Jones v Riley

Mr Riley's first affidavit

1. In his affidavit of 3 June 2022, Mr Riley asserted (paragraph 2) that he was not served with the statement of claim. He also asserted (paragraphs 3 and 4) that he was unaware of the default judgment being made against him in April 2020, even though he had been notified that funds from his bank account had been garnisheed. I note that, at the level of admissibility, Counsel for the respondent argued that a s 136 limitation should be imposed on the use of this evidence, but as indicated in argument, I did not regard that as being necessary in an interlocutory application of this kind (though I did indicate that it was relevant to weight).
2. On the aspect of service of the originating process, Mr Riley denied that he was present at his restaurant ('Panama House') as alluded to in the affidavit of the process server (which was contained in Exhibit 2). The restaurant was closed on Mondays.
3. In the same affidavit, he explained that although he was in receipt of the statement of claim, the motion (for default judgment) and the default judgment in August 2020, he took no action to apply to set it aside. He deposed that in March 2022, he obtained a credit report, which omitted reference to any default judgment against him. He deposed to his belief that he thought that the "matter" had been "taken care of", which was why he did not instruct his solicitors to set aside the default judgment earlier.
4. He deposed that it was only the act of service of the bankruptcy notice which caused him to instruct his solicitors to enquire into the status of the default judgment.

Mr Riley's second affidavit

1. In his affidavit of 10 June 2022, Mr Riley did not annex any proposed draft defence to the debt claim against him, which a Court entertaining an application of the present kind is entitled to expect. Ms Bailey, Counsel for the respondent, indicated that she had seen a draft defence, however that document did not make its way to the Court. At any rate, Mr Riley deposed to certain facts from which the Court was supposed to infer any defence.
2. These were, to begin, that he commenced a romantic relationship with Ms Jones in September 2017 and within a month, moved into Ms Jones' apartment in St Leonards. He deposed that Ms Jones used the apartment to secure two loans, each in the sum of $150,000. According to him, in November 2017, he persuaded Ms Jones to use one of those loans to invest in the purchase of a restaurant for investment purposes.
3. Mr Riley attached to his second affidavit the Loan Deed dated 9 November 2017. For the purposes of this application, relevant provisions referred to by the parties at the hearing of the application were: 1. in Recital C, reference was made to Ms Jones agreeing to advance to Mr Riley the "Principal Sum") of $150,000; 2. in cl 2, Mr Riley acknowledged the "receipt" of the "Principal Sum" and promised to repay her that amount by fortnightly instalments of $380 commencing on the first fortnight after the principal sum was advanced and continuing until the principal sum was repaid; 3. cl 12 provided that rights of the parties were not waived or varied otherwise than in writing.
4. To interpolate, it may be observed that although there was an express acknowledgement by Mr Riley about his receipt of the principal sum, the Loan Deed did not expressly set out how the loan proceeds were to be disbursed. It appears to be for this reason that Ms Jones alleged that the loan agreement was partly oral, and provided that she would advance only $100,000 and retain the benefit of $50,000 for her own purposes whilst obliging him to repay the principal sum of $150,000.
5. But although he deposed that the loan was for $150,000, he deposed that, on the basis of ANZ account statements covering the period from 9 November 2017 to 19 January 2018, he was only advanced the sum of $92,630 from the respondent. He also deposed that, contrary to the respondent's allegation that a sum of only $13,250 had been repaid, he had made payments totalling $15,600. This estimate was not based upon any reference to bank statements from his Commonwealth Bank account which, he explained, had been closed (he did not state when this had occurred) and that he had not had access to the statements ever since.
6. At paragraph 7 of his affidavit, he set out a conversation in which the basic terms of the loan were discussed, including the frequency (fortnightly) and amount ($380) of repayments. There was a discussion about recording the oral agreement in writing.
7. Mr Riley referred to payments he had made to Ms Jones throughout the course of their relationship which he equated to repayments being made under the Loan Deed. These were identified as a $10,000 deposit on a new car, three designer handbags, a laptop computer, business class flights to Europe; a weekend holiday for Ms Jones and 20 of her friends and various other cash payments for holidays and other expenses. He estimated that these payments totalled approximately $40,000.
8. Mr Riley deposed that after making these payments, he received a verbal assurance from Ms Jones that all of these payments would be treated by her as repayments in satisfaction of his obligations under the Loan Deed.
9. He also deposed that he had provided other, unspecified financial support, in paying bills and living expenses, as she was between jobs, which he estimated was in the sum of $20,000.
10. Mr Riley deposed that when the relationship broke down (without indicating when that occurred), Ms Jones verbally acknowledged his financial contribution towards payment of the bills and expenses and forgave him any further requirement to repay the advances, so long as he did not sue her for any property settlement. He deposed that on the basis of that understanding, and on the basis that she had made no further demands on him, the respondent's loan had been repaid.

