Huang v Green Slips Direct Pty Ltd trading as Australian Motor Traders

District Court of NSW|2022-10-21

The application before the court

Mrs Xiaojin Huang (hereafter "the plaintiff") is a 68 year old lady who came to Australia in 2017 from China, with her husband, to live with her daughter Suting Zhu, son-in-law (hereafter "Brian") and their children.
The defendant is a motor trader which at all relevant times has had its registered office at Unit 1, 159 Arthur Street Homebush according to ASIC records (Annexure B to the affidavit of Mr Frangos sworn 20 May 2022) and carries on business using an email address which has remained the same at all relevant times (CB 52 and Exhibit A).
As is set out in more detail below, the plaintiff's solicitors served correspondence and court documents on the defendant's registered office over more than three years (January 2019 - June 2022) resulting in their obtaining a judgment in favour of the plaintiff, and against the defendant, on 21 June 2022. The defendant did not participate in the court proceedings for the entirety of this period.
On 22 August 2022 the defendant (hereafter "the defendant" or "Green Slips"), by Notice of Motion filed on that day, sought the following orders: "1. The proceedings, including any enforcement proceedings, are stayed until the application to set aside judgment is determined. 2. The application for a stay of the proceedings in order 1 is dealt with ex parte, on an urgent basis in Chambers. 3. The Default Judgment entered on 21 June 2022 is set aside. 4. The Defendant is to file a Defence with 28 days. 5. The Plaintiff to pay the Defendant's costs of and incidental to the Notice of Motion. 6. Such other orders as the Court deems fit."
The defendant's motion was fixed before the court for hearing on 21 October 2022.

The plaintiff's solicitors contact the defendant

It is not in dispute that the plaintiff's solicitors sent correspondence to the defendant as early as 14 January 2019 seeking information about the circumstances of the plaintiff's fall. In response to this letter, the plaintiff's solicitors' office received a phone call from Mr Koukoutas, an employee of the defendant, on 25 January 2019 (CB 225).
This letter, and Mr Koukoutas's subsequent call, occurred less than a month after the plaintiff's accident and at a time when, if any of the defendant's employees were aware of the plaintiff's accident (as was later conceded in the evidence before me to be the case), it would have been fresh in their minds. This is significant, because one of the main reasons for failing to respond to the claim is asserted to be the belief of the defendant's servants or agents that the letter and subsequent documentation were part of a scam and that there had been no fall at all. It is also noteworthy that this early contact occurred a year before the pandemic (an event for which the defendant's witnesses comprehensively blame for their inaction, in that their offices were closed and there were difficulties in receiving and reading mail).
Apart from this phone call, no further steps were taken by anyone on behalf of the defendant. There the matter rested until the plaintiff commenced proceedings.

The plaintiff commences proceedings for personal injury

A statement of claim, statement of particulars and medical evidence were served in November 2021. It is conceded that these documents were all sent to the correct registered address for the company. A series of court-appointed dates for case management was also served.
The defendant failed to attend directions hearings before the Judicial Registrar. What is more, the defendant did not respond to letters from the court advising of directions dates, or to court warnings of the entry of default judgment due to its continued non-attendance.
Judgment was entered and the proceedings were listed for hearing before Robison DCJ on 21 June 2022. The plaintiff and two lay witnesses provided statements as well as evidence in chief at the hearing, and a schedule of damages was provided, together with supporting medical evidence. After satisfying himself that there was no appearance by the defendant despite the court having sent a notice, Robison DCJ entered judgment for the plaintiff for $335,273.70 on the same day as the hearing, namely 21 June 2022.
The court duly entered judgment for this sum, together with an order that the plaintiff's costs be paid on the ordinary basis as agreed or assessed. The Judgment/order provided that "The Registrar is to notify the defendant of the judgment for damages" and the registry did so.
It was not until 22 August 2022 that Green Slips, by notice of motion filed on that day, sought the orders set out in paragraph 1 of this judgment. The explanation for the delay between being notified by the court and the bringing of this application is that their solicitors had been writing to the solicitors for the plaintiff seeking the setting aside of the judgment of Robison DCJ, but that they refused to agree.
Orders were made on 23 August 2022 staying these proceedings until 26 August 2022. On 26 August 2022, the defendant's application to set aside judgment was listed for hearing before me on 21 October 2022.

