Pham v Gall

Court of Appeal (NSW)|2020-04-20|Before: Leeming JA, Payne JA, McCallum JA

House v The King (1936) 55 CLR 499; [1936] HCA 40 HR Turner & Son Pty Ltd v Rhodes [1970] 1 NSWR 305 Ibrahim v Ayoubi [2013] NSWCA 405 James v Australia and New Zealand Banking Group Ltd [2020] NSWCA 101 Kalbasi v Western Australia (2018) 264 CLR 62; [2018] HCA 7 Lord Faulconberg v Peirce (1754) 1 Ambl 210; 27 ER 140 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 Macnamara v The Minister for Works (1894) 15 NSWLR Eq 173 Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 Martin v Booty (1884) 1 WN (NSW) 47 Metwally v University of Wollongong (No 2) [1985] HCA 28; (1985) 59 ALJR 481 Northey v Bega Valley Shire Council [2012] NSWCA 28 Re Hartley [1891] 2 Ch 121 Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 72 ALR 1; [1987] HCA 27 Risa Gall v Andrew Minh Luan Pham [2015] NSWSC 1710 RT Company Pty Ltd v Minister of State for the Interior (1957) 98 CLR 168; [1957] HCA 39 Simpson v Alexander (1926) 26 SR (NSW) 296 Smith v Dobbins (1877) 37 LT (NS) 777 Sprigge v Rutherford (1833) 2 DPC 429 Swinfen v Swinfen (1859) 27 Beav 148; 54 ER 57 The Mutual Life and Citizens' Assurance Company Ltd v Evatt (1970) 122 CLR 628 Turner v New South Wales Mont de Piete Deposit and Investment Co Ltd (1910) 10 CLR 539; [1910] HCA 15 Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239 Watt v Barnett (1878) 3 QBD 363 Weiss v The Queen (2005) 224 CLR 300; [2005] HCA 81 Wilkins v Bedford (1876) 35 LT 622 Woodland v Swimming Teachers Association [2014] AC 537; [2013] UKSC 66 Workers Compensation Nominal Insurer v Detailed Flooring Pty Ltd [2010] NSWSC 1056 Texts Cited: Australian Digest (2nd ed, 1977) Vol 31, "Practice" J Baker, Collected Papers on English Legal History (Cambridge University Press, 2013), Vol I, "Introduction" J Baker, The Law's Two Bodies (Oxford University Press, 2001) J Bryson, "Common law pleadings in New South Wales and how they got here" (2012) 86 ALJ 452 W H Bryson, The Equity Side of the Exchequer (Cambridge University Press, 1975) W Cornish et al, The Oxford History of the Laws of England (Oxford University Press, 2010), Vol XI R Lush, The Practice of the superior courts of law at Westminster (London, 1840) Mason, Sir Frederick Jordan: Fire Under the Frost (2019, The Federation Press) New South Wales, Law Reform Commission, Report of the Law Reform Commission on Supreme Court Procedure (1969, LRC 7) WA Parker, The Practice in Equity (New South Wales) (1930, Law Book Co of Australasia) G Stuckey and C Irwin, Parker's Practice in Equity (Law Book Co of Australasia Pty Ltd, 2nd ed 1949) R Walker, The Practice of the Supreme Court of New South Wales at Common Law (Law Book Co of Australasia, 4th ed 1958) Category: Principal judgment Parties: Andrew Minh Luan Pham (Applicant) Risa Gall (Respondent) Representation: Counsel: D R Pritchard SC with A J Macauley (Applicant) B Le Plastrier (Respondent) Solicitors: KPL Lawyers (Applicant) Morgan Mac Lawyers (Respondent) File Number(s): 2019/335346 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2019] NSWSC 1294 Date of Decision: 27 September 2019 Before: Lindsay J File Number(s): 2015/132068

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] In December 2008 Mr Pham, the applicant, purchased a number of scratch lottery tickets. One of those tickets was a winning ticket. The ticket provided for the winner to receive an annuity of $75,000.00 for 15 years. The issue giving rise to the litigation is whether prior to "scratching" the lottery ticket, the applicant gave the winning ticket to Ms Gall, the respondent and his then partner, as a gift. In May 2015, the respondent filed a statement of claim stating that she was beneficially entitled to the proceeds of the lottery win because prior to scratching the lottery ticket the applicant gave the ticket to the respondent as a gift. The applicant did not appear in those proceedings. On 13 November 2015, the primary judge made orders in favour of the respondent. In October 2018, the applicant filed a notice of motion seeking to set aside the orders and to permit the applicant to file a defence. The applicant cited drug addiction as an explanation for delay in bringing the proceedings. In September 2019, the primary judge refused to make those orders. Those orders are the subject matter of the present appeal. There were four issues on appeal: (1) whether the primary judge applied the correct legal test for setting aside an undefended judgment; (2) whether the primary judge erred in assessing the nature and strength of the applicant's case; (3) whether the primary judge erred in assessing the prejudice to the respondent from setting aside the orders; and (4) whether the primary judge erred in assessing the explanation offered for the applicant's non-appearance at the hearing and delay.

The Court held, refusing leave and dismissing the appeal:

Per Leeming JA (Payne JA and McCallum JA agreeing)

Open-ended discretionary rules such as UCPR r 36.16 are a product of their history, and need to be construed in that context: [53]. Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2, applied.
With the assimilation in 1972 of the separate procedural rules at common law and in equity, the same principles apply irrespective of the Division in which the judgment was obtained: [54].
Jordan CJ's judgment in Vacuum Oil is applicable to the present case because, in order to succeed in setting aside a regularly obtained judgment, the party in default needs to explain the reasons for the default and the nature of the proposed defence: [55]. Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239, discussed and applied.
Jordan CJ's statement in Vacuum Oil as to the question of whether there was a real likelihood that it would be unjust to the defendant to allow the judgment to stand was an encapsulation of the evaluation required for the exercise of a judicial discretion: [56]. Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239, discussed and applied.

Per Payne JA (Leeming JA and McCallum JA agreeing) 5. As the present case involves a discretionary judgment, House v The King error must be established. The weight to be given to factors in the exercise of discretion is a matter for the primary judge alone: [89], [151]. Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61; House v The King (1936) 55 CLR 499; [1936] HCA 40; Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42, applied. 6. UCPR r 36.16(2)(b) provides an unfettered, though judicial, discretion. It necessarily involves the Court in making a broad evaluative judgment: [110]. 7. There is no difference in substance between the ways of expressing this broad evaluative judgment in the passages cited from Vacuum Oil and Northey. Neither case should be read as a formulation of any rigid rule for setting aside an undefended judgment: [110]. Northey v Bega Valley Shire Council [2012] NSWCA 28; Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239, discussed and applied.