Ms Jones' evidence

1. In her affidavit, Ms Jones addressed the point of service of the statement of claim raised by Mr Riley. She referred to and attached an 'update' memo from a process server which indicated that it had been in touch with Mr Riley on 13 March 2020 and that an indication had been received from 'Michael' to serve the originating process on the Monday, 16 March 2020, given that he would be at the restaurant "all day". The affidavit of the process server (3 April 2020) indicated the process server's belief that the originating process was served that day, a belief fortified (a) by a conversation with the male person identifying himself as the applicant; and (b) a photograph of the person served. In her affidavit, the respondent who, not to forget was in a prior romantic relationship with the applicant some years before, identified that the applicant was the person in that photo.
2. Ms Jones also addressed, in detail, her attempts to enforce the default judgment since it was obtained on 27 April 2020. This included the use of a Garnishee order against the ANZ Bank in June 2020. However, that means of enforcement only procured a sum of $13,185.46. This was a matter which the respondent's Counsel relied upon on the aspect of prejudice and the question whether any costs order(s) imposed against the applicant, if his application was acceded to, could redress such prejudice.
3. In late July 2020, the respondent obtained an Examination Order from this Court and arranged for it to be served on the applicant.
4. It was this means of enforcement which apparently provoked Mr Shohmelian, the applicant's solicitor in late July 2020 to request documents, including the statement of claim, the affidavit of service and the default judgment.
5. On 20 and 24 August 2020, on the applicant's behalf, Mr Shohmelian foreshadowed that an application would be brought to set aside the default judgment. But Ms Jones deposed that from then on, she received no further correspondence from the applicant's solicitor enclosing a motion to set aside the judgment.
6. In May 2022, the respondent instructed her solicitors to commence an alternative mode of enforcement of the judgment, being bankruptcy. A bankruptcy notice was served on the applicant on 17 May 2022.
7. On 6 June 2022, her lawyers received an email from Mr Shohmelian, which attached the current motion. Ms Jones indicated that this was the first correspondence she had received from Mr Shohmelian since August 2020.
8. Ms Jones observed that after Mr Riley had been served with the originating process on 16 March 2020, apart from not filing any defence, he gave no other indication of any intention to defend the proceeding.
9. In her affidavit, Ms Jones also deposed to certain facts relevant to the 'merits' (insofar as they can be distilled) of Mr Riley's position expressed in the latter's affidavit.
10. She noted that, according to Mr Riley, he had repaid only the sum of $15,600 "in respect of the loan" in the period 4 December 2017 to 3 June 2019 (a period of approximately 18 months). She deposed to only receiving the sum of $13,250 up to 3 June 2019.
11. Her romantic relationship with Mr Riley ceased in 2018.
12. She denied the conversations Mr Riley deposed to relating to treating payments Mr Riley had made (identified in paragraphs 16 and 19-20 of Mr Riley's affidavit) as 'counting' as loan repayments and denied his account of a conversation, upon the breakdown of their relationship, to the effect that she forgave him any further obligation to repay so long as there was no property settlement (dispute).

