Maleski v Hampson

Supreme Court of NSW|2013-12-05|Before: Bleby J, Bergin J

Judgment 1HER HONOUR: Ms Maleski's claim is for the recognition and enforcement at common law of a final default judgment for a fixed sum of money of the Superior Court of New Jersey made on 14 March 2011 (the judgment). 2By amended notice of motion filed 4 September 2013, the plaintiff now seeks first an order that the defence be struck out pursuant to Rule 14.28 of the Uniform Civil Procedure Rules 2005 ("UCPR") and/or s 61(3)(c) of the Civil Procedure Act 2005; and second, an order pursuant to UCPR Part 16 and/or s 61(3)(c) of the Civil Procedure Act that judgment be entered against the defendant in accordance with the relief claimed in the statement of claim filed in the sum of AUD$126,403.30 as at 5 November 2013 together with interest up to judgment at such rate as the Court determines, and costs of the proceedings. 3The plaintiff is Nadine Maleski. She is a practising attorney of the State of New Jersey. The defendant Donald Hampson. Ms Maleski relied on her affidavit sworn 28 August 2013. The defendant did not rely upon affidavit evidence. 4At common law, a foreign judgment is prima facie capable of recognition and enforcement if the following requirements have been met. (a) There is identity of the parties, as is the case here; (b) The foreign judgment is a judgment of a court, the Superior Court of New Jersey; (c) The foreign judgment is for a certain (fixed) sum of money; and final, that is, it is not interlocutory and has not been appealed; (d) The foreign court exercised a jurisdiction that Australian courts recognise for the purposes of the rules of recognition and enforcement of foreign judgments at common law (also known as "jurisdiction in the international sense"). See Benefit Strategies Group v Prider (2005) 91 SASR 544, per Bleby J at 552, [18]; Schnabel v Yung Lui [2002] NSWSC 15, per Bergin J at [75]; M Davies et al, Nygh's Conflict of Laws in Australia (LexisNexis, 8th ed, 2010) p 807 at [40.2] (Nygh). 5It is common ground that these four requirements have been met. 6As to the requirement that the New Jersey court have jurisdiction in the international sense, this is satisfied where the defendant is served within the jurisdiction of the foreign court: see Herman v Meallin (1891) 8 WN (NSW) 38; Nygh at [40.6]. It is also common ground that the defendant was served with the complaint within the jurisdiction of the foreign court. As all of these requirements have been met, the judgment is recognised and can be entered as a judgment of this Court and I make this order.

Whether there is a proper defence 7However, the principal issue in dispute between the parties is whether the defence in these current proceedings discloses an arguable defence to the recognition and enforcement of the judgment. Ms Maleski seeks to summarily strike out Mr Hampson's defence. Counsel for Mr Hampson submitted that as the defence raises fraud that includes an equitable notion of constructive fraud (such as the conduct of a fiduciary or someone required to act in good faith) constitutes a recognised defence. 8It is long established that provided the foreign court had jurisdiction in the international sense, the intrinsic merits of the judgment could not be called into question: see Godard v Grey (1870) LR 6 QB 139 at 150; RDCW Diamonds v Da Gloria [2006] NSWSC 450, Rothman J at [28] -[31]. Mr Hampson cannot raise in these proceedings any defence that was or could have been raised in the foreign proceedings, even though it would have been a complete answer to the claim: see Nygh [40.59], citing Ellis v M'Henry (1871) LR 6 CP 228. 9In order to establish whether or not the defence should be struck out, it is necessary to briefly examine the proceedings in the Superior Court of New Jersey, United State of America.