Per McCallum JA (Leeming JA agreeing) 8. The distinction posited by the applicant as to the difference between the words of Barrett JA in Northey and the words of Jordan CJ in Vacuum Oil is illusory. Barrett JA's formulation of the "real likelihood" inquiry does not overlook the prospective nature of the part of the inquiry as to whether, if allowed in to defend the case, the defendant is likely to obtain a different result: [158]. Northey v Bega Valley Shire Council [2012] NSWCA 28; Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239, discussed and applied.

Issue 2 9. The primary judge's conclusion that the outcome of the case would likely be determined based on a consideration of disputed accounts of conversations was open to his Honour: [127]. 10. The 12 February 2010 document was capable of being viewed as an admission by the applicant of the respondent's beneficial entitlement to the lottery annuity: [131].

Issue 3 11. The effect of delay, particularly the length of delay here, gives rise to relevant prejudice to the respondent: [140]. 12. The primary judge was entitled to regard the objective facts identified as tending in favour of the respondent being entitled to the benefit of orders regularly obtained, without any default on her part, in the ordinary course of the principal proceedings: [142].

Issue 4 13. The applicant's evidence about the delay in seeking to set aside the orders made in 2015 was internally inconsistent and lacking reliability: [146]. 14. The applicant's bare assertion that by reason of his drug addiction he was unable to participate in the 2015 proceedings was a manifestly inadequate explanation for his non-appearance in 2015. There was no real or adequate explanation for the delay until October 2018 in seeking to set aside the orders: [153]. 15. No House v The King error has been shown in the primary judge's conclusions on any of the issues: [113], [138], [143], [153]. House v The King (1936) 55 CLR 499; [1936] HCA 40, applied.

As to leave 16. Leave to appeal is refused because this Court has recently addressed issues of principle about the application of UCPR, r 36.16(2)(b): [154].

Judgment

LEEMING JA: I agree with the orders proposed by Payne JA, and, subject to what follows, which is by way of elaboration rather than qualification, with his reasons and those of McCallum JA. The points I wish to elaborate concern Jordan CJ's judgment in Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239. They are: 1. whether there were separate tests for setting aside judgments obtained following an undefended trial at common law and in equity; 2. whether the reasoning in Vacuum Oil v Stockdale now applies to all judgments obtained following an undefended trial; and 3. the meaning to be given to Jordan CJ's words "there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand".
As explained by Payne JA, the primary judge refused an application to set aside a judgment under r 36.16(2)(b) of the Uniform Civil Procedure Rules. The judgment had been entered following a final hearing, some three years earlier, at which the defendant did not appear despite having previously been served. Rule 36.16 undoubtedly confers discretionary power in such a case, but says nothing as to how the discretion is to be exercised. That is not unusual. Many rules fail to specify how a discretion is to be exercised. Many rules have a long history. Their meaning "depends on a background of concepts, principles, practices and circumstances that the drafters took for granted or understood, without conscious advertence, by reason of their common language or culture". Those words of Gaudron ACJ, McHugh, Hayne and Callinan JJ, in Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2 at [5], coincidentally also addressed a rule conferring power to order a new trial (albeit in a criminal context) on any ground upon which it was "appropriate" to do so. Their Honours went on to say that "[o]nly knowledge of the manner in which courts have historically dealt with applications for new trials can reveal when the grant of a new trial is 'appropriate'." The same applies here.
In this appeal, attention focussed upon the principle formulated in Vacuum Oil Pty Co Ltd v Stockdale. The Chief Justice said that the question was whether "there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand". The parties' close attention to the meaning of those words, and especially the words "real likelihood" (which according to the applicant meant, variously, a "non-fanciful probability", a "substantial possibility" or something which was "seriously arguable"), led me to ask how it was that the Full Court's judgment came to apply at all. Although there too there had been a final judgment following an undefended trial, the Full Court was dealing with a motion for a new trial following a jury's verdict in an action at common law. It did not seem obvious that the same test should apply on an application to the same judge who had given the final judgment, sitting without a jury, and in the Equity Division. Further, if the approach in Conway is to be followed, one needs to know more about the circumstances in which Vacuum Oil was decided.
In response to that question, Ms Gall submitted that it was "erroneous to suggest that the test in Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243 reflected a peculiarly common law approach to setting aside judgments given in the absence of the defendant which imposed a higher bar than that imposed in equity." She equated s 25(3) of the Common Law Procedure Act 1899 (NSW) with r 100 of the Consolidated Equity Rules 1902 (NSW). Her submission was sought to be made good by reference to five English decisions from the last quarter of the nineteenth century: Re Hartley [1891] 2 Ch 121; Farden v Richter (1889) 23 QBD 124; Smith v Dobbins (1877) 37 LT (NS) 777; Watt v Barnett (1878) 3 QBD 363 and Wilkins v Bedford (1876) 35 LT 622.
Mr Pham embraced the conclusion advanced by Ms Gall. His submissions referred to the report of the New South Wales Law Reform Commission explaining Pt 40 r 9 of the Rules of the Supreme Court (which was the predecessor of r 36.16). He observed that the report referred to "differing approaches to whether an order could be set aside or varied otherwise than on appeal, noting that the answer sometimes depended upon whether the order had been made in chambers and the distinction between orders of judges, masters, registrars and other officers", but added that "[n]o mention was made of a differing approach between the position at law and in equity".
Contrary to the parties' submissions, I think the position at common law and in equity was different in 1942, I do not accept the reasons advanced by either party, and I do not think that Jordan CJ was purporting to state comprehensively when the discretion to set aside a decree in an equity suit would be exercised. However, I agree that since 1972, the test in Vacuum Oil has applied to applications to set aside final undefended judgments, whether obtained at common law or in equity. I explain why below. My analysis has assisted me to reject the submissions made by the applicant about the meaning of Jordan CJ's reasons in Vacuum Oil.