The applicant's submissions

1. It was common ground that the Court was empowered by r 36.16(2)(a) of the Uniform Civil Procedure Rules 2005 (NSW) to set aside the default judgment. The applicant's written submissions predominantly set out principles, derived from case authority concerning how applications of the present kind should be addressed by a Court. It is fair to say that many of them pre-dated the enactment of the Civil Procedure Act 2005 (NSW), the significance of which I will refer to later in these reasons. As to the application of those principles, the applicant's solicitor's written submissions were very brief.
2. Mr Shohmelian acknowledged his client's delay in filing the application to set aside the default judgment. But he still set out in his affidavit facts identifying a reasonably arguable defence. No prejudice would be suffered by the respondent if the application was acceded to.
3. In his oral submissions at the hearing, Mr Shohmelian submitted that there was a real point whether his client had been served with the originating process prior to the default judgment being entered into, arising from Mr Riley's evidence in his first affidavit.
4. Mr Shohmelian acknowledged that there was undue delay in bringing this application, but argued that his client's explanation was satisfactory. He could only be said to have been aware of the judgment against him in August 2020 and nothing more was done by the respondent to enforce the judgment until May 2022, via the route of bankruptcy proceedings. Once the respondent activated that mode of enforcement, the applicant acted. He was entitled to rely upon the circumstance that since March 2020, credit reports did not indicate any default judgment (that was unsatisfied) against him.
5. Mr Shohmelian submitted that there was a bona fide arguable defence in multiple respects. This was done with reference to his client's second affidavit. First, there was a triable issue as to how much monies was actually advanced to the applicant. Secondly, although the differential was small, there was a triable issue as to how much the applicant had repaid. Thirdly, there were triable issues whether the agreement had been varied, on the basis of conversations Mr Riley deposed to; and also whether Mr Riley's obligations were discharged either consensually or by abandonment.

The respondent's submissions

1. In her written and oral submissions, Ms Bailey, Counsel for the respondent argued that the onus fell on the applicant to establish an arguable defence and that there was a satisfactory explanation for his delay in filing a defence.
2. Before that, Counsel submitted that there was no doubt that the applicant was served with the originating process. Here she referred to the evidence of the arrangement made between the process server and the applicant for service to be effectuated on a Monday; and evidence from both the process server and the respondent that it was. Counsel invited the Court to disbelieve the applicant's evidence that his restaurant was closed on a Monday.
3. Counsel submitted that, contrary to the applicant's evidence, he must have known about the default judgment when his bank account was garnisheed in June 2020 and, plainly, he was aware of the judgment when his solicitors sent correspondence to the respondent's lawyers in August 2020. Ms Bailey noted that it was not until the eve of the Bankruptcy Notice taking effect, as an act of bankruptcy, that the applicant was spurred into action to try to set aside the default judgment. Through the course of various methods by which the applicant had tried to enforce the judgment, in effect, she submitted, the applicant had stood pat; forcing the respondent to trouble and expense in the meantime.
4. Counsel for the respondent submitted that the period of delay between the date of the judgment and the application to set it aside was considerable: it is now 2 years and nearly 4 months. Counsel argued that the length of delay was fatal to the application; but, alternatively, where delay is considerable, as she said it was here, it would be expected that if an application of the present kind was to succeed, an applicant would need to establish a strong arguable case.
5. Counsel for the respondent emphasised the importance of the principle of finality of litigation and prejudice to the respondent if the judgment was set aside. This prejudice was identified as the costs she has incurred in earlier attempts to enforce the judgment, as well as the extent of the delay since the matters giving rise to the litigation itself. On the aspect of finality, Ms Bailey argued that her client was entitled to order her affairs on the basis of a valid judgment and if application was made to set it aside, that needed to be done within a reasonable period. Two years and nearly 4 months was not a reasonable period. Ms Bailey emphasised that the applicant's solicitor had foreshadowed the present application back in August 2020 but had not brought it until June 2022.
6. Counsel for the respondent argued that there would be no useful purpose in setting aside the judgment. The ambit of the dispute was narrow, given that Mr Riley had admitted: the existence of the loan deed; and his making modest repayments. She argued that the Court would not find credible Mr Riley's professed endeavours to obtain further documentation given his inactivity since the proceeding began. It was not without significance that although nearly two months have passed since his second affidavit had been prepared for the application, Mr Riley has not provided any further information as to the fruits of his attempts to obtain documents. Ms Bailey argued that he has had ample opportunity to raise a defence. Ms Bailey argued that the arguable defence rose or fell on the basis of disputed conversations many years ago.
7. In answer to a point that the applicant's solicitor had made as to why his client had delayed bringing the application, Ms Bailey argued that the Court should not draw anything adverse to Ms Jones from what might be called a lull in enforcement activity, between August 2020 (when the applicant foreshadowed the present application) and May 2022 when she instructed her lawyers to pursue the bankruptcy path.
8. Counsel for the respondent also referred the Court to s 59 of the Civil Procedure Act 2005 (NSW) and submitted that acceding to the present application would not be consistent with the objective of 'eliminating' delay.

