Hilton v Gidley

Supreme Court of NSW|2008-08-12|Before: Hislop J

Introduction 1 The plaintiff, by statement of claim filed on 8 May 2008, alleged that he loaned monies pursuant to a loan deed to the first and second defendants and that the third and fourth defendants agreed to provide an equitable mortgage over a property at Stanmore to secure the first and second defendants obligations under that deed. The plaintiff further alleged that the first and second defendants were in default under the loan deed. He sought various forms of relief against them and the third and fourth defendants. 2 On 26 May 2008 Mr Fordyce, solicitor, filed an appearance on behalf of each of the first to fourth defendants. The appearance stated that each of those defendants "submits to the making of all orders sought, and the giving or entry of judgment in respect of all claims made, save as to costs". 3 On 4 June 2008 an amended statement of claim was filed whereby the plaintiff added St George Bank Ltd and Fast Fix Loans Pty Ltd as fifth and sixth defendants respectively. These defendants filed appearances in July 2008. The plaintiff did not seek any relief from the fifth and sixth defendants, they being joined consequent upon observations made in King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076. 4 On 2 July 2008 the plaintiff filed a notice of motion seeking judgment and other orders against the first to fourth defendants consequent upon the submitting appearance. 5 On 23 July 2008 a notice of motion was filed on behalf of the first to fourth defendants seeking, relevantly, orders that "1. Leave be granted for the submitting appearance filed on 28 [sic 26] May 2008 to be withdrawn pursuant to r 12.5 of the Uniform Civil Procedure Regulations 2. The submitting appearance filed on 28 [sic 26] May 2008 be withdrawn."

6 The notice of motion came on for hearing before me on 12 August 2008. In support of the notice of motion the affidavits of each of the first to fourth defendants sworn or affirmed on 21 July 2008 were read as was the affidavit of Mr Fordyce sworn on 17 July 2008 and the affidavit of Kerrie-Anne Zack affirmed on 24 July 2008. 7 The affidavit of the second defendant was in the following terms: "2 During the course of these proceedings I have only ever instructed Mr Paul Fordyce, solicitor to act for me connection with this matter. 3 I have never instructed my solicitor to submit to the orders requested pursuant to the statement of claim. 4 It has never been my intention and I do not submit to the orders requested under the statement of claim, or as amended, or to the notice of motion. 5 I have been recently advised and verily believe that there may be an arguable defence and/or a possible cross claim available to me in connection with these proceedings and I would like an opportunity to be heard in respect of those possible applications. 6 I was not aware that any order submitting to the orders had been prepared or filed until my solicitor advised me late in the day on Thursday 17 July 2008." 8 The affidavits of the third and fourth defendants were relevantly in identical terms to that of the second defendant as was the affidavit of the first defendant save that paragraph 6 was omitted from her affidavit.