The proceedings in the Superior Court of New Jersey, United States of America 10On 29 July 2010, Ms Maleski issued a summons out of the Superior Court of New Jersey, United States of America seeking payment from Mr Hampson based on a loan contract (and addendum). The complaint pleaded two counts, the first count being that the defendant breached the term of the loan contract; and the second count pleaded was that of unjust enrichment. 11A copy of the contract and addendum were filed in the foreign court. It is only necessary to refer to the relevant portions of the loan contract. They read: "This Loan is made on November 6, 2009. The names and addresses of the Borrowers are: DAVID MALESKI, of XX XXX XXX, XXXXX, Kailua Kona, Hawaii 96740 and DONALD HAMPSON, of X XXXX XXXX, Necshanic, New Jersey 08853 ("Borrowers"). The name and address of the lender is NADINE MALESKI, of XX XXXX XXXX, Flemington, New Jersey 08822, ("Lender"). Together, the foregoing are referred to as "The Parties." Nadine Maleski hereby lends the sum of $80,000 (EIGHTY THOUSAND DOLLARS) to the Borrowers to be provided by electronic bank transfer, wire, or such other means acceptable to the Borrowers. Said Loan shall be repaid at an Interest rate of twenty percent (20%) per annum. The Loan monies shall be used for start up costs for the Borrowers' business, entitled Recycling & Cryogenics Technologies, LLC, ("RCT"), such as warehouse lease, liquid nitrogen, electrical cost of operations and refrigeration truck(s), forklift rental, truck rental, gasoline and oil, telephone, website development, and office fax, copier, scanner, computer maintenance. Repayment of said loan shall be made with the Borrowers' Small Business Loan, anticipated to be provided to the Borrowers in 2009. The above loan shall be secured by the Borrowers' Equipment: Kason Classifier (valued at $10,000). Cryogenic food freezer and controls (valued at $168,000), Cryogenic Grinding System (valued at $251,586), second screen and drying unit (valued at $49,915). Nadine Maleski shall be named on the insurance policy (ies), which insure the above Equipment, as an also Insured party and proof shall be supplied to the Lender within thirty (3o) days of this date. If the Borrowers to not repay said loan to the Lender by October 14, 2010 for any reason, the Lender shall have the following options: 1.) All or part of the said Loan monies constitute Income to the Borrowers and a loss to the Lender for purposes of 2009 income tax filings; or 2.) Repayment must be made through the sale of said Equipment, or 3.) Some combination of the first two options; or 4.) On terms as the Parties may agree. ... The Borrowers are equally responsible, individually and together, to Lender for payment in full of this Loan and performance of all obligations under this Contract." 12The addendum is an agreement to allow for David Maleski and Mr Hampson to borrow an additional sum of $20,000 under the same terms and conditions as set out as the loan for $80,000. Both loan document and addendum were signed by all parties and witnessed by a Notary Public of New Jersey. 13In her complaint, in the Superior Court of New Jersey after establishing jurisdiction, Ms Maleski relevantly pleaded: "14. Defendants contracted to repay the loans with financing anticipated to occur within a few months of the April 29, 2010 and through product sales. 14. Defendants did not obtain the Small Business Loan as promised and did not repay the subject loans with the Small Business Loan. 15. Defendants did not ensure the equipment used as collateral, and did not name Plaintiff as additional insured. 16. Defendants did not repay the loan with financing. 17. Plaintiff has demanded repayment of the subject loans in accordance with the terms of the contract. 18. Plaintiff has demanded that the subject equipment named as collateral for the subject loans be sold to satisfy the loan in according with the terms of the contract. 19. Notwithstanding the Plaintiff's demands for payment from the Defendants, and the Defendants promises to make payment thereof, said Defendants have neglected and failed to pay the same. WHEREFORE, the Plaintiff demands judgment against the Defendants for damages in the amount of $100,000 together with interest and costs, and further that Defendants sell said equipment to pay same." 14On 6 August 2010, the summons was served personally on Mr Hampson at XX XXXX XXXXX, Necshanic, New Jersey. Mr Hampson failed to appear, answer or otherwise move on the plaintiff's summons. 15On 14 March 2011, the Superior Court of New Jersey having considered this matter and for good cause shown granted default judgment in favour of Ms Maleski against Mr Hampson in the amount of USD$119,666.