Consideration

1. Although the parties commonly referred the Court to expressions of principle that govern the instant application, the correct starting point is that the undoubted discretion that the Court has is shaped by case management objectives and considerations identified in ss 56 - 60 of the Civil Procedure Act 2005 (NSW). Cases decided before that enactment, to the extent that they illuminate relevant considerations, have to be viewed in the light of these statutory provisions. As Allsop ACJ said in Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [36], those statutory provisions "bring about a new statutory balance among various factors in litigation including court and party efficiency and the delivery of individual justice". Allsop ACJ's observations were approved by Sackville AJA in Dai v Zhu [2013] NSWCA 412 at [88].
2. Fundamentally, 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].
3. That said, conventionally understood [1] , applications under r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) invite consideration of three principal considerations: 1. whether the applicant has an arguable defence (which is bona fide asserted and gives rise to a triable issue); 2. whether an applicant has provided an adequate explanation for failing to file a defence; 3. the length of delay; and 4. whether the respondent would be prejudiced if the default judgment was set aside.
4. In Dai v Zhu at [89], Sackville JA explained that the rationale for the requirement that the applicant for relief demonstrate a bona fide ground of defence 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 default judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained".

The service issue

1. But before addressing these considerations, I will first address the point of service. I do not regard the applicant's evidence as sufficient to give rise to a triable issue whether the applicant had been served with originating process. The evidence itself relied entirely upon the applicant's recollections of an event which occurred on 16 March 2020, unassisted by any documents. Although Mr Riley sought to pre-empt the respondent's reliance upon the evidence of the process server, his evidence that the restaurant was "closed every Monday" did not inherently preclude an arrangement that he would strike with the process server to arrange to meet with him that day. Indeed, the reference in the 'update memo' to the process server speaking to a female staff member appears to believe Mr Riley's recollection of the restaurant being closed that day. In any event, the combination of the process server's conversation with the applicant on 16 March 2020 and the respondent's identification of the applicant being in the photograph that the process server had taken falsifies Mr Riley's account. Further, the Court was not drawn to any piece of correspondence prior to Mr Riley's affidavits on this application, in which his solicitors had asserted that he had not been served with the originating process prior to the default judgment.
2. This, to my mind, was a false issue and, whilst acknowledging that this is only an interlocutory application and that Mr Riley was not cross-examined, the above finding has the spin-off effect that I am somewhat circumspect about the correctness of what Mr Riley deposes to which is not supported by other evidence or my assessment of the probabilities of events.

The explanation for not filing a defence

1. It follows from my rejection of his argument on service that the applicant was on notice of the originating process. No other explanation was supplied for failing to file a defence within the period prescribed by Court rules.

Delay in bringing the present application

1. As to the question of why he delayed in bringing the present application, I agree with the respondent that a very powerful inference arises that the application has only been brought now to stave off the bankruptcy proceeding in the Federal Court and, further, that the applicant had deliberately refrained from bringing the application even in the face of attempts by the respondent to enforce the judgment despite being aware of the default judgment from at least August 2020, if not earlier in June 2020, when his bank account was garnished.
2. Contrary to his solicitor's argument, it was unsatisfactory for the applicant to rely upon the content of credit reports as the barometer for whether he should apply to set aside a default judgment in circumstances where he was on notice of it.
3. The applicant's delay in bringing application since that time involving this Court represents, in my view, a dereliction of his responsibility under s 56(3) of the Civil Procedure Act 2005 (NSW) (a matter also relevant to the costs order to follow my determination of this application) and has caused a waste of the available judicial and administrative resources of this Court (s 57(1)(c)). This weighs very heavily against the application. Plainly, the applicant's conduct has been antithetical to the "quick" disposal of a civil proceeding.