Reading Vacuum Oil in context

The starting point, no differently from when applying the words in any judgment, is what was said by Lord Porter in the Bank Nationalisation case (1949) 79 CLR 497 at 637-638: "These words must (as must every word of every judgment) be read secundum subjectam materiam. They were appropriate to their context and must be read in their context."
Doing so is harder than it may appear. In order to appreciate the context in which Jordan CJ was writing for the Full Court in 1942, it is necessary to read Jordan CJ's reasons in accordance with Sir John Baker's advice: "[W]e need to be able to switch our minds over to the same thought processes as the lawyers of the period in which we are working": J Baker, Collected Papers on English Legal History (Cambridge University Press, 2013), Vol I, Introduction, p 7.
Jordan CJ was writing much more recently than the lawyers to whom Sir John referred, but there is still a large gap between the procedure of the Supreme Court of New South Wales in 1942 and 2020. What Jordan CJ was conveying cannot be understood without regard to the procedural context in 1942. When regard is had to that context, it will be seen that he was writing with considerable precision, and in terms which glossed over what would have seemed obvious to the participants, but may be less obvious to readers 80 years later.
First, Vacuum Oil was decided prior to the enactment of the Supreme Court Act 1970 (NSW). Two applications came before the Full Court: a summons to set aside a judgment which had been entered following a trial at common law before a jury, and a motion for a new trial on the ground of surprise. Just pausing there, it is a little curious that the articulation of a test in such circumstances would answer the question as to when a judge in the Equity Division in the 21st century would permit a defendant who had been absent from the trial to set aside the judgment. Jordan CJ was resolving a dispute in the Full Court arising on the unreformed procedure at common law following a trial by jury. The primary judge was sitting in Equity, at first instance, exercising power conferred by a rule (UCPR r 36.16) which had no direct analogue to any power at common law in 1942.
Secondly, what is written at pp 240-242 of volume 42 of the State Reports is said to have been "taken from the judgment of his Honour the Chief Justice". That is more literally correct than might appear. The words which follow are lifted verbatim from the original judgment (including corrections - some of which are material as opposed to stylistic) - in what appears to be Jordan CJ's hand, from the original judgment held in the Law Courts Library.
Thirdly, the words, "The action was commenced on 16 May 1941" signify that the plaintiff Vacuum Oil Pty Ltd had invoked the common law jurisdiction of the Court. The same language of "action" may be seen in s 44 of the District Court Act 1973 (NSW). In 1941, the procedure at common law in important respects resembled that in the superior courts of common law at Westminster in 1872, as described by J Bryson, "Common law pleadings in New South Wales and how they got here" (2012) 86 ALJ 452. Hence the demand for the 3rd (1868) edition of Bullen & Leake Precedents of Pleading in this State (which is why Lord Diplock commenced his advice with reference to the "famous third edition" of that work in The Mutual Life and Citizens' Assurance Company Ltd v Evatt (1970) 122 CLR 628 at 629). Hence also the complaints by Griffith CJ ("some supposed ancient technicalities of the law, which are said still to linger in New South Wales"), O'Connor J ("enmeshed in legal technicalities under the system of procedure at present in force in New South Wales") and Isaacs J ("antiquated separation of legal procedure") in Turner v New South Wales Mont de Piete Deposit and Investment Co Ltd (1910) 10 CLR 539 at 543, 549 and 554; [1910] HCA 15. In the present case, Vacuum Oil filed its declaration, with two counts, and Mr Stockdale appeared and ultimately filed a plea and an amended plea.
Fourthly, the action thereafter came on for hearing. Mr Stockdale terminated the retainer of his solicitor, and did not appear. The trial proceeded, and the jury returned a verdict for £1,955.
Fifthly, Jordan CJ was at pains to emphasise that the hearing came on in the ordinary course at 241 ("[t]he action came on for hearing in its ordinary turn") and 243 ("the action coming on for trial in its ordinary place in the list"). Trials of undefended cases were (and are) not uncommon, especially in straightforward claims of debt. Where an action was called on out of its turn, a motion for a new trial would be allowed if that was regarded as an irregularity. This was established by decisions in Exchequer no later than Aust v Fenwick (1833) 2 DPC 246 and Sprigge v Rutherford (1833) 2 DPC 429; the same may be seen in Martin v Booty (1884) 1 WN (NSW) 47 and other cases at columns 245-247 of the second edition of the Australian Digest (1977) Vol 31, Practice, in the section on "Practice before the Supreme Court Act 1970 at Common Law".
Sixthly, the second paragraph of the reported judgment at p 242 concerned a related threshold point. It was whether there had been an irregularity, based on the fact that a solicitor formerly retained had advised that the defendant had been served with notice of the trial, no longer having authority to do so. It was necessary to address this at the outset, because it went directly to the test to be applied. Mr Stockdale was seeking to invoke the so-called "Exchequer rule" whereby the wrongful admission of any evidence gave the losing party a right to a new trial, as explained in Weiss v The Queen (2005) 224 CLR 300; [2005] HCA 81 at [13]-[16]. As Dixon CJ observed in Balenzuela v De Gail (1959) 101 CLR 226 at 232-233; [1959] HCA 1, this common law rule continued in New South Wales in the first half of the 20th century in civil trials, in contrast with other States where the judicature system had abolished it (it was much earlier abrogated in criminal trials). There was a debate as to whether the rule was as absolute as it was sometimes expressed (see Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2 at [16]-[26]), which may be passed over for present purposes. Mr Stockdale's submission was rejected, on the basis that there was no obligation to prove at trial that notice had been given. The second substantive paragraph of the judgment concludes that "the applications have proceeded on the footing that he is in petitorio". The reader was expected to appreciate the contrast was between an irregular judgment, which "ought not to be on the records of the Court" and which therefore will ordinarily be set aside as of right (see for example Dixon CJ's reasons in RT Company Pty Ltd v Minister of State for the Interior (1957) 98 CLR 168 at 170; [1957] HCA 39), and an application where the moving party had to make out a case for setting the judgment aside.
The distinction between applications to set aside judgments entered irregularly, as opposed to applications to set aside judgments entered regularly, remains to this day, as may be seen by contrasting UCPR r 36.15 and r 36.16, and see James v Australia and New Zealand Banking Group Ltd [2020] NSWCA 101 at [18]-[21].
This recalls what was explained in R Lush, The Practice of the superior courts of law at Westminster (London, 1840), at p 530, dealing with the substitution of the motion for new trial by the older procedure of a bill of exceptions. Lush said that "the latter is a proceeding of right, and is limited to the rejection or admission of evidence, or to misdirection or other mistake of the judge". Mr Stockdale was seeking to show that the evidence of the solicitor amounted to the wrongful admission of material evidence, entitling him to set aside the verdict as of right.
The contrast is useful, because Lush went on to say that the motion for a new trial: "is addressed to the discretion of the court, to be exercised upon a review of all that has taken place, and to be governed by sound and equitable principles, and hence a motion for a new trial has been denominated a direct appeal to the justice and laws of the country. In granting it the courts know no limitation other than that which is prescribed by public policy, as defined by the established practice of the court." (at 530-531, footnote omitted).
That anticipated what the High Court said in Conway in the passage reproduced above.
Seventhly, Jordan CJ was not dealing with a default judgment. Jordan CJ made this pellucidly clear: "The present is not a case in which judgment was signed by default through some procedural omission on the part of the defendant or his legal advisers."
That was important, because it meant that the power conferred by s 25(3) of the Common Law Procedure Act 1899 (NSW) was not available. When Jordan CJ wrote that "[i]n every such case the Court has an inherent and unfettered, though judicial, discretion" his Honour was on my reading stating that the defendant was invoking and the Court was exercising an inherent jurisdiction, rather than one conferred under statute or the rules.
Of course, provision was made at common law and in equity for the recurring phenomenon of a defendant who was in default being permitted to defend after a default judgment had been obtained. Rule 100 of the Consolidated Equity Rules 1902 provided: "A defendant, notwithstanding his default of appearance, may, at any time, apply to the Court for leave to appear and defend upon such terms as to costs and otherwise as the Court directs."
As Ms Gall submitted, that closely resembled the power conferred by s 25(3) of the Common Law Procedure Act 1899 (NSW), which applied to specially indorsed writs of summons which had been served (broadly speaking, corresponding to statements of liquidated claim): "Provided that the Court or a Judge may either before or after final judgment let in the defendant to defend, upon an application supported by satisfactory affidavits accounting for the nonappearance and disclosing a defence upon the merits."
But the proviso constituted by s 25(3) was a proviso to the power to apply for default judgment. That was not what Mr Stockdale's application had been.
Applications to set aside default judgments were familiar. They were determined, in the first instance, by the Prothonotary, from whom an appeal lay to a single judge: see for example Simpson v Alexander (1926) 26 SR (NSW) 296 and HR Turner & Son Pty Ltd v Rhodes [1970] 1 NSWR 305, and see R Walker, The Practice of the Supreme Court of New South Wales at Common Law (Law Book Co of Australasia, 4th ed 1958), p 30.
But Mr Stockdale needed to set aside a judgment following a jury's verdict after an undefended trial, not a default judgment. He could not rely on s 25(3). It was a relatively unusual case, and one for which no express provision was made under statute or the rules.