Summary judgment 16The plaintiff relies upon s 61(3)(c) of the Civil Procedure Act 2005, UCPR 13.1, 14.28 and Part 16 although no particular rule is specified. "61 Directions as to practice and procedure generally (cf SCR Part 23, rule 4; Act No 9 1973, section 68A) (1) The court may, by order, give such directions as it thinks fit (whether or not inconsistent with rules of court) for the speedy determination of the real issues between the parties to the proceedings. ... (3) If a party to whom such a direction has been given fails to comply with the direction, the court may, by order, do any one or more of the following: ... (c) it may strike out any defence filed by a defendant, and give judgment accordingly, ... 13.1 Summary judgment (cf SCR Part 13, rule 2; DCR Part 11A, rule 2; LCR Part 10A, rule 2) (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires. (2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed. (3) In this rule, a reference to damages includes a reference to the value of goods." 17UCPR 14.28(1) provides that the Court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings, or thirdly, is otherwise an abuse of the process of the court. 18UCPR 14.28(2) provides that the court may receive evidence on the hearing of an application for an order under subrule (1). 19Recently, in O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 the Court of Appeal applied the High Court decision of Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118. In Spencer the High Court was concerned with s 31A(2) of the Federal Court Act 1976 (Cth) but the following principles are of general application: (a) On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]). (b) The critical question can be expressed as whether there is more than a "fanciful" prospect of success (at [25]) per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the court to allow the action to go forward (at [54]). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success. 20Powers to summarily terminate proceedings must be exercised with exceptional caution (at [55]; see also French CJ and Gummow J at [24]).

The defence 21By defence filed on 1 May 2013 in these current proceedings, Mr Hampson, after referring to matter that are admitted and stating that the plaintiff as an attorney had drawn up both the agreement and the addendum. It pleads at [7]: "7. IN ANSWER TO THE WHOLE OF THE PLAINTIFF'S CLAIM, the Defendant says that the Default Judgment entered against him in the Superior Court of New Jersey, Law Division, Huntington County, Docket No L-488-10 ("New Jersey proceeding") was procured by the fraud of the Plaintiff." 22The defence continues: "... (iv) The Agreement further provided that if sum of US$80,000.00 was not made by 14 October 2010, the Plaintiff could (at her option) either (1) treat the loan as income to me and her brother, and a loss to the Plaintiff for 2009 Income Tax purposes under US Income Tax law; (2) sell the equipment listed in the Agreement which secured her loan and repay herself from the proceeds; (3) some combination of (2) and (3); or (4) come to further terms as to repayment with the Borrowers; ... (ix) The only remedies available to the Plaintiff under the Agreement and/or the Addendum are those remedies set out in (iv) above; ... (xii) The Plaintiff, as an attorney practising law in the State of New Jersey USA, had an obligation to the Superior Court of New Jersey, to make specific disclosure to that court that as at the date the New Jersey proceeding was commenced by her the debt she sued for was not due and payable; (xiii) The plaintiff, on the same basis, was obliged to tell that Court that her only remedies under the Agreement and/or Addendum are those set out in (iv) above, and no other; ..." 23The main issues raised in the defence are said to constitute fraud firstly, that Ms Maleski, an attorney commenced the proceedings in the foreign court on 28 July 2010 at a time before the loan actually became repayable, on 14 October 2010; secondly that the only remedies available to Ms Maleski were those set out in 7(iv) of the defence; thirdly, the loan was a non recourse loan; and fourthly, the defendants had not been served with a notice of demand as required by the term of the loan agreement; and finally, that the plaintiff, as an attorney had an obligation to disclose to the court that the debt she sued upon was not due and owing and that she could only pursue the remedies provided under the loan agreement.