Prejudice to the respondent

1. I accept that there is prejudice to the respondent, in three senses. First, there has been substantial delay since the default judgment was obtained. Adopting what Payne JA said in Pham v Gall [2020] NSWCA 116 at [139] & [140], the respondent is an individual, of not limitless financial resources and presumably has arranged her financial affairs on the faith of a default judgment obtained in April 2020. She was entitled to expect that if the applicant was to exercise rights under r 36.16 he would do so in a timely fashion. He did not do so, even after instructing his solicitor to foreshadow that such application would be brought in August 2020.
2. Secondly, although the extent of the expenditure was not apparent in her affidavit in response to the application, plainly the respondent would have outlaid significant time and expense in the steps she has taken since April 2020 to enforce her judgment, including, in particular, the garnishee proceeding, the examination notice and bankruptcy proceedings. Although the payment of such 'post-judgment' costs is a typical term that a court might make when deciding to set aside a default judgment [2] , the applicant has supplied no evidence to indicate any financial capacity to pay those costs which would have been wasted if that was a term of the grant of the relief of the judgment being set aside. Whilst Mr Shohmelian initially bridled at the suggestion that evidence of his financial capacity to meet costs orders might have been relevant evidence in the application, Mr Shohmelian accepted that there was nothing he could say about his client's capacity to meet any costs orders as the price for securing the relief that he seeks.
3. Thirdly, the respondent has given evidence that the relationship with the applicant broke down in 2018, which the applicant deposed started in September 2017. The applicant deposed that he had only made repayments in respect of the loan totalling $15,600 from December 2017 to 3 June 2019 (although the respondent disputes that sum). But there were two important conversations, on the applicant's case. The first was "over the course of the relationship", i.e. between September 2017 and sometime in 2018, through which the applicant deposed to the respondent verbally agreeing to treat payments he made as loan repayments. The second occurred "when our relationship broke down", presumably sometime during 2018, when, he deposed, the respondent agreed to treat other expenses he had paid for during the relationship as loan repayments. The applicant did not suggest that the substance or purport of these conversations was ever recorded in writing, and Mr Shohmelian accepted that there was no evidence of any such recording.
4. In my view, to the extent that the suggested arguable dispute centred on arguments that the arrangements entered into in 2017 were varied (throughout 2017-18) or ultimately discharged consensually (in 2018), the contest at any trial will involve disputed recollections of what was said by the applicant and the respondent over 4 or perhaps 5 years earlier, there will be forensic prejudice to the respondent since, with the effluxion of time, comes faded memories and other evidence which she might have compiled to disprove the content of verbal conversations may be lost.

The suggested arguable defences

1. I will now address the consideration of whether the applicant has, through his affidavit, indicated an arguable defence. It is understood that, when deciding this application, the Court does not embark on a hearing of the full merits of the case. In Dai, Sackville AJA said (at [92]) that "All that is necessary is for the defendant to show that the defence is asserted bona fide and that there is an arguable or triable issue." I referred to his Honour's explanation for the rationale for that requirement earlier in these reasons.
2. However, the nature of the evidence required in a particular case may "depend on the circumstances, including the cogency of the defendant's explanation for the delay or failure to comply with the orders of the court". As his Honour said at [93], there may even be circumstances where an application to set aside a default judgment could be acceded to even without affidavit evidence evincing a bona fide arguable defence.
3. But as was noted by both Payne JA and McCallum JA in their separate judgments in Pham v Gall [2020] NSWCA 116 at [112] and [158], respectively, on an application of this kind, the burden of persuasion on an applicant may be heightened on account of significant delay or, correspondingly reduced when the applicant identifies the strength of the merits of the proposed defence [3] .
4. Mindful as I am about the need to avoid any strong opinion on the merits of the defences concerning variation and/or discharge (consensually or by abandonment), various matters may be noted, which to my mind, point in different directions. The first is that the applicant will be asking the trier of fact to accept that through verbal conversations, at times when he was in default, there was agreement to substantially vary the terms (payments for the respondent's benefit being treated as loan repayments) and thereafter an abandonment of a written loan agreement (because of the respondent's recognition of the applicant's contribution to payment of living expenses) in the face of cl 12 of the loan deed. Secondly, Mr Shohmelian accepted it does not appear that there is any recording of the conversations. Nor does it appear that any reference was made by the applicant to the conversations as a reason why he did not make the loan repayments. The third is that although the respondent did briefly address the applicant's account and denied the material conversations that the applicant referred, she did not dispute his evidence that the applicant had made not insignificant payments, for her benefit, and otherwise contributed to household expenses, throughout the course of what appeared to be a short relationship. As to the last point, I take Ms Bailey's point that it would not necessarily have been expected that Ms Jones, in her affidavit in opposition to this application, would go to the trouble of addressing all points raised by Mr Riley. Nevertheless, if there were matters which she confidently disputed, including the amount of repayment which the applicant asserted, I would have expected her to at least raise them; if not necessarily seek to establish her position, as she did when it came to responding to Mr Riley's evidence of conversations.
5. I also note that in her written submissions (at paragraph 14), Counsel for the respondent did not, in terms, submit that no arguable defence may arise from what the applicant deposed in his affidavit. Counsel's point was that there was no useful purpose in acceding to the application. That is to say, even if arguable, the proposed defences are not 'bona fide'. There is considerable force in that submission, given my rejection of the applicant's explanation for his default and inadequately explained delay in applying to set aside the judgment. Given that a predominant part of the reason for the delay in bringing the application was to hinder the bankruptcy proceeding, he has no incentive to defend the proceeding with proper despatch even if granted the indulgence to do so and, as I have already explained, he has in the past not complied with his obligation under s 56(3) of the Civil Procedure Act.