Common law and equity prior to 1972 - "Nothing was ever considered final in Chancery"

I turn now to the parties' submission that the position was the same in equity. Contrary to Ms Gall's submission, the positions at common law and in equity in 1942 in New South Wales, in a matter of practice and procedure such as a motion to set aside a judgment following an undefended jury trial, are not determined by English decisions after 1875 when the Judicature legislation had been enacted, and when there was a single procedure governing the whole of the newly created Supreme Court of Judicature. The decisions on which Ms Gall relies point to the same principles being applied after the commencement of the Judicature legislation in England. Unification of the separate procedures at common law and in equity did not occur in New South Wales until a century later.
Research confirms that there were material differences in the practice, which were well recognised in reported judgments.
First, contrary to what one might at first blush think, trials with juries did exist in connection with equity proceedings. For centuries, issues of fact had been referred to common law courts. And for centuries, equity courts had said that they applied different principles in setting aside the juries' verdicts from such trials. Without being exhaustive, Lord Hardwicke had said in Lord Faulconberg v Peirce (1754) 1 Ambl 210; 27 ER 140 in granting a new trial that "[T]his Court, in that respect, will go further than courts of law can", while Sir John Romilly MR had said a century later that "The rules respecting new trials are less stringent in equity than they are at law": Swinfen v Swinfen (1859) 27 Beav 148 at 152; 54 ER 57. His Lordship elaborated at 152-153: "the course in Courts of Equity has been, to consider whether, having regard to the entire subject matter, and to the whole of the evidence given at and before the trial, and what has since become known, the Court is satisfied that full and complete justice has been done between the parties, and that no further investigation is necessary for the purpose of attaining that end, and unless it is so satisfied, the Court requires that the matter shall be again tested by an examination before a jury ..."
Ultimately, a retrial was not ordered. However, the passages reproduced above and the elaborate consideration which followed amount to a rejection of the sufficiency of the note by the common law judge (Byles J) who had tried the issue, that he was "not dissatisfied with the verdict": see at 151.
Secondly, in the mid-nineteenth century, reforms to chancery had sought to address the inconveniences caused by the separation of the jurisdictions at common law and in equity. Perhaps the most famous example, which still plays an important role today, is the power to order damages conferred by "Lord Cairns' Act" (see now Supreme Court Act 1970 (NSW), s 68), which is available in addition to or in substitution for certain injunctions or orders for specific performance. One of the reforms authorised chancery to determine issues of fact, and to do so with juries. That legislation was incorporated into a bill supplied by William Owen in 1870 to a New South Wales Law Reform Commission, which in turn was belatedly enacted as the Equity Act 1880. Thereafter, parts of some proceedings in equity in the Supreme Court of New South Wales were determined by a court constituted by a judge and jury. This was covered by Part XVII of the Consolidated Equity Rules 1902, which included express provision in such cases for motions for new trials (r 169).
Yet even here, where it might be thought that the practice would be the same as that at common law from which the procedure was derived, there was a striking difference. The cases when a new trial would be ordered were addressed elaborately in Goodsell v National Bank of Australasia (1890) 11 NSWLR Eq 32, dismissing an appeal from Owen CJ in Eq (as the author of the Equity Act 1880 had become). The Full Court followed what had been held for centuries in England and Ireland concerning new trials of issues sent down for trial at law, and held that the same broader principles applied notwithstanding that a judge in equity could now determine a question of fact with a jury.
Four years later, Owen CJ in Eq said in Macnamara v The Minister for Works (1894) 15 NSWLR Eq 173 at 181: "It is not necessary for me to go at any length into the power or discretion which a Judge in Equity has with respect to the granting of a new trial, because that was dealt with in the case of Goodsell v The National Bank of Australasia wherein the Full Court, following a long line of English decisions, held that a Judge in Equity has a much wider discretion as to granting new trials than obtains in the common law Court ..."
Thirdly, the test to be applied on setting aside a default judgment was different in equity and at common law. The question in an application to set aside a default judgment at common law was whether a jury applying its mind could reasonably find in favour of the defendant. The Full Court said in Simpson v Alexander (1926) 26 SR (NSW) 296 at 301 that: "the Court or a Judge is not to try the issues of fact arising upon the alleged defence. That is for the jury at the trial." That test could not apply to a proceeding in equity.
Fourthly, there were other processes in equity available to parties bound by a judgment. Traditionally, a dissatisfied litigant in chancery had been able to apply for a rehearing, a review or an appeal. I shall mention each in turn.
For many years, a litigant had been able to apply for a rehearing after a decree had been drawn up and entered, so long as it had not been enrolled: W H Bryson, The Equity Side of the Exchequer (Cambridge University Press, 1975), p 157. Professor Polden has written: "In fact the court [of chancery] was remarkably generous in reviewing decisions. Even when the court of Appeals in Chancery was set up it remained possible for the suitor to have his cause reheard by the judge first and it was not until 1852 that orders imposed a time limit of five years from the order or decree; until then only the doctrine of laches set any bounds to appeals. It is no wonder that nothing was ever considered final in Chancery." W Cornish et al, The Oxford History of the Laws of England (Oxford University Press, 2010), Vol XI, p 673.
That had not been the case in New South Wales for many years. The old right of the Lord Chancellor to rehear suits already decided in chancery was held to have been abolished when the office of the Primary Judge in Equity was created, with a right of appeal to the Full Court, in 1841: see G Stuckey and C Irwin, Parker's Practice in Equity (Law Book Co of Australasia Pty Ltd, 2nd ed 1949, p 112.
A bill of review was not available after 1880. Before then, it seemed that a litigant "probably had 20 years within which to commence proceedings for review": Harrison v Schipp (2002) 54 NSWLR 612; [2002] NSWCA 78 at [63], a decision which elaborately addresses this remedy. When, incidentally, from time to time it is said that a central and pervading tenet of the judicial system is that controversies once resolved are not to be reopened except in a few narrowly defined circumstances, those statements apply relatively loosely to the pre-Judicature system in equity; cf Achurch v The Queen (2014) 253 CLR 141; [2014] HCA 10 at [14]-[15].
Notwithstanding the abrogation of the rights of review and rehearing, a litigant dissatisfied with a judgment in equity had a right of appeal. That was a large difference between equity and common law. It is to be recalled that, as Rich, Dixon, Evatt and McTiernan JJ explained in Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225; [1935] HCA 45, "[a]n appeal is not a common law proceeding". When Vacuum Oil was decided, an appeal by way of rehearing lay to the Full Court, under s 82 of the Equity Act 1901 (NSW). Mr Stockdale was not appealing in the strict sense. He was not inviting the Full Court itself to rehear Vacuum Oil's action. He was applying to set aside the judgment so that there could be a new trial before a new jury on different evidence.
Fifthly, the differences I have mentioned above between the approaches at common law and in equity are merely some of those which may be seen from the legislation and the decided cases. The actual differences are apt to have been more pronounced, and reflected in practice by orders by consent and on applications which did not lead to a reported judgment. One way in which this may be seen is from the separate practice texts of the period (to which I am considerably indebted): Walker's work on Common Law, and Parker's work on Equity. Another is in the separate categories of entries in the second edition of the Australian Digest, volume 31, published in 1977. Chapter 1 is devoted to Practice in New South Wales, and Part III within that chapter is devoted to practice before the Supreme Court Act 1970. Within Part III, division 1 (columns 139-351) is headed "At Common Law" while division 2 (columns 352-442) is headed "In Equity". The physical separation in separate books on practice, and separate categorisation in the Digest, must have been conducive to a different mindset on the part of courts and practitioners. We know that the Registries for common law and equity were in different buildings, and used different forms. All of this lends support to the insight that the law as practised was quite different from the law as reported in that minority of litigation that goes to judgment: see J Baker, The Law's Two Bodies (Oxford University Press, 2001).

