Mary-Jean Lewis as Administrator of the Estate of the late Benjimen Baxter v Hettiaratchi

Background

1. Mary-Jean Lewis is the plaintiff and administrator of the estate of her brother, the late Benjimen Robert Samuel Baxter. On 5 March 2019, Mr Baxter died.
2. On 18 October 2017, Mr Baxter had filed a statement of claim seeking damages against the defendants for alleged medical negligence arising out of treatment they provided him between 2012 and 2015.
3. In short, it is alleged that each of the four defendants breached their respective duties of care that they separately owed to Mr Baxter by failing to diagnose a condition of the neck and cervical spine known as ossification of the ligamentum flavum ("OLF"). It is further alleged that as a consequence of the defendants' respective failures to diagnose the OLF, Mr Baxter was rendered quadriplegic when he fractured his C4 and C5 vertebrae in a fall.
4. Mr Baxter contends that on 8 November 2017, the fourth defendant, Dr Zeng, was served with the statement of claim. Following service upon them, the first, second and third defendants filed notices of appearance.
5. On 14 February 2018, Mr Baxter filed a notice of motion seeking default judgment against Dr Zeng. On 26 February 2018, default judgment was entered against Dr Zeng. On 7 May 2018, separate defences were filed on behalf of each of the first, second and third defendants.
6. On 28 November 2018, Mr Baxter filed an amended statement of claim ("ASC"). The ASC pleaded additional particulars of negligence against each of the defendants, including Dr Zeng. On 3 December 2018, Mr Baxter filed an amended "Part 15" statement of particulars.
7. On 1 March 2019, the day after Dr Zeng instructed his solicitor, Ms Cantrill, she appeared at a directions hearing. She filed a notice of appearance and an affidavit. Dr Zeng was directed to file and serve a notice of motion and affidavit to set aside default judgment by 15 March 2019. He complied with those orders.
8. On 5 March 2019, Mr Baxter died.
9. On 21 August 2019, letters of administration were granted in favour of Mr Baxter's sister, Ms Lewis.
10. On 23 September 2019, a further amended statement of claim ("FASC") was filed. The FASC substituted Ms Lewis for Mr Baxter as the plaintiff. Each of the four defendants, including Dr Zeng, consented to the filing of the FASC.

Set aside default judgment

1. In accordance with Rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), the Court may set aside default judgment. It reads: "36.16 Further power to set aside or vary judgment or order (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 …"

Principles - setting aside a default judgment

1. The principles relevant to setting aside a default judgment were recently restated in J & M McNamee Holdings Pty Ltd v Mungerie Vale Pty Ltd t/as Greenwood Group Realtors [2019] NSWCA 283 at [48] to [52]. They read: "[48] It is well established that the considerations relevant to an application to set aside a default judgment include whether the applicant has a bona fide ground of defence, an adequate explanation for the failure to defend and the length of any delay: Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503 at 506 (Hope JA; Glass JA agreeing). Whether the plaintiff will be prejudiced if the default judgment were set aside is also relevant. [49] 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] (Sackville AJA; Barrett and Leeming JJA agreeing), citing, with approval, the remarks in Reinher Industrial Lease & Finance Pty Ltd v Jordan (Court of Appeal (NSW), 4 June 1974, unrep). [50] Two further matters referred to by Sackville AJA in Dai v Zhu should be mentioned. One is the observation by his Honour at [89] 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'. [51] The other matter, which is related to this, is his Honour's observation at [92] that, 'In determining whether the defendant has a bona fide defence on the merits, the Court does not embark on a hearing of the full merits of the case … [A]ll 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'. His Honour continued at [92]: 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 orders of the Court. [52] It is also to be accepted that the application of these principles must now be subject to the provisions of the Civil Procedure Act 2005 (NSW). In Dai v Zhu, Sackville AJA gave as an example at [93], that there may be circumstances where it would be contrary to 'the just determination of the proceedings', referring to s 57(1)(a) of the Civil Procedure Act 2005 (NSW), to require a defendant to adduce affidavit evidence demonstrating a bona fide defence and in such cases the Court would be unlikely to reject the defendant's application to set aside a default judgment solely on the ground that no such affidavit had been filed whilst emphasising each case must of course depend on its own facts."