Overall evaluation

1. I am obliged to consider this application with reference to the dictates of justice, which includes the case management directives of ss 56 and 57 of the CP Act. In my opinion, and subject to two qualifications, whilst there may be something in the applicant's evidence indicative of a possible defence in relation to variation or discharge of the loan agreement to satisfy the low threshold of 'arguability', and whilst acknowledging that this is not the occasion to express strong views, my impression is that these proposed defences, manifested by the facts in his second affidavit, are not apparently so strong in their merit as to counterbalance the other considerations identified, relating to prejudice to the respondent (partly financial and partly forensic), an absence of satisfactory explanation for failing to file the defence (which could not be attributable to matters beyond the applicant's control (s 58(2)(b)(iii), and the excessive delay in bringing the application (which was contrary to the requirement to eliminate delay: s 59). It does not assist Mr Riley, in this regard, that he has only raised the matters in his second affidavit for the first time recently; many years after the events. Nor, on a more minor point, does it assist him that he raised what, in my view, was a specious argument about lack of service of the originating process; though, as I again acknowledge, this is not the occasion for the expression of any general view on his credibility.

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

1. The two qualifications relate to any degree of injustice to the applicant, which needs to be compared to the degree of injustice to the respondent (s 58(2)(b)(vi)). The first qualification is this. I accept that there is a triable issue regarding the monies actually advanced to Mr Riley. With the support of bank statements, he has prima facie established that he received only the sum of $92,630 when, on Ms Jones' case, he was entitled to receive the sum of $100,000 but was obliged to repay $150,000. In her affidavit in response on the application, Ms Jones did not address this shortfall. Secondly, although the differential is modest, I accept that there is a triable issue whether the applicant had repaid the sum of $15,600 or, as Ms Jones believed, only $13,250. About this, Mr Riley indicated in his affidavit of 9 June 2022 that he wanted opportunity to inquire of the Commonwealth Bank whether there may have been other payments. He is not entitled to receive that opportunity, given (a) that he has not supplied any further indication to the Court since 9 June 2022 of the results of his efforts to obtain further account statements from the Bank (when, the Court infers, in the absence of explanation it was likely he would have been provided with them); and (b) his being on notice of Ms Jones' allegation of the amount of repayment since March 2020 or, on the alternative basis (most favourable to him), in August 2020; and (c) the exorbitant delay in his attempt to procure more documents (see paragraph 15 of his second affidavit).
2. In the light of these qualifications and after verbal argument had concluded, I arranged through my Associate to inquire of the parties two matters. First, what difference would have resulted if, on the application for default judgment, the applicant's position on the two matters that I have alluded to was accepted; i.e. that he only received $92,630 and repaid $15,600.
3. Secondly, with an eye to the example of an adjustment on the amount of default judgment imposed by the Court of Appeal 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, the parties were invited to make further submissions as to why, if the application was otherwise rejected, the Court should not adjust the amount of the default judgment to reflect the applicant's 'arguable' position on the two matters. This second question was motivated by the unattractive prospect of having a trial on arguable matters involving insubstantial amounts of money (itself a matter being contrary to ss 56-60 of the Civil Procedure Act, and especially s 60). These matters had not been canvassed in the hearing.
4. In response to my inquiries, the applicant submitted [4] that given that the terms of the loan required him to pay 150% of the amount advanced ($150,000 for an advance of $100,000), that ratio would suggest that if only $92,300 was advanced, the principal sum should be adjusted to $138,450. Accepting, further, that $15,600 had been repaid (rather than $13,750 as the respondent had claimed) the principal amount payable should be adjusted downwards to $122,850. In other words, the percentage of reduction in the principal amount payable was 11.27%.