Fraud - Does it constitute a defence? 24According to the Encyclopaedic Australian Legal Dictionary (LexisNexis, 2013), the definition of fraud is "an intentional dishonest act or omission done with the purpose of deceiving." 25Actual fraud is defined as "at common law, an act or omission done for an intentionally deceitful purpose or with reckless indifference as to the truth or falsity of a representation: Derry v Peek (1889) 14 App Cas 337 ; [1886-90] All ER Rep 1 . Actual fraud is distinguished from equitable fraud, which focuses on the conscience and motives of the party: for example, Armitage v Nurse [1998] Ch 241 ; [1997] 2 All ER 705; [1997] 3 WLR 1046". 26The defendant also pleads constructive fraud. "Constructive fraud" that is also defined in the Encyclopaedic Australian Legal Dictionary as "the fraudulent breach of an obligation, enforced by a court of conscience. An actual intention to cheat need not be proved; this distinguishes constructive fraud from actual fraud. Conduct will be regarded as constructive fraud when a person violates, however innocently, an obligation that a court of equity will assume was known to the person: Nocton v Lord Ashburton [1914] AC 932 ; [1914-15] All ER Rep 45". 27Lord Coleridge CJ in Abouloff v Oppenheimer (1882) 10 QBD 295 at 302 was of the opinion that the occurrence of fraud allowed the current court to reconsider the proceedings that were before the foreign court. His Lordship stated: "... I am of the opinion that the fraud of the person who has obtained the foreign judgment, is none the less capable of being pleaded and proved as an answer to an action on the foreign judgment in a proceeding in this country, because the facts necessary to be proved in the English courts were suppressed in the foreign court by fraud on part of the person who seeks enforce the judgment..." 28There are two approaches to what constitutes a defence to a foreign judgment based on fraud, one is the English approach set out in Abouloff v Oppenheimer (1882) 10 QBD 295 and the other is the more restrictive domestic approach of Rogers CJ Comm D in Keele v Findley (1990) 21 NSWLR 444. The parties have also referred to Close v Arnot Matter No 10107/96 [1997] NSWSC 569; Yoon v Song [2000] NSWSC 1147; Benefit Strategies Group Inc v Prider [2005] SASC 194; Allardyce Lumber Company Limited v Quarter Enterprises Pty Limited (No 2) [2012] NSWSC 438. Some judgments of this Court have followed the English approach and more recently the New South Wales domestic approach. The Full Court of South Australia in Prider followed the New South Wales domestic approach.

Abouloff v Oppenheimer - the English approach 29In Abouloff v Oppenheimer (1882) 10 QBD 295, the Court of Appeal (per Lord Coleridge CJ, Baggallay and Brett LJJ agreeing) refused to enforce a foreign judgment where the judgment was obtained by fraud. The plaintiffs obtained judgment against the defendants in a Russian court. The defendants were ordered to return certain goods to the plaintiff or alternatively, pay an amount equivalent to value of the goods. The defendants alleged that the plaintiffs obtained judgment by making fraudulent representations to the Russian court that the goods were not in the plaintiff's possession. 30Lord Coleridge CJ at 300 stated: "Many authorities... have been cited during the argument but not one throws doubt on the broad proposition that where a judgment has been obtained by the fraud of a party to a suit in a foreign country, he cannot prevent the question of fraud from being litigated in the courts of this country, when he seeks to enforce the judgment so obtained. The justice of that proposition is obvious: if were not so, we should have to disregard a well-established rule of law that no man shall take advantage of his own wrong, and we should have to lay down as a legal proposition that where a judgment has been obtained by courts of a foreign country by fraud and by a wrongful act, nevertheless the person obtaining it can take advantage of that fraud and of that wrongful act..." (My emphasis added) 31Lord Coleridge CJ (at 301) also stated that when a foreign judgment is sought to be enforced, the question to be considered is "whether the foreign court has been misled intentionally by the fraud of the person seeking to enforce it, whether a fraud has been committed upon the foreign court with intention to procure its judgment". 32His Lordship concluded at 303 that: "...[O]n on the broad ground that no man can take advantage of his own wrong, and that it is a principle of law that no action can be maintained on the judgment of a court either in this country or in any other, which has obtained by the fraud of the person seeking to enforce it..." 33Baggallay LJ agreed with Lord Coleridge CJ that the foreign judgment could not be enforced. However Baggallay LJ also held that English Court should not enforce a foreign judgment in two types of fraud. They are firstly, where the foreign court was unaware of the fraud perpetuated by the plaintiff or secondly, where the foreign court was or may have been aware of the fraud but decided in favour of the plaintiff instead. Baggallay LJ stated at 303 - 304: "If the judgments had not been improperly obtained, the right of the plaintiff would be clear. In using the words "improperly obtained", I desire to be understood as not limiting them to a case where a fraud has been perpetrated upon the foreign court itself. I apply them to also a case where a fraud has been perpetrated and the foreign court was not ignorant of the facts on which the assertion of fraud was based... ...If all the facts from which the fraud is to be inferred had been before the foreign court, and that court did not infer fraud from them, and if an English court was called upon to give effect to the judgment obtained by the person who perpetuated the fraud, I should be prepared to hold that the foreign judgment could not be enforced in the English court." 34Baggallay LJ also considered that the same principles that governed applications to set aside local judgments by reason of fraud should apply to foreign judgments. 35Brett LJ agreed with Lord Coleridge CJ and held "that if the judgment upon which the action is brought was procured from the foreign court by the successful fraud of the party who is seeking to enforce it, the action in the English court will not lie" (at 306). Accordingly Brett LJ concluded that: "...[F]raud committed by a party to the suit for the purpose of deceiving a foreign court, is a defence to an action in the country founded upon the judgment of that foreign court, It seems to me that if we were to acceded to the argument for the plaintiff, the result would be that the plausible deceiver would succeed, whereas a deceiver who is not plausible would fail. I cannot think that plausible fraud ought to be upheld in any court of justice in England. 36Ultimately, the Court in Abouloff held that a foreign judgment obtained by fraud of a party seeking to enforce the judgment cannot be enforced in an English court even where the question of fraud had been considered by that foreign court and the foreign court had decided that fraud had not been committed. 37There have been other English cases that have followed the approach in Abouloff v Oppenheimer. In Vadala v Lawes (1890) 25 QBD 310 the defendant claimed that the judgment against him given by an Italian court had been procured by false evidence. The plaintiff's response to the claim was that these allegations were raised in the Italian proceedings and were rejected by the Italian court. The Court of Appeal held that the defendant could raise the issue again in the English court. Lindsay LJ stated at 316 - 317: "[I]f the fraud upon the foreign Court consist of the fact that the plaintiff has induced that Court by fraud to come to the wrong conclusion, you can reopen the whole case even though you have in this Court to go into the very facts which were investigated and which were in issue in the foreign court." 38The Court of Appeal in Jet Holdings Inc v Patel [1990] QB 335 followed the decision in Vadala v Lawes. In Jet Holdings, the plaintiff commenced a claim in California. In the Californian proceedings, the defendant alleged that he had safety concerns if he were to go to California. The defendant was ordered to take depositions and when he failed to attend, the court gave judgment against him in his absence. The court held that the defendant was allowed to raise the issue of alleged intimidation in the enforcement of foreign judgment proceedings. The alleged intimidation amounted to fraud because the plaintiff's lawyers had told the court that the defendant's account of violence and threats were untrue.

