from Somerville & Co went to the latter address. 105 In cross-examination by Mr Curtin, he was shown emails of February 2005 addressed to mpallister@mobileemail.vodaphone.com.au and a further email dated 6 June 2007 from him to Ms Baqleh which indicated that he had used the email address mpallister@mobileemail.vodaphone.com.au for the purposes of sending that email. He was shown a further email communication of 7 June 2007 from him to Ms Baqleh in which he, again, had used the latter email address as well as for the purpose of a further email of 12 June 2007. He agreed that, in June 2007, he had sent 23 emails to Ms Baqleh using the email address mpallister@mobileemail.vodaphone.com.au. He agreed that his earlier evidence of not using that email address in 2007 was incorrect. 106 It was then put to him that the email correspondence identified in paragraph [95] were, in fact, received and read by him. He denied that that was the case.

(12) PROPER AND SATISFACTORY EXPLANATION FOR APPLICANT'S FAILURE TO APPEAR AT HEARING 107 The applicant said that he had previously been involved in litigation and understood that if there was a need for him to be at the hearing, then he would be asked to go. He added that he did not know that the hearing dates were for a final hearing, although he did admit that he appreciated it was a possibility that the primary proceedings, as well as the cross-claims, would be heard. Despite this he did not take any steps until at least 10 October 2008 to find out what had happened. 108 He first gave instructions to his solicitor to make the present application on 9 February 2009. He conceded that he did not instruct a lawyer in those four months to take action in relation to the judgment. In that period, he was in Australia between July and 9 November 2008. It appears that he was served with a bankruptcy notice on 16 December 2008.

(13) CONCLUSIONS ON DISCRETIONARY FACTORS: DELAY AND EXPLANATION FOR FAILURE TO ATTEND HEARING 109 In his written submissions, Mr Curtin observed that the applicant had been informed and knew of the hearing dates and that his explanation for non-attendance was "unconvincing", particularly so by reason of the fact that after the hearing dates had past he made no inquiries of any nature about the outcome. He further contended that the applicant's evidence that he believed Somerville & Co would attend the hearing ought to be rejected given the lack of any corroborative evidence for such a belief and the lack of any oral or written advice from Somerville & Co that could reasonably have given rise to such a belief. Reliance was also placed upon the letters written by Somerville & Co dated 6 and 7 June 2007 (Exhibit 4) to the effect that funds were required for the preparation of the matter. 110 Department of Immigration records were relied upon to establish that, between the date the proceedings were set down for hearing (20 June 2007) and the date of hearing (7 November 2007), the applicant was in Australia for 111 days of those days and that between 7 November 2007 and the date that he assumed there was a judgment against him (10 October 2008) he was in Australia for 310 of those days. 111 The applicant's evidence as to his understanding that his solicitor would attend the hearing on 7 and 8 November 2007, the fact that he claims not to have received any of the email correspondence from Somerville & Co, that he did not receive the email or hard copy of the Notice of Ceasing to Act and the fact that he did not trouble to inquire after 7 November 2007 about the matter are all matters about which there are serious questions concerning the applicant's evidence. 112 The applicant painted a picture of himself as being an extremely busy man who had, during the relevant period, separated from his wife and, from time to time, lived in Sydney and at other times in Perth and spent a good deal of time overseas. The inconsistencies in his evidence, particularly, in relation to the email correspondence to which I have referred are reasons enough to question his credibility. However, at the end of the day, the question of inaction and delay by the applicant are matters that go to the exercise of the discretion and are not necessarily determinative of the outcome of the application. Whilst there were inconsistencies and a lack of corroboration in the applicant's account, I do not make any findings that he deliberately fabricated any of the evidence in order to increase his prospects of success in this application. It was not put to the applicant that he had, in fact, fabricated the evidence that he had given and nor were there any submissions made to that effect.