Dr Zeng's explanation

1. In addition to relying on his two affidavits, Mr Khoury, a licenced process server, gave evidence at the hearing of these proceedings. He stated that at 4.33pm on 8 November 2017, he personally served Dr Zeng with the following documents: a statement of claim in the proceedings filed 18 October 2017; an expert report of Dr Ron Sekel dated 30 June 2017; a report of Dr Peter Stein dated 26 March 2012; and a report of Dr Hunter dated 22 September 2014, by giving them to him personally at Campsie Medical Clinic, 1st floor XX Amy Street, Campsie. At the time, he had a worksheet where he made contemporaneous notes of the service. He swore his affidavit of service two days later. Mr Khoury no longer has his worksheet, as it was forwarded to his employer. I carefully observed him when he gave evidence. I found his evidence to be truthful and I accept it.
2. Dr Zeng deposes that he cannot recall being served with the statement of claim. Dr Zeng was not required for cross examination. Since he became aware of the proceedings, Dr Zeng has considered the following possible explanations as to why he was not aware of Mr Baxter's claim until 26 February 2019.
3. He has checked his appointment book to see if he was in fact at the medical practice. The appointment book shows that on 8 November 2017, he had appointments with patients from 9:00 am until 5:45 pm. Between 4:00 pm and 5:00 pm, he had appointments with four patients. He cannot now recall whether he saw those patients, although a printout of the "status screen" shows that each of those four patients (identified by their unique patient numbers) attended the medical practice that afternoon, and that each was invoiced in relation to medical services provided by Dr Zeng at that time (Ex B). In the circumstances, Dr Zeng states that he presumes he was busy seeing each of the patients in turn between 4:00 pm and 5:00 pm on 8 November 2017.
4. On 5 January 2018, the plaintiff's solicitor sent a letter to Dr Zeng by registered post to Campsie Medical Clinic. The letter confirmed that Dr Zeng should enter an appearance before the directions hearing on 8 February 2018, and that if he did not, the plaintiff would seek orders for default judgment against him. The tracking number contained on the registered post lodgement receipt is 944517650016.
5. On 27 November 2019, the plaintiff's solicitor made a telephone call to Australia Post and spoke to an operator named Mathew. She asked Mathew to perform a search of the tracking number above, and to advise her as to whether he could provide confirmation of delivery. Mathew replied in words to the following effect: "The letter was delivered to Campsie Centre Medical Clinic on 12 January 2018. The letter is confirmed as being delivered in our system and it was signed on receipt by M. Wang. He forwarded a copy of the proof of delivery. The proof of delivery on the system does show that the letter was delivered to Campsie Centre Medical Clinic on 12 January 2018 and signed for by M. Wang".
6. The medical practice consisted of two doctors, Dr Danny Hua and Dr Zeng. The medical practice also employed a receptionist and a clinical psychologist. The medical practice frequently receives documents sent by post or courier, or hand delivered by patients or other people.
7. In November 2017, and presumably January 2018, it was the medical practice's procedure to: 1. provide the mail or document to the relevant doctor to read; 2. action as appropriate; and 3. scan the mail or document into the relevant electronic patient file.
8. Over the years, the medical practice has experienced patients who have litigated personal injury claims. Occasionally, the medical practice has been served with a subpoena to produce documents. On receipt of any court documents, the medical practice adhered to its usual practice.
9. Dr Zeng stated that when he received mail, documents or court documents that related to one of his patients, it was his practice to read the correspondence and review the relevant patient file so he could determine what action he needed to take.
10. I accept that the practice manager did receive the letter from the plaintiff dated 5 January 2018 advising him that default judgment may be entered against him. Dr Zeng does not recall ever receiving a copy of that letter.
11. However, Dr Zeng does remember receiving a letter dated 30 January 2019 from the National Disability Insurance Agency ("NDIA") in relation to Mr Baxter. In accordance with the medical practice's usual practice, the letter was provided to Dr Zeng and scanned into the electronic patient file for Mr Baxter.
12. In accordance with his usual practice, Dr Zeng read the letter. The contents of the letter were a surprise to him. He was concerned that the letter appeared to raise some issues with which he was unfamiliar. In particular, Dr Zeng did not understand why he might be paying compensation to Mr Baxter. Accordingly, he attempted to investigate whether the letter was genuine and, if so, what he should do about it.
13. Dr Zeng deposes that he looked up Mr Baxter's patient file to see if there was anything on it which might shed light on the NDIA letter. There was nothing in Mr Baxter's file which related to the NDIA, nor any claim against him, or any requirement for him to pay compensation.
14. Secondly, Dr Zeng asked the medical practice's receptionist, Ms Mengsi Wang, to contact the NDIA and make inquiries about the letter. Ms Wang told him that she telephoned the NDIA and spoke to a person who informed her that NDIA was unable to verify the letter, as they could not identify the reference number on it.
15. On 8 February 2019, Ms Wang sent a follow-up email to the NDIA. She told Dr Zeng that neither she nor the medical practice received any form of reply to her email.
16. Dr Zeng deposes that he first became aware that default judgment had been entered against him on 26 February 2019, when a person called Lisa, who was apparently a solicitor acting for one of the other defendants, telephoned him and informed him of that fact. She recommended that he contact his medical defence organisation. He immediately contacted his medical defence organisation, MDA National Insurance Ply Ltd ("MDA National"). It is his understanding that MDA National made enquiries.