Understanding Jordan CJ's reasons

I have indicated above some of the ways in which litigants who had not appeared at final hearings resulting in judgments against them could apply in 1942 to have them set aside, and how they differed depending on whether the judgment was obtained at common law or in equity. There is nothing in Jordan CJ's reasons to suggest that he was expressing principles which would apply to an application in equity, or seeking to conflate the differences between common law and equity mentioned above.
Vacuum Oil was subsequently applied in motions for a new trial at common law (for example, in Graham v Ashton (1953) 70 WN 44 and Ex parte Vigilant Finance (NSW) Pty Ltd; re Cameron Smith [1964] NSWR 1282 at 1285) but not, so far as I am aware, in any appellate process following a trial (with or without a jury) in equity.
Although those differences seem clearly established, Jordan CJ said that in such cases "the Court has an inherent and unfettered, though judicial, discretion, in the exercise of which it will, however, necessarily consider (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained". It seems clear, as the parties implicitly agreed, that those were two essential aspects of any application to set aside a regularly obtained judgment.
However, contrary to some of the parties' submissions, Jordan CJ's proposition four sentences later, whether "there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand", does not stand alone. That passage is to be read as part of the judgment as a whole, with "real likelihood" and "unjust" informed by an assessment of the strength of the proposed defence, and the explanation offered by the defendant.
The test applied by Jordan CJ is not much elucidated by advancing competing submissions as to the meaning of "real likelihood". Reasons for judgment are not to be read as if they were a statute: Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 72 ALR 1 at 6; [1987] HCA 27; Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [66]-[67] and [80]. In Woodland v Swimming Teachers Association [2014] AC 537; [2013] UKSC 66 at [28] it was said that "the words used by judges in explaining why they are deciding as they do are not [to] be treated as if they were the words of statute, setting the rules in stone and precluding further principled development should new situations arise". That is especially apt in a matter of practice and procedure, and where the Chief Justice had said in terms at 243 that each case turned on its own facts. The particular sentence in Vacuum Oil was a summary encapsulation of the considerations to which regard was necessary in a case where there had been a judgment regularly obtained following an undefended trial.
Significantly, Jordan CJ drew upon what had been said by Lord Russell in Evans v Bartlam [1937] AC 473 at 482. That appeal concerned applications to set aside a default judgment, and plainly enough, there was no reason either in England or in New South Wales for the position to be different in that respect at common law or in equity. In either case, where the plaintiff had regularly obtained a judgment, and the defendant who had been in default was applying to have it set aside, it was necessary to have regard to the explanation for the default and the nature of the defence which the defendant wished to have determined.