The evidence

The evidence relied upon by the parties is set out in a joint Court Book. The applicant relied upon the following evidence: 1. Affidavit of Kannon Kanesa, an accountant employed by Green Slips, dated 22 August 2022. 2. Two affidavits of Andrew Koukoutas dated 28 September 2022 and 12 October 2022. 3. Two affidavits of Mithrah Baskaran (a solicitor employed by Holman Webb) dated 22 August 2022 and 12 October 2022. 4. Objections were taken to the affidavit of James Quach dated 17 October 2022 (who had provided an affidavit only on the basis of not being cross-examined and refused to attend court for this purpose). The reasons for my rejection of that evidence are set out at the end of this judgment. An affidavit by an asserted expert, Mr Strautins, was withdrawn.
Mr Koukoutas and Mr Kanesa were cross-examined.
The respondent relied upon the following evidence: 1. Affidavit of Brian Huang dated 14 October 2022. Mr Huang is the plaintiff's son-in-law. He took photographs of the steps where the plaintiff fell. 2. Three affidavits of Marcus Frangos, the solicitor for the respondent, dated 20 May 2022, 9 September 2022 and 30 September 2022. These affidavits attach copies of the correspondence sent to Green Slips from the commencement of the time that he received instructions from the plaintiff. 3. Affidavit of Melissa Rae, an employee of the law firm retained by the plaintiff, dated 6 September 2022. She deposes to a conversation she had with Mr Kanesa on 7 April 2022.
None of the plaintiff's witnesses were required for cross-examination.
In addition to the Court Book tendering these affidavits and the pleadings (including the notice of motion for default judgment dated 20 May 2022), the parties referred during their submissions to letters sent by the court to the defendant, some of which were tendered, and to the evidence before Robison DCJ.
Most of the challenged evidence relates to the explanations offered on behalf of the defendant for failing to respond to correspondence from the plaintiff and the court in relation to the service of court documents, correspondence and court notifications. Apart from three somewhat rude phone calls (25 January 2019 and 7 April 2022) made by employees of the defendant, no steps in the litigation were taken.
The explanations proffered by the defendant for failing to do so may be summarised as follows: 1. The defendant's registered office was shut for long periods before, during and after the pandemic lockdowns and most, if not all, of the correspondence was not seen by the relevant office personnel as a result. 2. The alternate explanation offered was that the defendant's servants or agents saw these documents, but were suspicious each time the defendant was served with correspondence, court pleadings and court notices, as they considered that the claim could be a fraudulent or fictitious one. They thought it best to ignore these documents, as they thought the defendant's servants or agents working in the showroom would have been aware if an accident had in fact occurred on the stairs as claimed. 3. Alternatively, the defendant's servants or agents saw and/or were aware of the plaintiff's accident but considered she had fallen because she did not hang on to the railing and that the claim was thus a fraudulent one. 4. Alternatively, the defendant's witnesses claimed to have been misled by, or to have misunderstood, what Mr Frangos and Ms Rae (the solicitor for the plaintiff and his employee) said in the course of the two telephone calls made to them by employees of the defendant, or to have been unable to contact Mr Frangos, either because he did not return calls or could not be contacted.

What happened in December 2018?

The circumstances of the plaintiff's accident on 15 December 2018 are not really in dispute. Although the initial response of the defendant's witnesses in their affidavit evidence was to deny knowing anything about the accident, at least one witness asserted in his oral evidence that he had seen the events in question. That description is largely consistent with the description of the accident in the statement of claim. It is agreed that there had been rain earlier in the day and the external staircase was wet. According to paragraph 9(g) of the statement of claim, while the plaintiff and her daughter and son-in-law were descending from the showroom via the external stairway, an employee of the defendant yelled words to the effect of "Be careful going down the stairs". The plaintiff's daughter heard these words but the plaintiff did not and, as the plaintiff's English was limited she would not have understood them. The plaintiff either at the same time or a few seconds later slipped and fell while descending.
Whether as a result of this accident or for other reasons, it is not in dispute that some changes were made to the stairs in question (although the date on which those changes were made was not agreed to). It is not in dispute that the photograph taken by Brian two days after the plaintiff's accident, on 17 December 2018, shows the state of the stairs as follows:
The very significant changes to the staircase in the photograph taken on 19 December 2018 include the placement of 18 non-slip mats as follows:
In addition to having its employees aware of the accident on the day and having (more likely than not) authorised the changes to the stairs at about this time, the defendant also had the benefit of receiving the plaintiff's solicitor's letter sent to the defendant at its registered office on 14 January 2019, the contents of which were as follows: "Dear Sir/Madam, Our client: Xiaojin Huang Date of Incident: 15 December 2018 We act for Mrs Xiaojin Huang in a potential public liability claim for damages arising out of injuries sustained in a slip and fall incident on 15 December 2018 ("the Incident") at Australian Motor Traders (NSW) ("the Premises") which we confirm is situate at 2 Haberfieid Road, Haberfield NSW 2045. We are instructed that Mrs Huang slipped and fell while walking down external stairs at the Premises ("the area of the Incident"). Requests for Documents and Information As part of our 'reasonable enquiries' in accordance with rule 5.3(1)(a) of the UCPR, we request that you provide us with the following documents and information to assist our client in making a decision whether or not to commence proceedings against Green Slips Direct Pty Ltd T/AS Australian Motor Traders (NSW): 1. All documents and records of complaints made in relation to the Incident and the area of the Incident for the period 15 June 2018 to date. 2. Internally generated reports or all documentation relating to the Incident and the area of the Incident. 3. Reports or documents that were created subsequent to the Incident such as details of repairs made or precautions taken, if any, since the Incident occurred. 4. All other documents relating to the incident, including notices of claim, claim forms, letters and correspondence between our client and your organization, or any organization that is affiliated with your organization. 5. All documents that outline the system of inspection, condition, maintenance, repair and cleaning at the Premises, such as contracts, agreements, policies, guidelines, practice notes, directives, progress and condition reports, correspondence, incident reports, including internal incident reports, inspection reports and records in force as at the date of the Incident. 6. A copy of all de-identified incident/accident reports in relation to trip accidents/incidents that occurred at the Premises on the date of the Incident. 7. Please provide any CCTV Footage of the Incident you hold, including 30 minutes prior to the Incident and 30 minutes after. If CCTV Footage does not exist please confirm this in writing. In our view, 21 days (4 February 2019) is a reasonably sufficient time for you to supply the above requested documents and information. If you require an extension of time please indicate the amount of time you require by return mail. If you have any questions please contact the writer."
There can be no doubt that this letter came to the attention of the defendant immediately, for two reasons. The first is that the defendant's explanation for not checking its registered office for mail on a regular basis due to the pandemic cannot apply, as the pandemic was a year away. The second is that on 25 January 2019, Mr Andrew Koukoutas, on behalf of the defendant, telephoned the plaintiff's solicitors and spoke to Mr Marcus Frangos, who wrote a file note in the following terms: "Andrew - 0405 388 965 Only just moved in July/August Did tell her to be careful. Normal person Alleged that she hadn't grab [sic] handrail. Could have grabbed. Sales clerk - had a fall I can't do anything. Public liability - should have used hand rail Take it easy. Hold onto her - she should take her hand rail Told her take it easy. What else to do. How do we know Only two hand rails. Second step - after that Told her to be careful - what else could they do? Asian respect Asian. Daughter was there too - would have heard her. Wouldn't answer. Raining - Be careful"
Both before and during this period of time, a Mr James Quach was working from both the showroom premises and the premises at Homebush which was also the registered address of the company. Mr Quach was responsible for collecting the mail from the Homebush premises, as was Mr Kannan Kanesa. He was the employee who saw the plaintiff's daughter and son-in-law on the day of the accident.
The premises at Homebush were not only used as the registered address for the company. They were also used by Mr Koukoutas for his personal affairs. He tendered hospital records showing he had given the Homebush address as his place of residence and he also told the court that it was the address given on his motor vehicle licence registration.
I consider that it is clear beyond doubt that the defendant's employees knew of the accident on the day it happened and took steps to prevent further falls. I am also satisfied that Mr Koukoutas was aware that the company had insurance for this kind of accident.