The plaintiff's submissions

1. The plaintiff submitted that on the evidence before the Court, it should be found that on the balance of probabilities, not only was Dr Zeng served with the originating process, but that he also received the letter dated 5 January 2018 sent to him by the plaintiff's lawyers, Sydney Compensation Specialists, advising him of the application for default judgment.
2. The plaintiff submitted that being personally served with proceedings at one's place of business is an event of which one is likely to recall. If the unchallenged evidence of Mr Khoury is accepted, then in the circumstances, where Dr Zeng denies that he was served, is telling. It and gives rise to the possibility that the service was ignored. It should be noted that Dr Zeng only took action when he received notification that judgment has been entered and that NDIA was seeking to recover money.

Consideration

1. On 8 November 2017, Dr Zeng was served with the statement of claim and other documents by Mr Khoury. I do not accept that Dr Zeng deliberately ignored service of the statement of claim. His medical practice was a very busy one, particularly at the time of service on 8 November 2017 at 4.33 pm, when he saw four patients between 4.00 pm and 5.00 pm (see Ex B). Rather, on the balance of probabilities, I find that it is more likely that he was served with the statement of claim, but does not recall it. I also accept that the plaintiff's solicitor's letter dated 5 January 2018 advising Dr Zeng that default judgment was to be entered against him was received by his practice manager, Ms Wang, on 12 January 2018.
2. It is unfortunate that the plaintiff's statement of claim and further letter were overlooked. Nonetheless, Dr Zeng says that he was not aware of the proceedings or of the default judgment until 26 February 2019. On becoming aware of the proceedings on 26 February 2019, he immediately took proper and expeditious steps to prepare his defence to the claim brought against him by Mr Baxter. In my view, Mr Zeng has provided an adequate explanation.

The pleading framework

1. It is common ground that Mr Baxter consulted Dr Zeng on two occasions, namely 5 August 2014 and 22 September 2014.
2. Paragraphs [23] to [25] of the FASC plead: "23. On the 5 August 2014, the plaintiff attended a consultation with Dr Zeng seeking a second opinion as to the cause of the symptoms that he was suffering to his neck and gave a history of chronic back pain. 24. On the 22 September 2014, the plaintiff attended a consultation with Dr Zeng where he (a) prescribed analgesics; (b) referred the plaintiff for an x-ray. 25. The report on the x-ray referred to no serious injury of disease. Particulars Report dated 22 September 2014; Dr Hunter to Dr Zeng"
3. In Dr Zeng's proposed defence at [10] to [11], he pleads: "10 In answer to paragraph 23 of the Further Amended Statement of Claim, the fourth defendant: a. admits that Benjimen Baxter consulted with him on 5 August 2014; b. denies that Benjimen Baxter informed him that the purpose of the consultation with him was to seek a second opinion as to the cause of symptoms he was suffering to his neck; c. says that Benjimen Baxter informed him that the reason for consultation was dental pain, for which Mr Baxter requested pain medication; d. admits that while he was taking a history from Benjimen Baxter, Mr Baxter informed him of chronic back pain; e. relies on his record of consultation as a contemporaneous but not complete summary of matters discussed in that consultation; f. otherwise does not admit paragraph 24 of the Further Amended Statement of Claim. 11 In answer to paragraph 24 of the Further Amended Statement of Claim, the fourth defendant: a. admits that Benjimen Baxter consulted with him on 22 September 2014. b. says that Mr Baxter requested pain medication; c. says that he informed Mr Baxter that Mr Baxter needed to transfer his clinical notes to the Campsie Centre Medical Clinic if Mr Baxter wanted to come under the care of the fourth defendant; d. admits that he prescribed Naprosyn 500mg; e. admits that he referred Mr Baxter for an X-ray of the cervical spine; and f. otherwise does not admit paragraph 24 of the Further Amended Statement of Claim."
4. The draft defence also contends that in accordance with s 5O of the Civil Liability Act 2002 (NSW), Dr Zeng acted in a manner that was widely accepted in Australia by peer professional opinion as competent medical practice in 2014; or that in the alternative, there was no breach of duty of care pursuant to s 5D of the Civil Liability Act.
5. In her report dated 13 July 2019, Dr Marcela Cox, general practitioner, has provided her peer professional opinion regarding Dr Zeng's conduct. In short, it is Dr Cox's opinion that on the two occasions that Dr Zeng saw Mr Baxter, Dr Zeng's conduct was consistent with competent professional practice in Australia at the time. On 27 August 2019, Dr Cox's report was served on the other parties.