The judicature legislation in New South Wales

The complexities in the separate systems of procedure in New South Wales before 1972, some of which are mentioned above, were reflected in the report of the NSW Law Reform Commission LRC 7 at p 25, on which Mr Pham relied. When summarising the new Pt 40 r 9 which would apply to all judgments and orders, the report said: "Rule 9 deals with the setting aside or varying of judgments and orders. At present it is a matter of some difficulty to say whether an order can be set aside or varied otherwise than on appeal. Sometimes the question depends for its answer upon whether or not the order was made in chambers. The abolition of the distinction between Court and chambers (section 11 of the Bill) and the provisions to the effect that the orders of Judges and masters and of registrars and other officers have effect as orders of the Court (sections 40, 118 (3) and 121 (2) of the Bill) call for a re-statement of the cases in which a judgment or order can be set aside or varied without appeal. Rule 9 proposes a solution to this problem. It is better to let the rule speak for itself than to attempt a paraphrase of it in these notes."
That rule became enacted as Pt 40 r 9 within the rules which were a Schedule to the Supreme Court Act 1970 (NSW), which came into force in 1972. For the first time since the early 19th century a single set of rules applied to proceedings at common law and in equity. Pt 40 r 9 was, as described in the Law Reform Commission's report, a single rule which replaced a range of procedures at common law and in equity. It conferred a discretion which was not fettered in terms. It is the immediate ancestor of r 36.16.
I do not agree with Mr Pham that any significance attaches to the failure of the passage in NSWLRC 7 to mention any difference between common law and equity. A fundamental purpose of the Supreme Court Act and the new rules, which were the subject matter of that report, was to put in place, for the first time, a single procedure applicable throughout the Court. It was not necessary to say that Pt 40 r 9 replaced the separate procedures at common law and in equity.
A long succession of decisions has now applied Jordan CJ's formulation to applications to set aside regularly made final orders and judgments: see most recently Foundas v Arambatzis [2020] NSWCA 47 at [14]. Sackville AJA drew many of the authorities together when he said in Dai v Zhu [2013] NSWCA 412 at [89]-[90] that: "the authorities consistently state that, as a general rule, a defendant who seeks to set aside a judgment by default regularly obtained must show that he or she has a bona fide defence. This ordinarily requires the defendant to file an affidavit demonstrating a prima facie defence on the merits. The rationale for this requirement is that in the exercise of its 'unfettered, though judicial, discretion' the Court will consider: (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained. Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243, per Jordan CJ (with whom Davidson and Roper JJ concurred), citing Evans v Bartlam [1937] AC 473, at 482, per Lord Russell; Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 at [48]-[51], per Hodgson JA (with whom MW Campbell AJA agreed) (holding that the principles stated in Vacuum Oil have not materially been affected by the reasoning of the High Court in Taylor v Taylor (1979) 143 CLR 1; [1979] HCA 38, and Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40). The authorities referred to in the previous paragraph were all cases in which a judgment had been obtained after a hearing on the merits, but at which the defendant did not appear."
Sackville AJA also observed at [93] that the principles from earlier times had now to be read subject to the Civil Procedure Act 2005 (NSW), but that the principles articulated in the cases decided before the enactment of that statute were consistent with the criteria laid down in the legislation.

Conclusion

Four things follow from the foregoing.
First, open-ended discretionary rules such as UCPR r 36.16 are a product of their history, and need to be construed in that context, in accordance with what was said in Conway v The Queen at [5].
Secondly, with the assimilation in 1972 of the separate procedural rules at common law and in equity, the same principles apply irrespective of the Division in which the judgment was obtained.
Thirdly, what Jordan CJ wrote as to the question being whether there was "a real likelihood that it would be unjust to the defendant to allow the judgment to stand" was an encapsulation of the evaluation required for the exercise of a judicial discretion. It is to be recalled that Mr Stockdale's application was for there to be another trial before another jury. Today in criminal appeals it is customary for an appellant seeking to quash a conviction to say that he or she has lost a "real chance of an acquittal" (see for example the discussion in Kalbasi v Western Australia (2018) 264 CLR 62; [2018] HCA 7 at [8]-[12], [15], [64]-[68], [113]-[118], [134] and [160]). It is not unnatural to read the reference to "real likelihood" as reflecting an appreciation that it was a jury which would determine the fate of Mr Stockdale's defence if he were permitted to advance it at a second trial; that reconciles the language of "real likelihood" with the incommensurate and qualitative evaluation of the defence sought to be advanced and the explanation for the non-appearance which necessarily inform the notion of whether it "would be unjust to the defendant". Even if that reads too much into Jordan CJ's language, the reasons are to be read as a whole, and one cannot divorce the last sentence from the approach identified in the reasons which precede it.
Fourthly, what Jordan CJ wrote in the context of an application to set aside a final judgment following a jury's verdict at an undefended trial at law is applicable to the present case. In order to succeed in setting aside a regularly obtained judgment, the party in default needs to explain the reason for the default and the nature of the proposed defence. Those matters inform the exercise of discretion.
Turning perhaps belatedly to the facts of this case, which are comprehensively set out by Payne JA, it was necessary for the primary judge to have regard to the positive defence sought to be raised by Mr Pham, to his explanation for the non-appearance and delay in bringing the application, and to what was proffered by way of reducing the prejudice to Ms Gall. To my mind, the most significant aspect of Mr Pham's account is the inadequacy of the explanation for Mr Pham's non-involvement in the litigation, in circumstances where he, or someone on his behalf, had been giving detailed instructions to the solicitors immediately prior to the commencement of proceedings, and the inadequacy of the explanation for the delay of more than three years subsequently.
The primary judge had regard to all these matters. He did so in accordance with Vacuum Oil v Stockdale. For the reasons Payne JA and McCallum JA give, supplemented by what I have said above, that discretion is not shown to have miscarried.
PAYNE JA: In December 2008, Mr Pham, the applicant, and Ms Gall, the respondent, were in a relationship. On 18 December 2008, the applicant purchased a number of scratch lottery tickets. One of those tickets was a winning entry. The terms of the lottery provided for the winner of the particular game to receive an annuity of $75,000.00 for 15 years, commencing from the date of purchase. The issue giving rise to this litigation is whether prior to "scratching" the lottery ticket and revealing it as a winning ticket, the applicant gave the ticket to the respondent as a gift.
On 4 May 2015, the respondent filed a statement of claim in the Supreme Court which sought declaratory and consequential relief relating to her claim that prior to scratching the surface of the lottery ticket and revealing it as a winning ticket, the applicant gave the ticket to her as a gift. The respondent claimed that she was beneficially entitled to the proceeds of the lottery win. Ultimately, the applicant did not appear in those proceedings and the primary judge made orders in favour of the respondent: Risa Gall v Andrew Minh Luan Pham [2015] NSWSC 1710 ("the 2015 proceedings").
On 26 October 2018, the applicant filed a notice of motion seeking to set aside the declaration and consequential orders made by the primary judge on 13 November 2015 and to permit the applicant to file a defence in answer to the statement of claim. On 27 September 2019, the primary judge refused to make those orders: Gall v Pham (No 2) [2019] NSWSC 1294. Those orders are the subject matter of the present appeal.