The defendant is served with the statement of claim in November 2021

The plaintiff had medical treatment and, after the necessary medical reports were obtained, proceedings were commenced in the District Court by statement of claim filed on 11 November 2021. This document was served on the defendant at its registered office, together with the Statement of Particulars and Standard Timetable, which gave a return date of 2 February 2022.
The defendant's employees claim not to have been aware of this correspondence because of the pandemic lockdown. The pandemic lockdown had been lifted approximately one month before these documents were served. It seems unlikely that major events such as Christmas and the New Year would pass by without somebody checking the mail.
The defendant failed to appear at the 2 February 2022 return date. The company was informed of the next date (22 May 2022) not only by the plaintiff's solicitors (CB 206) but also by the court.
Once again, there can be no doubt that this correspondence was not only received but read. On 7 April 2022 Mr Kannon Kanesa rang the plaintiff's solicitors and spoke to Melissa Rae (CB 210 - 211), with the result that the plaintiff's solicitors sent further correspondence warning that if no defence was filed, an application for summary judgment would be brought.
The defendant continued to fail to attend and the plaintiff brought an application for default judgment on 20 May 2022. Default judgment was entered on 23 May 2022. The defendants' solicitors sent a series of letters over this period, including a notice of an assessment hearing sent on 7 June 2022 (CB 217).

The defendant's explanation for failure to attend

Holman Webb summarised their client's position as at 12 July 2022 as follows: "1. Whilst the Defendant's registered office is in Homebush, the office is used as a storage unit and since on or around December 2021 no employees are there. Given this, the mail is not checked there regularly. In any event, we are instructed that the Statement of Claim and Statement of Particulars was never received by the Defendant. 2. The Defendant's contact person (Mr Koukoutas) received a call from your office on or around April 2022. Mr Koukoutas asked to speak with you directly as you were the Solicitor with carriage of the matter however he never received a call back. Mr Koukoutas was unsure what the matter was in relation to and did not take any further steps as he never received a call back. He has also instructed that a copy of your letter dated 7 April 2022 was never received. The email address (info@carsalesnsw.com.au) is also no longer being monitored as the sales person for the Defendant has resigned. 3. The Defendant did not receive any correspondence from your office. The only correspondence the Defendant received was a notice from the Court on or around 21 June 2022. Immediately after receiving this correspondence, the Defendant contacted the Court and his insurer."
Most, if not all, of the information in this letter is false, and knowingly false. I particularly note: 1. Although Holman Webb assert in point 1 that the statement of claim and statement of particulars were never received by the defendant, the defendant was aware of, and used, the reference number on these documents and the correspondence attached to them. The defendant's staff made two telephone calls to the plaintiff's solicitors about their correspondence. What is more, the statement of claim and accompanying documents were served in November 2021, which was before the December 2021 date given in Holman Webb's letter as being the date after which the defendant was no longer manning the registered office. 2. As to point 2, Mr Koukoutas was not only well aware of "what the matter was" but the email address asserted to being no longer monitored was in constant use by the defendant in relation to its car sales, and remains in use to this day. 3. As to point 3, as the chronology above demonstrates, Mr Koukoutas telephoned the plaintiff's solicitors on 25 January 2019 in relation to the proposed application for preliminary discovery and letters were sent not only by the plaintiff's solicitors but also by the court. Mr Kanesa rang on 7 April 2022. 4. No explanation is offered by Holman Webb for their client ignoring this court's correspondence and notifications of dates, entry of default judgment and the like.
All of the documentary evidence points to the defendant, through its servants or agents, being aware of the accident on the day it occurred, receiving the plaintiff's solicitors' correspondence in January 2019 and contacting them in reply, receiving court notifications and telephoning Ms Rae in reply and receiving court notifications, including the entry of default judgment and the assessment of damages made by Robison DCJ on 21 June 2022.