Dr Zeng's submissions

1. Dr Zeng submitted that he has bona fide grounds of defence on the merits.
2. In the event that the default judgment is set aside, Dr Zeng will seek leave to file a defence to the FASC in substantially the same terms as the draft defence.

The plaintiff's submissions

1. The plaintiff submitted that it is incumbent upon Dr Zeng to adduce evidence of matters that would give rise to a bona fide ground of defence. He has not done so. Counsel for the plaintiff submitted that Dr Zeng should have sworn an affidavit that sets out his version of events, and that by not doing so, he has not established that he has a bona fide defence.
2. The plaintiff acknowledged that the Court must not issue a judgment on a matter which has not been properly adjudicated. However, the plaintiff submitted that the Court should not permit a defendant to ignore the consequences of legal proceedings, and subsequently to seek to have those consequences ameliorated without providing a credible explanation for the default or adducing evidence as a basis for a defence.

Consideration

1. I am satisfied that Dr Zeng has bona fide grounds of defence set out in his proposed defence. While the plaintiff's counsel submitted that Dr Zeng should have provided an affidavit, he has given instructions to his solicitor as to his version of events. They have been incorporated by his solicitor into his proposed defence. In addition, he has served an expert report that supports his defence under s 5O of the Civil Liability Act. He may choose to provide a sworn statement. It is my view that Dr Zeng has bona fide grounds of defence.

Dr Zeng's submissions

1. Dr Zeng submitted that in all the circumstances, justice between the parties militates strongly in favour of granting his application to set aside the order for default judgment. Allowing the plaintiff to proceed on the default judgment will significantly and irredeemably prejudice him. He also submitted that setting aside the default judgment will not result in prejudice to any other party in the proceedings, either as a consequence of delay or otherwise.

The plaintiff's submissions

1. Mr Baxter died on 5 March 2019, 10 days before the fourth defendant's application on 15 March 2019. Mr Baxter's death has prejudiced the plaintiff's case in the greatest possible manner.
2. The plaintiff submitted that a delay resulting from commencing proceedings after a limitation period has expired gives rise to a presumption of prejudice, and that by analogy, the same is true in this case. The plaintiff submitted that the onus rests with the Dr Zeng to demonstrate that despite Mr Baxter's death, there can still be a fair trial once the plaintiff has discharged its evidential onus of raising any matter that might tell against the exercise of discretion.
3. As setting aside the default judgment and allowing the fourth defendant to defend the plaintiff's action gives rise to significant prejudice to the plaintiff, she submitted that application should be refused.

Consideration

1. At issue in the proceedings will be the conversations that occurred between Dr Zeng and Mr Baxter during the two consultations on 5 August and 22 September 2015. As I understand it, the plaintiff's solicitors have an unsigned statement of Mr Baxter in relation to these proceedings for the purpose of informing them of his version of what occurred. Mr Baxter died a few days after the legal representatives for Dr Zeng appeared at a directions hearing, and 10 days before Dr Zeng brought his application on 15 March 2019.
2. I accept that Dr Zeng's delay from 8 November 2017 to 15 March 2019 has caused the plaintiff to suffer presumptive prejudice. Mr Baxter's death means he will be unable to contribute to his case as it proceeds.
3. However, even if the default judgment is not set aside, Dr Zeng is entitled to be heard at trial on the issues of causation and damages. There are three other defendants. The trial, as it currently stands, will involve Dr Zeng and three other doctors as defendants to be heard on issues of causation and damages. I am satisfied that if default judgment entered against Dr Zeng on 26 February 2018 is set aside, both parties will receive a fair trial. It is my view that setting aside the default judgment is also in the interests of justice.

Conclusion

1. Dr Zeng has provided an adequate explanation and has bona fide grounds of defence. I am also satisfied that the parties will receive a fair trial. As such, it is my view that justice dictates that the default judgment entered on 26 February 2018 against the fourth defendant be set aside.

Costs

1. Costs are discretionary. As the fourth defendant has been granted an indulgence by this Court, the appropriate order for costs is that the fourth defendant should pay the plaintiff's costs of his notice of motion.

The Court orders that: (1) The default judgment entered on 26 February 2018 against the fourth defendant is set aside. (2) The fourth defendant is to pay the plaintiff's costs of his notice of motion filed 15 March 2019.

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: 20 December 2019