Keele v Findley - New South Wales domestic approach 39In Keele v Findley (1990) 21 NSWLR 444, the plaintiffs sought to enforce in New South Wales, the judgment obtained in the Superior Court of Arizona in the County of La Paz. The defendants claimed that judgment was obtained by fraud because it relied upon perjured evidence. The plaintiffs submitted that it was not open for the defendants to rely upon that type of fraud to resist the enforcement of the judgment. 40Rogers CJ Comm D in Keele did not follow the English approach. His Honour (at 448 - 449) referred to the principles which govern applications to set aside domestic judgments in Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 as re-stated by Kirby P: [I]t must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment... There is a public interest in finality of litigation. Parties ought not, by proceeding to impugn a judgment, to be permitted to relitigate matters which were the subject of the earlier proceedings which gave rise to the judgment... ... ...[M]ere suspicion of fraud, raised by fresh facts later discovered, will not be sufficient to secure relief. The claimant must establish that the new facts are so evidenced and so material that it is reasonably probable that the action will succeed. This rule is founded squarely in the public interest in finality of public... ... ...[A]lthough perjury by the successful party or a witness or witnesses may, if later discovered, warrant the setting aside of a judgment on the ground that it was procured by fraud, and although there may be exceptional cases where such proof of perjury could suffice, without more, to warrant relief of this kind, the mere allegation, or even the proof, of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment... [I]t must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge... ... [T]he burden of establishing the components necessary to warrant the drastic step of setting aside a judgment, allegedly affected by fraud or other relevant taint, lies on the party impugning the judgment. It is for that party to establish the fraud and to do so clearly.In summary, he or she must establish that the case is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; that they go beyond mere allegations of perjury on the part of witnesses at the trial; and that the opposing party who took advantage of the judgment is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such party should take the benefit of the judgment." 41Rogers CJ Comm D also considered Kirby P's discussion (at 456 - 457) of Abouloff in obiter in Wentworth v Rogers (No 5) where Kirby P expressed doubts on the application of Abouloff. Kirby P pointed out that within a few years of the decision in Abouloff, the House of Lords in Boswell's case laid down the principle that the action to set aside a judgment on grounds of fraud must be based upon something newly discovered after the trial and not a challenge to a matter that arose at trial. Rogers CJ Comm D quoted Kirby P who referred to a competing consideration and stated (at 457): "The applicable law as well as reasons of principle grounded in the public interest in finality of litigation, make it plain that the test to be applied in this Court for such an action as the appellant seeks to maintain, challenging as it does a judgment of this Court, is whether, since the judgment under attack, fresh facts have come to notice which satisfy the other requirements already stated". 42Ultimately, Rogers CJ Comm D did not follow the English approach for the reasons his Honour articulated at 457 - 458: "Eventually, I decided that, faute de mieux, the parties should have my expression of what I believe is the applicable law. This is for a number of reasons. First, there is no authority in this country where the point has squarely arisen for decision. Secondly, there is a respectable line of judicial authority in Canada which I believe represents the correct view. Thirdly, it is important that, what I believe to be an error, should not be transplanted into this country in a matter of such importance in the administration of justice. The Act [Foreign Judgments (Receicprocal Enforcement) Act 1973] uses the word fraud in s 8(1)(iv) and it is important that in its interpretation there should be no error. ... Fourthly, every academic writer I have consulted accepts the Canadian thinking in preference to the English cases. Fifthly, the historical evolution of the state of the English authorities readily explains how the present error came about. Finally, the English judges seem to accept, in several instances, that the same rules should apply to enforcement of local and foreign judgments in the face of allegations of fraud. I can do no better than to say that all the considerations enumerated by Kirby P in Wentworth v Rogers (No 5) as justifying the law's approach to local judgments, cry out for the same approach to be taken in relation to foreign judgments." 43Rogers CJ Comm D in Keele also expressed the view that despite errors of fact or law, the foreign court's judgment is conclusive and that there is no difference between an error of fact and "an incorrect conclusion that a person is telling the truth" (at 458). His Honour concluded: "... [I]t seems to me, odd to say the least, that on the one hand, local courts should grant a stay of proceedings in their courts, and send the litigants to a foreign court, and at the same time, arrogate to themselves the right to re-try an issue determined by the foreign judge, simply on the basis that the local court may be more skilful in detecting perjury than was the foreign judge. It is accepted, on all hands, that, whatever errors of fact, or law, the foreign court may commit, its judgment is conclusive. I can detect no difference in principle between a grossly erroneous finding of fact and an incorrect conclusion that a person is telling the truth. Yet under the law of England, the resultant foreign judgment cannot be challenged in the first case, but grounds a permissible argument of fraud in the latter. The principle of enforcement of foreign judgments calls for self denial in those circumstance." 44In Keele, Rogers CJ Comm D held that the same principles that governed applications to set aside a domestic judgment should apply to applications resisting common law enforcement of foreign judgments where the foreign judgment has allegedly been obtained by fraud.