The evidence of the witnesses

As noted above, the plaintiff's witnesses were not required for cross-examination. Mr Koukoutas and Mr Kanaan were cross-examined on their affidavits. Their oral and affidavit evidence was wholly inconsistent with the contemporaneous documentation.

Mr Koukoutas

In his affidavit sworn on 16 September 2022, Mr Koukoutas said that he had been an employee of the defendant for approximately 15 years. He described the office set-up as at December 2021 as follows: "From on or around December 2021, after the Defendant's Sales Person resigned, there were no employees at the Registered Office. The email address (redacted) was also unmonitored after the Sales Person resigned. Kannon Kanesa, an Accountant employed by the Defendant, was responsible for accessing any mail received at the Defendant s Registered Office. Due to Covid-19, I am aware that Mr Kanesa did not check the mail regularly at the Registered Office as most of the Defendant's employees were working from home. I cannot recall exactly when however I estimate that on or around March 2022 I was notified by Mr Kanesa of correspondence from a firm called Law Partners Personal Injury Lawyers. I asked Mr Kanesa to contact Mr Marcus Frangos from Law Partners as he was the contact. I understand that Mr Kanesa attempted to call Law Partners Personal Injury Lawyers without success. On or around 7 April 2022 I am aware that Mr Kanesa again contacted Law Partners Personal Injury Lawyers and spoke with an employee of Law Partners Personal Injury Lawyers who I know to be Melissa Rae. After Mr Kanesa spoke with Ms Rae of Law Partners Personal Injury Lawyers, I then contacted Law Partners Personal Injury Lawyers and asked to speak with Mr Marcus Frangos, the Solicitor who had conduct of the matter. Ms Rae said words to the effect that she required our insurance details. I said words to the effect to Ms Rae that I needed to speak with Mr Marcus and unless I received a call back from Marcus, I was not going to respond to any enquires made by Law Partners Personal Injury Lawyers. As I was not aware of any accident that occurred on 15 December 2018 and had never received a call back from Mr Frangos, I was under the assumption that the claim was not legitimate and I therefore did not take any steps to notify the Defendant's public liability insurer of the claim. I also did not receive any correspondence from Law Partners Personal Injury Lawyers. I believe that the reason for not receiving any correspondence from Law Partners Personal Injury Lawyers is because no documents were sent by registered post. Further, during the months of May 2022 and June 2022 I was unwell and was not at work. I was eventually admitted to Concord Repatriation General Hospital. Annexed and marked "A" is a copy of the discharge summary. I returned to work on or around 20 June 2022. On the week that I returned to work, on or around 24 June 2022 I was made aware of correspondence from the District Court of New South Wales which was received via registered post. As soon as I was notified of the correspondence from the Court, I was aware that the matter was serious. I immediately asked Mr Kanesa to contact the Defendant's public liability insurer to lodge a claim on 24 June 2022."
Mr Koukoutas's explanation concerning his health issues was supported, albeit tenuously, by a hospital discharge summary, which recorded that a medical issue (constipation and a viral infection) led to his day admission on 26 May 2022. The address given for Mr Koukoutas was the Arthur Street Homebush address, which Mr Koukoutas confirmed was also on his driver's licence. Mr Koukoutas claimed his health problems caused him to be absent from the office for weeks if not months. He had no independent knowledge of the plaintiff's accident.
A rather different story is set out in Mr Koukoutas's second affidavit, dated October 2022. He was no longer unsure about why he was being contacted by a solicitor in 2019; he had been there on the day of the accident and had been told what had occurred: "I understand that the Plaintiff alleges that she slipped and fell on the external staircase at the rear of the Defendant's Haberfield Premises. I now recall that incident although when these proceedings first came to my attention I could not. The Plaintiff and the Plaintiffs daughter attended the Premises and were liaising with James Quach, an ex-employee of the Defendant. Mr Quach was employed as a Sales Person. His office was next to mine separated by a clear glass partition. I recall Mr Quach talking to the Plaintiff's daughter in his office while the Plaintiff sat on the lounge outside my office. I understand it is alleged that the Plaintiff slipped on the stairs as she left the premises. At the time of the Incident the Defendant had been occupying the Haberfield Premises for about five months. I am not aware of anyone having slipped on those stairs before the incident or since. Below is an image which I am informed is from a Google Street View image dated December 2018 showing the stairs. That is how I remember them. When we moved into the Premises the edges of the stairs had a gritty sandpaper-like surface. The only modification of the stairs that we have ever carried out was about six months ago. The first step down from the office to the landing was broken into two smaller steps. Fresh non-slip strips were also applied to the edges of the steps. The reason for this modification was that the owner of the business, who often comes to the Premises, suffers from multiple sclerosis and was having trouble managing the step up and down between the landing and the office."
Mr Koukoutas claimed in his oral evidence that the email address in Exhibit A was unmonitored "for a long time". Since Exhibit A shows that this is still the defendant's email address for a busy carsales website, I do not accept that evidence.
Despite now acknowledging that he did know that a person had reported an accident in December 2018, Mr Koukoutas's principal explanation was that "We get a lot of emails with scams" and that when the solicitor he spoke to asked him to send an email setting out what he proposed to do about the claim, he had responded "I'm not playing these games, I want to talk to the solicitor in charge". This was because he was mistrustful of emails which could be scams. He was also suspicious of phone calls because "I get a lot of false calls", but insisted he would have accepted a call from the solicitor acting from the plaintiff if he had rung him back. He was suspicious even of letters on letterhead because "anyone can do this" (i.e. send a bogus letter on fake letterhead). His explanation for ignoring the court documents was that he had tried to contact the court without success.
Surprisingly, given all this concern about the bona fides of the plaintiffs and the persons purporting to be her representatives, he then volunteered that "I do recall that she fell" and that it was "a rainy day" when the steps were "slippery".
When asked why, in those circumstances, he had not answered or processed any of these letters (including letters from the court), Mr Koukoutas said that he could not recall these events because he received 40 - 50 calls a day. When pressed further, he referred to "stress", health problems and the pandemic lockdown as the reason for doing nothing. It was in these circumstances that he voluntarily produced a hospital printout for his day admission on 26 May 2022 for gastric problems, but that printout was more notable for the fact that Mr Koukoutas gave the hospital the company address in Arthur Street as his home address (adding that this address appears on his motor vehicle licence as well).
Mr Koukoutas was asked to admit that the photographs taken on 17 and 19 December conclusively show that in the days following the plaintiff's accident, substantial changes were made to the steps. He denied this and said these changes were made six months ago because of a director's health issues.
He also claimed that over the past eight years nobody had fallen, but this is inconsistent with the assertion noted in the telephone conversation on 25 January 2019 that the defendant had moved to this showroom a few months before the accident. Even if it were the case that the defendant had been there for some years, absence of prior falls is a factor of limited relevance at best. As was observed in Fairfield City Council v Petra [2003] NSWCA 150 at [32], it is "trite law that although the fact that there was no evidence of prior falls on the subject steps is relevant, it is in no way determinative" (see also Francis v Lewis [2003] NSWCA 152 at [57]; Campbelltown City Council v Frew [2003] NSWCA 154 at [26]).
Mr Koukoutas's evidence was internally inconsistent, vague and at times obviously untruthful. I am satisfied that he exaggerated his health problems, lied about the company's email address and the degree of use to which the registered office was put by him personally (in that the evidence shows he used this address all the time for his personal affairs) and that his claims of suspicion of the plaintiff's lawyers' bona fides are not merely untruthful but absurd. No reliance whatsoever could be placed on such a witness.