9 Ms Zack's affidavit affirmed she was employed by Mr Fordyce as his personal assistant. She had been instructed by Mr Fordyce to draft an appearance in this matter which she did. She was not aware that she should not have included the section entitled "Statement of Submission" in the appearance. Mr Fordyce signed and dated the appearance and Ms Zack arranged for it to be filed and served. On 17 July 2008 she was advised by Mr Fordyce that the appearance was incorrect. 10 Mr Fordyce in his affidavit said "(2) When served with the originating process in this matter I instructed my secretary to prepare a notice of appearance so that the defendants could consider the claim against them and, if appropriate file defences. (3) Due to an error which I did not detect the submitting appearance was filed in error. (4) I seek leave to withdraw that submitting appearance so that a usual appearance pursuant to which the defendants can defend the proceeding if they wish can be filed." 11 Mr Fordyce was cross-examined on his affidavit. He said Ms Zack had commenced as his personal assistant in December 2007 and by 26 May 2008 had only prepared one other notice of appearance in which she had also included a Statement of Submission. This was prepared about the same time as the subject appearance. He denied his failure to file a defence within time was because the defendants did not intend to defend the proceedings. 12 No evidence was tendered on behalf of the plaintiff. 13 At the conclusion of the evidence counsel for the plaintiff submitted that the relief sought was discretionary, that the mistake in filing a submitting appearance was "only an entry point into the discretion" and that the discretion under r 12.5 UCPR should be exercised by analogy with the exercise of the discretion to set aside a default judgment under r 36.16 UCPR. 14 As a result of this submission, and a possible conflict of interest in the legal representative continuing to represent each of the first to fourth defendants, the matter was adjourned to enable appropriate representation to be arranged and for further evidence as to the merits of the defences to be filed and served. The matter was stood over to 3 September 2008. On that date Mr Perrignon, of counsel, represented the first to fourth defendants. He made an application for an adjournment as the new legal representatives had come into the matter only shortly before the hearing date. The matter was adjourned by consent. 15 Thereafter protracted efforts were made to resolve the plaintiff's claim. Ultimately these proved unsuccessful and on 17 March 2009 the matter was again listed before me. On that occasion the first defendant appeared in person and there was no appearance of the second, third or fourth defendants or any legal representative on their behalf. It appeared that the solicitor acting for the defendants had filed a notice of ceasing to act on the previous day. The first defendant stated that she needed more time either to resolve the issue or to get further representation, that her sister (fourth defendant) was unable to attend Court as she was ill and the two other defendants had been unable to rearrange their affairs at such short notice in order to attend Court. In these circumstances the proceedings were adjourned to 2 April 2009, the Court noting that it "would expect the matter to proceed on that day". 16 On 2 April 2009 the matter again was listed. The first defendant appeared in person. There was no appearance for the second, third or fourth defendants. The matter was stood down to 2.00pm to enable the second, third and fourth defendants to be present at Court, the first defendant having agreed to contact them. The first to fourth defendants attended at 2.00pm. They indicated to the Court that they desired to have an opportunity to get legal advice and either be represented on the next occasion or resolve the matter before then. The parties agreed to the matter being adjourned to 21 April 2009. The fourth defendant was informed she would not have to attend Court if she had legal representation on the next occasion. 17 On 21 April 2009 the matter was again listed. The first defendant appeared and there was no appearance of the second, third and fourth defendants or any legal representative on their behalf. The first defendant told the Court that she was not authorised to act on behalf of the second to fourth defendants.

18 Rule 12.5 UCPR provides: "An active party may withdraw an appearance by leave of the court."

"active party" is defined in the dictionary to the UCPR as: "in relation to any proceedings, means a party who has an address for service in the proceedings, other than: (a) a party against whom judgment has been entered in the proceedings, or (b) a party in respect of whom the proceedings have been dismissed, withdrawn or discontinued, being, in either case, a party against whom no further claim in the proceedings subsists" 19 Rule 12.5 UCPR confers a discretion on the Court. In Firth v John Mowlem and Co Ltd [1978] 3 All ER 331 Megaw LJ (with whom the other Justices agreed) said, in respect of a similar rule in the UK: "Each case had to be looked at on its own particular facts, and the judge has a discretion. There was here what can properly be called a 'mistake' and, subject to the question of the exercise of the court's discretion, the judge had jurisdiction to make the order which he did and to set aside the unconditional appearance."