These current proceedings - fraud? 45In these current proceedings, the defendant was served with the originating process. In his defence, Mr Hampson admits that he entered into the agreement. He also admitted that he has made no payments to Ms Maleski (at [5]). Hence, there is no dispute that he entered into the agreement and has not made any payments. Most of the allegations raised in his defence, namely that the loan was a non recourse loan and that the only remedies available to Ms Maleski were that firstly, all or part of the said loan moneys constitute income to the borrowers and a loss to the lender for purposes of 2009 income filings, secondly, that repayment was to be made through the sale of the equipment; or thirdly, some combination of these two options or on terms as the parties may agree are not ones that involve fraud by Ms Maleski (see D 7). Those issues solely relate to an interpretation of the terms of the agreements. The parties interpret some of the contractual terms differently. I accept that Ms Maleski in her complaint says that she has demanded repayment of the subject loan in accordance with the terms of the agreement and that Mr Hampson says he has not been that served with a notice of demand as required by the agreement. However, from my reading of the contract there is no requirement in the agreement that a notice of demand had to be served. This appears to be a misunderstanding by both parties. However, so far as the sale of equipment is concerned, Ms Maleski states in her complaint that she had demanded that the subject equipment listed as collateral for the loans be sold to satisfy the loan in accordance with the terms of the agreement. She says that notwithstanding her demand for payment from the defendants and their promise to make payment they have neglected and failed pay the same. 46So far as the two remaining and related contentions are concerned, first that Ms Maleski, an attorney, commenced the proceedings in the foreign court on 28 July 2010 at a time before the loan actually became repayable, on 14 October 2010; and second, as an attorney had an obligation to disclose to the court that the debt she sued upon was not due and owing and that she could only pursue the remedies provided under the loan agreement, these contentions also involve a construction of the written contract, Clause 3 of the agreement states, "repayment of the loan shall be made with the Borrowers Small Business Loan anticipated to be provided to the Borrowers in 2009." She says that because no business loan was ever obtained, the money became repayable when the loan did not eventuate. In my view these matters raised in the defence go to the proper construction of the terms of the loan agreements. They do not establish fraud. The plaintiff interprets the proper construction of the terms of the agreements in one way and the defendant in another. These are matters that should have been raised by Mr Hampson in Superior Court of New Jersey. He did not do so. To date he has not sought to have the judgment set aside in the Superior Court, New Jersey so he can raise these defences. 47The agreement placed before the Superior Court of New Jersey. The Superior Court of New Jersey was satisfied that after it considered this matter, good cause was shown and proceeded to enter default judgment pursuant to Rule 4:43-2 of the Rules Governing the Courts of New Jersey (www.judiciary.state.nj.us/rules/r4-43.htm). 48It is my view that the defendant's allegations of fraud are without merit. On both the English and domestic approaches the matters raised in the defence do not constitute fraud. The matters pleaded in the defence cannot be raised in this jurisdiction. The defence should be struck out.