Mr Kannon Kanesa

Mr Kanesa's affidavit was full of errors as to dates, notably in paragraphs 7 and 8 as to the time during which he said that the majority of the defendant's employees were working from home during the pandemic. He eventually decided upon saying that they had all been working from home for the period December 2020 to March 2022 and that during this period he had not attended the registered office "often" (paragraph 8), namely every 6 to 8 weeks. He claimed not to have opened any correspondence from the plaintiff's solicitors before "on or around March 2021" (paragraph 11).
However, these solicitors were writing to the defendant in January 2019, well before the pandemic. Additionally, they did not send correspondence in or after March 2021, the date he gives as checking for correspondence. The plaintiff's solicitors did not serve the statement of claim until November 2021, by which time the lockdown had lifted.
Mr Kanesa makes the claim that as soon as he was put on notice of the claim in June 2022 he attempted to speak to the plaintiff's lawyers "however, I was never able to speak with the Solicitor who had carriage of the matter" (paragraph 20). This is contradicted by the unchallenged evidence of this solicitor as well as being contrary to the correspondence.
Ms Rae's contemporaneous notes to Mr Marcus Frangos, the plaintiff's solicitor and her employer, set out what I am satisfied happened: "Hi Marcus, Cameron [sic] from Green Slips Direct called back. He said he called 2 months ago to the number of 8246 7615 and he said he has left numerous messages and this is the first time we have returned his call. I advised him Cameron unfortunately this is the first contact we have had from him. He did enquire what to do with the documentation we have sent him. I advised that he needs to provide the documents to his public liability insurer. He wanted to know what was this claim about and I advised unfortunately we are unable to provide any legal advice. Cameron advised he will contact his public liability insurer and pass the documents [to] them."
The file note recording the 7 April phone calls between Ms Rae and both Mr Koukoutas and Mr Kanesa is as follows: "RE: XIAONG HUANG - 181899 On 7 April 2022, Andrew from Green Slips Direct called and wanted to discuss the claim with Marcus. (0405 388 965). I advised him that I had just spoken to Kannon earlier today and I advised him to contact the public liability insurer and provide the documentation. He said no that is not how it works. I advised unfortunately we cannot provide any legal advice. I then advised him to send an email to Marcus in writing. He said no I am not playing these games on email and all he wants to do is talk to Marcus. He said that he is not an open cheque book and if we he does not receive a call back he going to do nothing about it as we don't have hearing date. I strongly suggested he contact his public liability insurer and they will be able to assist him. He then said no a simple call will fix this. He said what are going to do if I maybe don't have public liability insurance. He then said that is not how our client's incident occurred. He clearly did not want to listen to me and then hung up."
It should be noted that it was Mr Kanesa who had rung the solicitors on 25 January 2019.
The following letter was sent that same day, by email as well as by post: "Contact: Marcus Frangos OurRef:MF:MR:181889 The Proper Officer Green Slips Direct Pty Ltd t/as Australian Motor Traders (NSW) (ABN 64 097 754 115) Unit 1 159 Arthur Street Homebush NSW 2140 By email and post: info@carsalesnsw.com.au Dear Sir/Madam, RE: Xiaojin Huang v Green Slips Direct Pty Ltd t/as Australia Motor Traders (NSW) District Court of NSW proceedings no. (2021/00320435) We refer to the above matter and previous correspondence. We confirm that today, 7 April 2022, we were contacted by a gentleman named Kannan, who indicated they were from Green Slips Direct Pty Ltd ('Green Slips Direct'). Kannan enquired as to what he should do with our correspondence dated 30 March 2022. We noted that, as we act for the plaintiff, it would not be appropriate for us to provide advice with respect to the claim. Notwithstanding this, we recommended that Kannan provide the Court documents to your public liability insurer and/or insurance broker, so that steps could be taken to ensure you were represented on the next occasion. Kannan also indicated that he had tried to ring us on a number of occasions with respect to this claim. For completeness, we note that, until today, we have no record of anyone from Green Slips Direct attempting to contact us with respect to the Court proceedings. Subsequently, we were telephoned by someone named Andrew, who indicated they were also from Green Slips Direct. Andrew stated he wanted to discuss the claim with the writer. Again, we strongly recommended that steps be taken to ensure you are legally represented on the next occasion, however, Andrew was not content with this. Andrew indicated he would do nothing with respect to the claim unless he could speak with the writer. If you intend on instructing solicitors with respect to these proceedings, we think it would be more appropriate to liaise with your solicitors once instructed/an appearance has been filed. If, however, you intend on proceeding self-represented, please let us know at the earliest opportunity and put your queries in writing. Again, we strongly urge you to notify your insurer of this claim and to take steps to ensure you are represented on the next occasion. As indicated in our 30 March 2022 correspondence, if there is no appearance on the next occasion (18 May 2022), we intend on making an application for Default Judgment. Yours faithfully, Law Partners Personal Injury Lawyers"
Mr Kanesa acknowledged that if he saw any important correspondence, he gave it to Mr Koukoutas. However, when asked about the specific documents sent in this case, such as this letter, he was unable to remember more. He also denied that the email address on the correspondence was current, even when shown Exhibit A.
Mr Kanesa's evidence was self-contradictory and, when confronted with these inconsistencies, he simply said he could not recall. His evidence about the company email address not being monitored is patently false. He acknowledged that most of the company correspondence comes by email.
There was a great deal of evidence that Mr Kanesa could have provided to the court, such as a report setting out the coefficient of friction for the stairs and documentation evidencing when the non-slip pads were placed onto the stairs. While caution should generally be exercised in dealing with submissions about what evidence could have been brought, this is a case where the absence of such documentation, in circumstances where a bona fide defence must be demonstrated, is a matter that could be taken into account.

Mr Mithrah Baskaran

Mr Baskaran, the solicitor for the defendant, purported to give hearsay evidence of information provided to him by Mr Quach, the witness who had refused to come to court to be cross-examined. This was rejected for the reasons set out below in relation to Mr Quach.
I also note that there is no expert evidence as to the state of the steps, before or after the accident, or the coefficient of friction, although the defendant's solicitors acknowledged that they had consulted such an expert and that he had prepared a report. The report in question was served but withdrawn.