5. When interest was added, and using the same percentage reduction, the interest component should be reduced from what was determined ($10,209.42) to an adjusted figure of $9,058.82. When that interest component is added to the reduced principal amount, the amount for judgment (on the stated premises) should, when other fees and charges were added, be $133,906.82.
6. The applicant submitted [5] that if the Court was otherwise unpersuaded by the application, it would be open to the Court, consistently with the precedent in J & M McNamee, to adjust the amount of the default judgment from $148,518.42 to $133,906.82.
7. The respondent accepted that the Court is empowered, on an application to set aside a default judgment to vary it. Ms Bailey accepted that, as in J & M McNamee, the Court could so vary it if satisfied that there was an arguable defence; although she hastened to add that there were other circumstances in J & M McNamee - not present in the present application - which justified the course taken by the Court of Appeal in that case: there was no special prejudice in the judgment creditor and a relatively short period of delay (in J & M McNamee, as in this case, there was no satisfactory explanation for delay in filing a defence).
8. Ms Bailey accepted the applicant's calculations that, on (both) the stated premises, the sum repayable would have been $138,450 and the debt due after the $15,600 repayment would have been $122,850 plus interest and costs.
9. Very fairly, Ms Bailey said that the interest component would have been less on that debt ($5,391.83) than the adjusted interest component calculated by Mr Shohmelian ($9,058.82), yielding a total sum payable (taking into account other fees) of $129,800.83.
10. Having considered the parties' supplementary submissions, and the notion of variation of the quantum, I consider it appropriate to vary the amount of the default judgment so that the quantum is $129,800.83 to reflect my view that, in at least two respects there were bona fide arguable defences. It is true, as the respondent submitted, that the applicant's position for such adjustment was not as strong as the judgment creditor's position in J & M McNamee. Nevertheless, where, as here, facts were raised by the applicant, even belatedly, which were not contradicted by the respondent, it would not be just to disregard them.
11. That being so, I propose to vary the amount of the default judgment, and substitute the sum for the judgment of $129,800.83, the applicant's notice of motion dated 3 June 2022 is dismissed with costs.
12. However, in my view, subject to any persuasive application from the applicant to the contrary, it is also appropriate for the respondent to obtain an order for interest, under s 101 of the Civil Procedure Act 2005 (NSW) on the varied judgment sum ($129,800.83) from 27 April 2020.
13. Further, in my view, it is appropriate that the applicant should pay the respondent's costs of the notice of motion and also the costs thrown away by reason of the variation; even if he secured the relatively modest success in reducing his liability under the judgment; given the indulgence requested of the Court.

Orders

1. The orders of the Court are: 1. The amount of the default judgment is varied so that the sum for the judgment is $129,800.83; 2. Subject to orders 3 & 4, the defendant is to pay the plaintiff post-judgment interest under s 101 of the Civil Procedure Act on the varied judgment sum; 3. The defendant is to make any application, supported by a short outline of submissions (not exceeding 2 pages) as to why post-judgment interest should not be ordered on the varied judgment sum within 3 business days; 4. In the event that no application (contemplated by order 3) is made within the stipulated period, order 2 is to take effect; 5. The defendant is to pay the plaintiff's costs of the defendant's notice of motion and also any costs thrown away by the variation to the judgment sum; 6. Any application for variation of order 5 is to be brought within 14 days.
2. I will now hear from the parties as to the further case-management of the proceeding.

Endnotes

1. Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503 at 506; J & N McNamee Holdings Pty Ltd v Mungerie Vale Pty Ltd [2019] NSWCA 283 at [48]
2. R T & Co Pty Ltd v Minister of State for the Interior (1957) 98 CLR 168 at 170; also Magnate Projects Pty Ltd v Youma Constructions (No.2) [2005] NSWCCA 331 at [72]
3. I note that their Honours' observations were directed to a case concerning r 36.16(2)(b) of the UCPR, rather than r 36.16(2)(a), but as Sackville AJA noted in Dai, at [90], the principles applicable to applications for the setting aside of undefended judgments also may apply to applications to set aside default judgments
4. Mr Shohmelian's email to my Associate dated 5 August 2022 (1:17pm) became MFI 3.
5. Ms Bailey's supplementary submissions dated 5 August 2022 were MFI 4. 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 August 2022