Interest 49Interest is claimed in relation to the judgment in accordance with the Civil Procedure Act in the sum of US$23,301.68 to 30 August 2013 and US$22.13 per day thereafter up to orders being made in these proceedings (Maleski, Aff 28/8/13 at [19]); or in accordance with the post-judgment interest rate awarded by the New Jersey Superior Court of US$7,027.51 to 30 August 2013 and US$0.82 per day thereafter up to orders being made in these proceedings (Maleski, Aff 28/8/13 at [16]). 50I have allowed interest to be claimed in accordance with the post-judgment interest rate awarded by the New Jersey Superior Court. The plaintiff's interest calculations are set out below: Date Days Rate Amount 14 Mar 2011 - 30 Jun 2011 108 2.5% p.a US$ 885.20 1 Jul 2011 - 30 Jun 2012 366 2.5% p.a US$ 2,999.85 1 Jul 2012 - 30 Aug 2013 426 2.25% p.a US$ 3,142.46 31 Aug 2013 - 5 Dec 2013 97 $0.82 per day US$ 79.54 Total interest US$ 7,107.05

51However, I have calculated interest to date as follows: Date Days Rate Amount 14 Mar 2011 - 30 Jun 2011 108 2.5% p.a US$ 885.20 1 Jul 2011 - 30 Jun 2012 366 2.5% p.a US$ 2,999.85 1 Jul 2012 - 30 Jun 2013 365 2.25% p.a US$ 2,692.49 1 Jul 2013 - 5 Dec 2013 157 2.25% p.a. US$ 1,165.51 Total interest US$ 7,743.05

52I propose to enter judgment in favour of the plaintiff in the sum of AU$140,519.52 which consists of the principal judgment in the amount of US$119,666.00 and pre-judgment interest in the amount of US$7,743.05 (total US$127,409.05). I have relied on the Reserve Bank of Australia's exchange rate of 0.9067 as at 4 December 2013. 53I intend to enter judgment in favour of the plaintiff in the sum of AU$140,519.52 once the parties have checked the calculations. 54Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff's costs as agreed or assessed.

The Court orders that: (1) The defence filed 1 May 2013 is struck out. (2) The defendant is to pay the plaintiff's costs as agreed or assessed.

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 2013

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