Ruling on the evidence of Mr Quach

Mr Quach provided an affidavit but did not attend court for cross-examination. I was informed that the only terms on which he would provide the affidavit was that he would not be required to come to court or to be cross-examined. He has not been employed by the defendant for some time; he was only briefly their employee.
As to whether this was likely to occur at any hearing should the judgment be set aside, Mr Purdy submitted that the plaintiff could issue a subpoena if he did not do so, or that both parties could ask that Mr Quach be arrested (as occurred in SW v MK (No. 5) [2019] NSWDC 242).
Mr de Meyrick pointed out that there was no address provided on the affidavit and that, while there are ways of finding the addresses of reluctant witnesses, this amounts to rewarding a reluctant witness for not attending court, in circumstances where the reluctance is most likely to be because his evidence would knowingly be dishonest.
I am satisfied that Mr Quach is not "unavailable" for the purposes of s 63 of the Evidence Act 1995 (NSW) but rather that he is unavailable by choice as set out in s 64: Regina v Suteski (2002) 56 NSWLR 182. No notice has been given; to the contrary, his affidavit was included in the Court Book and it was not until this issue was raised shortly before the hearing that the plaintiff's legal representatives had any notice that Mr Quach would indeed fail to attend for cross-examination as required. There is no suggestion that his evidence is relevant for a non-hearsay purpose.
As set out above, Mr Baskaran, a solicitor employed by Holman Webb, attempted to circumvent the problem by setting out what Mr Quach had told him in his own affidavit material. That is not an acceptable way to present evidence to the court.
None of this evidence is admissible. I rejected Mr Quach's evidence in its entirety and the attempts by Mr Baskaran to refer to it in his affidavit of 12 October 2022.

The relevant principles of law

The provisions of Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 36.16 are as follows: "36.16 Further power to set aside or vary judgment or order (cf SCR Part 40, rule 9) (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if - (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it - (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order."
This rule gives the court a general power and discretion to set aside a default judgment where a defendant has established a defence on the merits and explained the delay in filing the defence. The question is whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits: Dai v Zhu [2013] NSWCA 412 at [83]; J & M McNamee Holdings Pty Ltd v Mungerie Vale Pty Ltd [2019] NSWCA 283 at [49].
I am not entirely satisfied that the facts of this case fall within the rubric of UCPR r 36.16. It is a judgment given in open court and can only fall within the parameters of r 36.16(2)(b); rr 36.16(3A) and (3B) cannot apply as the notice of motion was filed more than 14 days after judgment. However, it is a final judgment, even though the fact that it was given in the absence of the applicant means that an application can be made under UCPR r 36.16(2)(b): Mothership Music Pty Ltd v Flo Rida (aka Tramar Dillard) [2012] NSWCA 344 at [7]. In those circumstances, it may be that the appropriate pathway was to bring an appeal: Coren v Master Builders Association of New South Wales Pty Ltd [2014] NSWCA 244 at [16]. However, the parties did not raise any of these issues, so I merely note them.
Counsel for the plaintiff drew my attention to Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503 at 506 (see also J & N McNamee Holdings Pty Ltd v Mungerie Vale Pty Ltd [2019] NSWCA 283 at [48]), which provides that the court will take into account the following: 1. Whether the applicant has an arguable defence (which is bona fide asserted and gives rise to a triable issue). 2. Whether the applicant has provided an adequate explanation for failing to file a defence. 3. The length of delay. 4. Whether the respondent would be prejudiced if the default judgment was set aside.

Are there arguable bona fide defences?

As to bona fide defences, in Dai v Zhu at [89], Sackville AJA stated: "The second observation is that the authorities consistently state that, as a general rule, a defendant who seeks to set aside a judgment by default regularly obtained must show that he or she has a bona fide defence. This ordinarily requires the defendant to file an affidavit demonstrating a prima facie defence on the merits. The rationale for this requirement is that in the exercise of its "unfettered, though judicial, discretion" the Court will consider: (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained. Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239, at 243, per Jordan CJ (with whom Davidson and Roper JJ concurred), citing Evans v Bartlam [1937] AC 473, at 482, per Lord Russell; Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331, at [48]-[51], per Hodgson JA (with whom MW Campbell AJA agreed) (holding that the principles stated in Vacuum Oil have not materially been affected by the reasoning of the High Court in Taylor v Taylor [1979] HCA 38; 143 CLR 1, and Allesch v Maunz [2000] HCA 40; 203 CLR 172)."
The Court does not need to embark on a hearing of the merits of the defence. All that is necessary is to establish that the defence is asserted bona fide and there is an arguable or triable issue. The provisions of the Civil Procedure Act 2005 (NSW) are also relevant (Dai v Zhu at [93]). Fundamentally, the question is whether it is in the interests of justice to allow a party seeking to set aside default judgment to be permitted to defend the proceedings on the merits: Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43].
The facts in this case fall well outside the usual parameters upon which courts are asked to determine such questions. As noted above, on the documentary evidence alone, I am satisfied that the defendant's witnesses have lied to the court in their evidence about a wide range of matters, including the circumstances in which special rubber mats were placed on the steps in question within days of the plaintiff's fall.
The circumstances in which remedial steps are taken following an accident may be indicative of liability but are not conclusive, and a contest about whether such a task was performed as a result of the complaint is not an unusual issue in a personal injury claim. However, the circumstances in which the defendant's witnesses lied in their evidence, first to deny any such work was done at all, and then to deny when or why, is strong evidence of the lack of bona fides in their defence. If they are prepared to lie about this, what other lies will they tell?
Ordinarily, courts hearing applications to set aside judgments do not give opinions of a strong nature concerning the defence which is proposed to be relied upon. However, I consider that the evidence, notably the photographic evidence of the changes made to the steps, puts the facts of this case into an entirely different category to proposed defences in other applications to set aside default judgments.
Even if this were not the case, Green Slip's case on liability is not strong. The best argument that can be put is an assertion that the plaintiff must not have been holding on to the railing. If so, that is an issue of contributory negligence, not a complete answer to the claim, as was conceded during argument.
I am not satisfied that Green Slip has demonstrated sufficient material to defend the claim, independently of the problems in relation to the bona fides of such a defence.
The issue of quantum was not mentioned, apart from the entitlement to explore contributory negligence, which would of course reduce the sum of damages.