(14) THE SECOND CROSS-CLAIM 113 Mr McInerney in his opening (transcript, 7 May 2009, p.2, lines 35 to 40) and in his Written Submissions in Reply (paragraph 2), submitted that, even if the judgments (and ancillary orders) made in favour of the plaintiffs against the first and second defendants were not set aside, then "… the orders dismissing the cross-claims against Mr Staunton (which cross-claims have not been determined on their merits), should be set aside under UCPR 36.16(2)". There were no other submissions made in relation to the orders disposing of the cross-claims. 114 In the Third to Fifth Defendant's Submissions in Reply dated 15 May 2009, it was submitted:- "37. In all the circumstances outlined above, the application in respect of the cross-claim should be rejected. The applicant invoked the Court's processes to prosecute a claim for damages against the Solicitors. He was fully aware that that cross-claim was to be heard in November 2007. He did not make any arrangements to be represented at that hearing, nor appear himself, to prosecute that cross-claim. He made no inquiries subsequently. The Court's processes should not be made available to the applicant at his whim. 38. As is apparent, there is a significant dispute of fact between the applicant and the Solicitors regarding the advice he was given. If the application is granted, it is probable that a hearing date will not be obtainable until late this year, being 2 years after the November 2007 hearing and nearly 5 years after the relevant events. Thus, there is a presumptive prejudice in the further deterioration of the witnesses' memories since November 2007. Despite there being affidavits served by the parties, the witnesses will be cross-examined on their memories, inherent probabilities and consistency or inconsistencies with other incontrovertible evidence. The Solicitors were entitled to have the cross-claim determined in November 2007 and should not be required to defend it again in circumstances of greater uncertainty arising from the presumptive prejudice identified, the fault for which lies solely in the hands of a discredited applicant. 39. The applicant's submission ought be rejected and his application dismissed with costs." 115 In the second cross-claim filed on 29 September 2006, the applicant, as cross-claimant, sought orders as follows:- "1. Order that the cross-defendants indemnify the cross-claimant in respect of any judgment obtained by the plaintiffs against the cross-claimant. 2. Order that the cross-defendants pay the cross-claimants' costs of these proceedings, including the costs of this cross-claim." 116 The facts and matters pleaded are set out in paragraphs 1 to 13 of the second cross-claim. The cross-claim is framed in contract and in tort. 117 In paragraph 8 of the second cross-claim it is alleged that the first cross-defendant failed to provide advice, in particular:-

(1) A failure to advise the applicant of the effect of the Contract for Sale on him.

(2) Failure to advise him of the consequences of a default under the terms of the Contract except for the fact that he would forfeit the deposit of $50,000.

(3) Failure to advise him in respect of the consequences of the vendors' validly terminating the Contract.

(4) Failure to advise as to how the risk under the Contract would be limited to the deposit actually paid.

(5) Failure to provide the applicant with a copy of the Contract as requested. 118 I have had due regard to the matters that Mr Curtin has raised in his submissions and to which I have referred above. I have taken into account the questions of delay and prejudice to which I have also referred. The cross-defendants were under a duty in respect of professional services provided pursuant to their retainer. It is simply not possible on an application such as this to conclude that there is no basis for any of the alleged breaches of contract and/or alleged breaches of duty pleaded in the second cross-claim. There not having been an adjudication of matters which will depend on questions of fact, and despite the delay and the problems associated with the applicant's evidence to which I have earlier referred, the primary consideration is the fact that, judgment having been entered against the applicant in favour of the plaintiffs, the order dismissing the second cross-claim should be set aside in the circumstances of this case and where there has been no adjudication of the matters subjacent to and propounded in the second cross-claim. The applicant's undertaking will, to an extent, address any prejudice in terms of costs. 119 I, accordingly, propose to make an order setting aside the order dismissing the second cross-claim.

(1) Except as provided in paragraph (2) below, the application for orders sought in paragraphs 1, 2, 3 and 4 of the notice of motion filed on 26 February 2009 is dismissed.

(2) That the order made on 2 July 2008 and entered on 3 July 2008 dismissing the second cross-claim (order 5) be set aside.

(3) The applicant/first defendant is to pay the costs of the notice of motion filed on 26 February 2009.

(4) Liberty to any party to apply on short notice as to the form of orders or matters ancillary thereto. **********

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