I accept that that principle is applicable in relation to r 12.5 UCPR. I also accept, by analogy with the principles developed in relation to setting aside a default judgment pursuant to r 36.16 UCPR, that, in exercising the discretion, a relevant factor is whether the defendant can show an arguable defence. 20 Counsel for the plaintiff "handed up" correspondence from the second to fourth defendants (MFI 1) which he put before the Court: "as a matter of my duty in the absence of those persons, particularly where they have been acting in person, they were clearly aware on the last occasion of the state of play." 21 The first item of correspondence was an email dated 20 April 2009 to the plaintiff's solicitor from a solicitor who had provided advice to the third and fourth defendants. The email contained material which, if proved, may establish an arguable defence for the third and fourth defendants. The email contained a recommendation [19]: "this correspondence should be provided in any proceedings on foot between any of the parties" 22 A second email from that solicitor to the plaintiff's solicitor stated: "My short notice retainer was to provide a holistic independent opinion to the third and fourth defendants. I have done that. No time has been allowed to me to carry out any work to be able to appear tomorrow. In any event, I'm outside Sydney tomorrow. I am checking with Daniel and Cynthia what they wish to do. Out of fairness I think that Daniel and Cynthia should be given time to prepare a defence." 23 There was also an email dated 20 April 2009 from the second defendant to the plaintiff's solicitor in which he concluded: "I do not believe I can contribute by attending today [Tuesday 21 April] court hearing but if necessary at any time you can contact me on…" 24 Counsel for the plaintiff submitted that the appropriate course was for the Court to dismiss the notice of motion in respect of the second, third and fourth defendants as there was no evidence in admissible form before the Court to establish that an arguable defence was available to any of them; there was no evidence of an intention to pursue the notice of motion to its conclusion and each of them, it would seem, had made a deliberate decision to absent him or herself from the hearing, the third and fourth defendants, at least, after obtaining legal advice. He submitted that if the second to fourth defendants or any of them had an arguable defence which they wished to pursue and an explanation for their absence from the hearing they could move the Court to set aside any order made in their absence pursuant to r 36.16(2)(b) UCPR.

25 I accept the evidence of Mr Fordyce and the other witnesses that Mr Fordyce had not been instructed to file a submitting appearance, that such had been filed and served as a result of an error in his office and that the first to fourth defendants had not intended to submit to the orders sought by the plaintiff at that time. However the only evidence of the second to fourth defendants which has been admitted as to an arguable defence was that contained in the affidavits of 21 July 2008 that he/she had been advised "there may be an arguable defence and/or a possible cross-claim available to me". 26 In these circumstances, having regard to the delay in the proceedings, the plaintiff's understandable desire to proceed with his claim, the absence of the second to fourth defendants and the lack of evidence put forward by them to establish an arguable defence I accede to the plaintiff's request and dismiss the notice of motion in relation to those defendants with costs. 27 Counsel for the plaintiff proceeded against the first defendant. The first defendant read her affidavit sworn 2 September 2008 which detailed the circumstances in which the agreement was reached. Her affidavit sworn on 21 July 2008 was already before the Court. She also relied upon a draft proposed defence (Ex 1D1). 28 Counsel for the plaintiff submitted that the first defendant's defence, so far as could be ascertained, raised three matters none of which was arguable. In short, he submitted, and I accept,

(a) the first matter was a defence under the Contracts Review Act 1980 . This was not available as the evidence in the first defendant's affidavit was that the agreement was entered into in the course of or for the purpose of a trade or business carried on or proposed to be carried on by the first defendant and was thus excluded by s 6 of that Act.

(b) the second matter was a non est factum defence. This was not available as there was no evidence or suggestion that the first defendant was under any disability such as would have affected her ability to understand the document. There was no evidence that the document signed by her was a totally different document to the one she thought she was signing. It was immaterial that she may not have read and understood all of the terms of the agreement.

(c) the third matter was an allegation of unconscionable conduct. This was not available as a defence as there was no evidence of some special disadvantage of the first defendant or some unfair taking of advantage of the first defendant by the plaintiff. 29 Furthermore, the meeting where the agreement was prepared and signed was, at the first defendant's suggestion, held in the office of the first defendant's solicitor. The solicitor was present at all times. The loan deed was prepared by him. No other legal representatives were present. 30 The first defendant did not withdraw the notice of motion. However she informed the Court that: "There is no dispute. I have accepted that this is my responsibility… I don't have a case. I've admitted this is my liability"

and that she would resolve the matter with the plaintiff. 31 In all of the circumstances I am not satisfied that the first defendant has demonstrated an arguable defence. 32 Although, as previously stated, I am satisfied the submitting appearance was filed in error I nevertheless, in the exercise of my discretion, dismiss the notice of motion in relation to the first defendant with costs.

The notice of motion filed in Court on 26 May 2008 is dismissed.

The first, second, third and fourth defendants are to pay the plaintiff's costs of the notice of motion.

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.

CITATION : Hilton v Gidley [2009] NSWSC 383

CASES CITED : Firth v John Mowlem and Co Ltd [1978] 3 All ER 331 King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076

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