Should the quantum of judgment be varied to take into account arguable defences?

Mr Purdy conceded that its strongest argument in relation to being let in to defend related to contributory negligence. It might be possible for an application to be made to vary the amount of a default judgment, as occurred in J & M McNamee Holdings Pty Ltd v Mungerie Vale Pty Ltd t/as Greenwood Group Realtors [2019] NSWCA 283 (per Gleeson JA at [93], Brereton JA & Simpson AJA agreeing) to reflect bona fide arguable defences which were found to have arisen.
However, Mr Purdy made no such application. Nor did the Green Slip offer to agree to accept the quantum of damages, despite not raising any challenge to the computation of those damages during this application. Green Slip's application is an "all or nothing" application, namely to be let in to defend on all issues.
In practical terms, there would be difficulties in relation to assessment of damages taking into account the delay of up to five years since the accident. That is not an uncommon situation in personal injury proceedings, but the potential for unfairness at the trial of starting these proceedings all over again, more than four years after the plaintiff's injury, is a small but relevant factor.

Is the explanation for delay and for not filing a defence satisfactory?

The contemporaneous evidence conflicts with the evidence of Green Slip's witnesses. Their own evidence was internally inconsistent as well as being inconsistent with each other. It is hard to imagine a less satisfactory explanation for the consistent course of failing to respond to correspondence not only from the solicitors for the plaintiff but also from the court. The explanations proffered are themselves contradictory.
The delay in defending is contrary to ss 56-62 of the Civil Procedure Act which is, as was pointed out in Dai v Zhu, a relevant factor. It is a considerable delay, in terms of events if not time, in that the statement of claim was served in November 2021 and no attempt was made to appear or set judgment aside until August 2022, two months after the hearing on damages.
I consider that Green Slip has failed to demonstrate a satisfactory explanation for its delay and for not filing a defence. I am satisfied that its employees were well aware of the fall and that Mr Koukoutas preferred to bluster and bully the solicitors for the plaintiff as well as to make false statements to them in the hope that they would drop the case, such as hinting that the defendant did not have public liability insurance.

Prejudice to the respondent

There is substantial evidence of prejudice to the respondent: 1. As Payne JA said in Pham v Gall [2020] NSWCA 116 at [139] - [140], it is relevant that the respondent is not a person with significant financial resources. She is a 68-year-old woman in poor health due to the accident. She presumably has arranged her financial affairs, including medical treatment, on the basis of the judgment amount (I note there were delays in her surgery as she was in the public health system). She was entitled to expect that if the applicant intended to defend the proceedings, it would have done so at the time. 2. Although the extent of the expenditure is not apparent from the evidence, plainly the respondent has outlaid significant costs in obtaining medical reports and running the case to hearing. I do not understand the applicant to be offering to pay all those costs but even if it did, it would involve considerable expense for the plaintiff's second set of medical reports. 3. The value of any expert report as to the slip coefficient would be minimal as the fall occurred four years ago. Given the lack of honesty displayed by the employees of Green Slips concerning the modifications to the steps, the likelihood of the court receiving bona fide evidence as to the state of the steps in 2018 at and shortly after the plaintiff fell must be open to question. I also note the request for CCTV footage, made promptly within a month of the accident and in circumstances where it was likely to still be available, went unanswered. There is no suggestion that this material, or any of the material sought by Mr Frangos in his January 2019 letter, has been preserved.

Conclusions concerning the application to set aside

The applicant has failed to demonstrate an arguable bona fide defence and to explain the delay in coming into the proceedings to defend them. There is substantial documentary evidence contradicting both the bona fides of the defence and the explanation for the delay in defending. There is also significant evidence of prejudice.
The Court must make an evaluative judgment taking into account the matters raised by the parties as to whether to set aside judgment. The applicant's failure to satisfy the court as to any of the requirements to set aside judgment must result in the application being dismissed with costs. I have granted liberty to apply in relation to costs.

Order: 1. The defendant/applicant's Notice of Motion filed on 22 August 2022 is dismissed and its application to set aside the judgment entered on 22 June 2022 is refused. 2. The defendant/applicant is to pay the plaintiff/respondent's costs, with liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 December 2022

At a glance

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Judgment (21 paragraphs)

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Legislation Cited (3)

Cases Cited (15)