Relevant facts

It is common ground that the applicant purchased a number of scratch lottery tickets on the day in question. It is common ground that on that day the applicant gave the respondent a number of tickets to "scratch" the surface of the tickets so as to reveal if any of them was a winning ticket. The respondent's case, accepted by the primary judge in the 2015 proceedings, was that the applicant had made a gift to her of the winning scratch lottery ticket before she scratched the surface of the ticket.
A sample ticket of the winning game, game 3, may be seen at the bottom left of the right hand panel below. A sample of the ticket, in the form it took before the covering was scratched off, may be seen in the left hand panel.
On 19 December 2008, the applicant was registered by the office of NSW Lotteries as the owner of the winning ticket. The respondent's evidence in the 2015 proceedings was that she acquiesced in that registration as she had a limited right of residence in NSW and was apprehensive about the practicality of receiving the annuity, given her visa status. NSW Lotteries paid the first year of the annuity by cheque in the name of the applicant. It is common ground that $68,617.75 was paid to the respondent from the proceeds of that cheque. On 27 August 2009, NSW Lotteries was directed by the applicant to pay the remaining proceeds of the lottery win into a joint bank account that the parties opened with Westpac for that purpose. It is common ground that the respondent withdrew the whole of the prize money instalments from that joint account in 2010 and 2011 and deposited the amount in her personal account.
In 2010, the relationship between the applicant and the respondent ended. The respondent says that this happened in February 2010, the applicant says it happened in September 2010. The respondent says (and the primary judge accepted in the 2015 proceedings) that on 12 February 2010, a document was signed by each of the parties in the following terms ("the 12 February 2010 document"): "I, Andrew Minh Luan Pham [the applicant] of … agree to transfer all amount of $AUD75,000 every year for the next 13 years on the 19 Dec, which will be paid by NSW Lotteries to Risa Abe [the respondent]. The account number registered as the account for instalments is not to be changed without first notifying Risa Abe. The joint account currently registered is also not to be terminated until 2024 without discussion. All statements above are agreed and signed by Andrew Pham himself. Any changes to this contract will not be allowed without Risa Abe's consent."
In 2011, the Westpac joint account was closed. The respondent's evidence in the 2015 proceedings, which the primary judge accepted, suggested that the applicant may have unilaterally closed the account. The applicant's evidence was that he assumed it was closed by an automatic process of the bank. The applicant then directed NSW Lotteries to pay the remaining proceeds to an account he controlled. It is common ground that between 2011 and 2014 the applicant made the following payments to the respondent from the proceeds of the lottery annuity: 1. $38,255.00 for the period 19 December 2011 to 18 December 2012; 2. $50,000.00 for the period 19 December 2012 to 18 December 2013; and 3. $30,500.00 for the period 19 December 2013 to 18 December 2014.
The applicant did not dispute the payment of these amounts to the respondent between 2011 and 2014 but claimed that two amounts represented loans, specifically $755.00 in 2011 and $12,500.00 in 2012. Payments were not made in 2015, the year this litigation commenced.
Between 12 February 2015 and 17 April 2015, the respondent's then solicitors corresponded with Marque Lawyers on behalf of the applicant in an attempt to settle the parties' dispute.
On 7 May 2015, the respondent's then-solicitors sent a copy of the statement of claim to Marque Lawyers with a request that they accept service of the statement of claim on behalf of the applicant. Marque Lawyers sent the applicant a copy of the statement of claim, with legal advice, via an email which was copied to the applicant's brother. On 15 May 2015, Marque Lawyers advised the respondent's lawyers that they had been unable to obtain instructions from the applicant.
On 10 June 2015, a Registrar dispensed with personal service of the statement of claim on the applicant and made orders for substituted service of the statement of claim. On 15 June 2015, the respondent's solicitors sent a copy of the orders and another copy of the statement of claim to Marque Lawyers who forwarded the email to the applicant and the applicant's brother on 16 June 2015.
On 9 September 2015, further orders for substituted service were made in conjunction with an order listing the proceedings for hearing on 13 November 2015. Those orders were: "1. The matter be set down for trial on 13/11/2015 with a 1 day estimate. 1A. Usual order for hearing. 2. The Plaintiff bring to the attention of the Defendant the date of trial by taking the following steps: (a) By posting by express post a copy of this order to: (i) xxx Shop, at Shop xxx, Cabramatta New South Wales 2166; (ii) xxx Pitt Street, Sydney New South Wales 2000; and (iii) Care of Hannah Dobies, Marque Lawyers, Level 4, 343 George Street, Sydney New South Wales 2000. (b) By emailing a copy of this order to: (i) the Defendant care of Hannah Dobies at xxx; and (ii) the Defendant at xxx@hotmail.com. 3. The Defendant be deemed to have knowledge of the date of the trial after the Plaintiff completes the steps in paragraph 2 of these orders. 4. Liberty to restore upon 3 days notice."
On 25 September 2015, a copy of those orders was emailed to Marque Lawyers who forwarded the email to the applicant and the applicant's brother on the same day.
On 13 November 2015, the trial took place before the primary judge. The respondent appeared with legal representatives. The applicant did not appear or instruct lawyers to appear on his behalf. The primary judge found that despite substantial efforts by the respondent's solicitors to serve notice of the proceedings on the applicant, including the statement of claim, notice of the listing of proceedings and court book, the applicant had not appeared at any time in the proceedings. The primary judge was satisfied that the respondent had complied with orders made for substituted service of notice of the proceedings and found that, in fact, the applicant had received reasonable notice of the proceedings.
The respondent sought a declaration that from December 2008 she was the sole beneficial owner of the annuity payable by NSW Lotteries, an order vesting in her the entitlement to receive those annuity payments from NSW Lotteries and an order that the applicant compensate her for the lottery proceeds that he had appropriated to himself without her consent.
The primary judge in the 2015 proceedings was satisfied that the respondent was entitled to relief. The primary judge found that from December 2015 the respondent was the sole beneficial owner of the annuity payable by NSW Lotteries. The primary judge also found that the respondent was entitled to equitable compensation for the amount of the payments made by NSW Lotteries which the applicant had appropriated to himself. In calculating the respondent's entitlement to equitable compensation, the primary judge made allowances in the applicant's favour for sums which might have been paid to him or retained by him on the basis of the respondent's acquiescence or a belief held by the applicant as to her acquiescence.
