District Court of Queensland|2008-11-19

Hendon Homes Pty Ltd v. Centennial Group Holdings Pty Ltd [2008] QDC 284 (19 November 2008)

CATCHWORDS: Uniform Civil Procedure Rules r 374(5)(a),

r 374(8) - judgment in accordance with the claim awarded against defendant failing to make disclosure as ordered by a judge - defence was evasive - defendant did not appear - plaintiff refused indemnity costs of the application - plaintiff refused indemnity costs of the proceeding generally, even assuming that it had made an offer to settle less favourably.

HIS HONOUR: This is a plaintiff's application under rule 374 for judgment under sub-rule 5(a). It is based, as the relevant application conformably with the rule's requirements sets out, on the defendant's failure to comply with an order of Judge Collins of the 25th of September 2008 requiring the defendant to provide disclosure pursuant to rule 211 within 14 days.

That application was dealt with in the absence of the respondent, as was an application by its solicitors on the record for leave to withdraw, which Judge Koppenol determined on the 10th of October 2008. That order made no arrangement for providing the plaintiff with any address for service. What the plaintiff has done, and justifiably in my opinion, is rely on the address of the defendant company indicated in the notice of intention to defend, being an address in New South Wales.

That, according to searches, represents the defendant's principal place of business. It also has a registered office in New South Wales care of a firm of accountants. Very likely it was the advice of Judge Collins's order which led to the solicitors pulling out.

The defence is a lengthy document but one I would assess as conveying little or nothing by way of useful information or allegations. It can fairly be characterised as evasive.

That observation has some relevance. There is a comparison favourable to the plaintiff to be made with its statement of claim. The plaintiff is a builder which, according to the pleaded case, got involved with the defendant - described by Mr Adames from the Bar table as a "marketeer", although that's by the by. Its role appears to have been to locate people who would become clients of the plaintiff which was willing to bear certain costs and make certain payments to the defendant in expectation in getting valuable contracts.

Its claim, which is slightly in excess of $120,000 before interest, is, in essence, for recovery from the defendant of $75,000 paid to it, being three payments of $25,000 which it pleads it made on the completion of land contracts whereby the prospective customers acquired land in Queensland where it was expected houses would be erected for them.

The balance of the claim is for particularised outlays which the plaintiff met by way of payments to local authorities or private building certifiers for the approvals for construction and the like.

In retrospect, it is perhaps unfortunate that Judge Collins' order by its terms called for compliance by way of disclosure being made within 14 days, which would be construed as within 14 days of the making of the order. Inevitably, in the circumstances, there was going to be some delay in the defendant's becoming aware of the making of that order and the necessity for it to comply.

It will have been at least a week before Mr Adames' letter of advice of the order was received in Parramatta. That was followed up about a week later by provision of a sealed copy of Judge Collins' order. A letter from Mr Adames in effect allowed the defendant until the 22nd of October before some response from it was required; acknowledging the timing of events in that way strikes me as appropriate.

Despite the extended time which the defendant was entitled to for making disclosure at least in a moral sense, there's been no disclosure yet - generating suspicion that the defendant realises defence of the proceeding is pointless; perhaps it's without the means or ability to defend.

I have always been of the view that while it may be a salutary thing to visit on a plaintiff falling foul of rule 374 the harsh consequence of an adverse judgment, it is, in principle, a very different thing to visit on a defaulting defendant the serious consequence of a judgment for a large amount of money which may or may not be an appropriate outcome on the merits.

In the last day or so I've had occasion to decline to make a guillotine order which boded to have that effect in a proceeding about property damage to the plaintiff's motor vehicle based on the defendant's failure to produce documents of which disclosure had been made where the defendant was unable to produce the documents given that her former solicitor was holding them pursuant to a lien. (Veolia Environmental Services (Australia) Pty Ltd v Baglin (as Executors of Spearing), 681/2008, 18.11.08).

In special circumstances I have been persuaded it was appropriate to use rule 374 in the harshest way its terms envisaged by a judgment against the defendant, for example, in Truran Storey v.Peekhrst Pty Ltd [2008] QDC 180. Mr Adames has referred me to a couple of instances of other Judges of the Court using rule 374 in precisely the way in which he seeks that it be applied today for failure of a defendant to disclose. A judgment of $250,000 was entered by Judge Dearden in Waters v. Gembrook Crest Pty Ltd [2006] QDC 174.

More recently Mr Adames himself was in a matter before Judge Tutt which was closely similar. It was identified as RJSJ Lee Pty Ltd v.Calridge Pty Ltd BD3247 [2007] 20 August 2008.

If one enquires about the basis on which a court can in good conscience enter a judgment against a defendant it would seem there are three potential bases, the first that is a means of effectively penalising the defendant for not complying with the court's order. The second basis, which is relatively common, might involve some reference to rule 371 and a notional striking out of steps taken by a defendant to protect itself against judgment in consequence of which that the plaintiff gets into a position to proceed as upon default; the plaintiff here has not invoked r 371. Thirdly, the court may reach the judgment that upon the merits the plaintiff appears entitled to succeed.

Mr Adames is here without any evidence upon the merits of the parties' dispute. I don't resile from comments I made above about the respective pleadings.

I consider that it is appropriate for the Court to bring this proceeding to a head in the way proposed. The Court has the comfort of sub-rule (8) of rule 374 which may be available to the defendant, if it wishes to defend the claim, to have judgment set aside.

Somewhat narrowly I am persuaded that the order sought by Mr Adames ought to be made. I'm not prepared to include in it indemnity costs as sought in respect of the application in Mr Adames' final suggested draft, which sought standard costs in respect of the proceeding generally. This application I don't see as a case for indemnity costs. By way of marked contrast with the usual situation for indemnity costs, the plaintiff here is getting a judgment unusually quickly and inexpensively.

Once alerted to the Court's intention to grant the bulk of the relief sought, at least the important parts, Mr Adames mentioned that his client had made an offer to settle which might arguably affect costs by entitling the plaintiff to indemnity costs, given that unsurprisingly the offer to settle was for a more modest sum than that referred to in the judgment.

I am not inclined in the circumstances to entertain an application for indemnity costs and essentially for the same reason which led me to refuse them in respect of the costs of the application. So the order is as per initialled draft.

Hendon Homes Pty Ltd v. Centennial Group Holdings Pty Ltd [2008] QDC 284 (19 November 2008)

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Hendon Homes Pty Ltd v. Centennial Group Holdings Pty Ltd [2008] QDC 284 (19 November 2008)