The equitable compensation the applicant was ordered to pay the respondent for lottery proceeds appropriated by the applicant to himself was $118,745. That was the amount the primary judge accepted the applicant had wrongfully retained. The primary judge identified the basis of his calculation as follows: "[15] Viewed in that way, the amount for which the [applicant] should compensate the [respondent] comprises an amount of $36,745, representing part of the annuity paid on or about 19 December 2011; an amount of $7,000, representing part of the annuity paid on or about 19 December 2013; and an amount of $75,000.00, representing the annuity paid on or about 19 December 2014, the sum of which three amounts totals $118,745."
To this sum the primary judge added an award of pre-judgment interest under s 100 of the Civil Procedure Act 2005 (NSW) of $13,481.65. The total judgment sum was $132,226.65. The primary judge made the following orders: "(1) DECLARE that the [respondent] is the sole beneficial owner of the entitlement to receive from New South Wales Lotteries Corporation Pty Ltd an annuity of $75,000 in respect of the NSW Lottery ticket number 565-021118-014 drawn on 19 December 2008. (2) ORDER that the entitlement to receive that annuity from New South Wales Lotteries Corporation Pty Ltd be vested in the [respondent] for her own use and benefit. (3) NOTE that, by these orders, the [respondent] is entitled to give to New South Wales Lotteries Corporation Pty Ltd a direction that the annuity payable by the company on or about 19 December 2015 be paid to her or as she may direct. (4) ORDER that the [applicant] pay to the [respondent] the sum of $132,226.65 (representing an award of compensation to the [respondent], including interest under s 100 of the Civil Procedure Act 2005 (NSW), for [the applicant's] appropriation of annuity payments referable to the period to date). (5) ORDER that the [applicant] pay the [respondent's] costs of the proceedings. (6) RESERVE to the parties liberty to apply for such, if any, consequential relief as may be necessary in the working out of these orders."
In January 2016, the respondent attempted to execute the orders against property jointly owned by the applicant and his wife at Chipping Norton. However, the Parramatta Office of the NSW Sheriff determined that there was insufficient equity in the property to pay out the mortgagee from the applicant's interest in the property.
In July 2017, proceedings were commenced against the applicant and his wife by the Commonwealth Bank of Australia ("CBA") as mortgagee for possession of the property at Chipping Norton. In August 2018, the respondent intervened in the CBA proceedings and sought the following orders: "ORDERS SOUGHT 1 An order under rule 41.16 of the UCPR prohibiting the transfer, payment or other dealing in respect of the whole or any part of the funds, or of any income derived from the funds, without notice to the applicant paid into court by the Plaintiff pursuant to its Notice of Motion filed 10 August 2018; 2 An order for payment to the Applicant, from the funds paid into court by the Plaintiff pursuant to its Notice of Motion filed 10 August 2018, of the sum of $132,226.65, being the amount of a judgment in favour of the Applicant against the First Defendant in proceeding 2015/00132068 and an amount equal to interest on the judgment; 3 Costs; 4 Any other order this Honourable Court deems fit."
On 9 November 2017, in the CBA proceedings, the Registrar made orders expressed to be by consent that any surplus funds after repayment of the loan secured by the mortgage be paid into Court: "SHORT MINUTES OF ORDER BY CONSENT 1. Judgment for Plaintiff, Commonwealth Bank of Australia, against the First Defendant for possession of the land comprised in Certificate of Title Folio Identifier xxx, being the land situated at and known as xxx, Chipping Norton in the State of New South Wales (also known as xxx, Chipping Norton NSW). 2. Judgment for the Plaintiff, Commonwealth Bank of Australia, against the First Defendant in the sum of $204,736.19. 3. The Plaintiff, Commonwealth Bank of Australia, is to pay any surplus funds into Court. 4. No order as to costs." A writ of possession was issued on 12 December 2017.
In August 2018, the respondent applied for an order for payment to her of the moneys paid into Court pursuant to the order at [80] above. Orders were made by consent on 12 October 2018 that: "CONSENT ORDERS: On the Notice of Motion filed 14 August 2018 (Motion), the Court orders by consent of the parties to the Motion: 1. The Court make payment out of the funds in Court to the Applicant an amount of $186,180.53, being an amount representing 50% of the funds paid into Court by the Plaintiff on 17 August 2018. 2. Order 1 be stayed. 3. The stay referred to in Order 2 be lifted on the occurrence of the first of the following: a. If the First Defendant does not make an application to set aside the judgment entered on 13 November 2015 in proceeding 2015/00132068 (Judgment) by 10.30am on 29 October 2018; or b. If an application is made by the First Defendant to set aside the Judgment, upon the final resolution of that application, including any appeals; or c. Upon further order of the Court lifting the stay. 4. The hearing of the Motion listed for 17 October 2018 be vacated. 5. Costs of the Motion be reserved. 6. The proceeding be adjourned to the Registry. 7. Liberty to apply on 3 days' notice including for an order vacating Order 1."
Those orders were stayed pending the determination of the application filed on 26 October 2018 (set out at [61]) to set aside the orders made in the 2015 proceedings. The amount of $186,180.52 remains lodged with the Court.
On the hearing of the 2018 motion to set aside the 2015 orders, the applicant's case was that he failed to appear in the 2015 proceedings because he was in the grip of a drug addiction. The applicant accepted and the primary judge found that the applicant knew of the litigation from at least February 2015, the time the applicant's brother told the applicant that the respondent's solicitors had sent him and his brother a letter of demand. The applicant's explanation for not appearing in the 2015 proceedings was that because of his drug addiction, he "simply did not have the mental capacity to deal with legal proceedings. I was using drugs to avoid various problems and stresses in my life".
The applicant accepted that he had recovered from his drug addiction by 2016 and was aware at least from then of the orders made in the 2015 proceedings. In December 2016, the applicant consulted a lawyer about setting aside the orders made in 2015. The applicant then did nothing for a year. The applicant's evidence was that he "forgot to see [the solicitor] again" for a year.

Decision of the primary judge

The primary judge dismissed the applicant's notice of motion in Gall v Pham (No 2) [2019] NSWSC 294 for the following reasons: 1. the applicant conceded that the orders of 13 November 2015 were not irregular or irregularly obtained; 2. the applicant had a reasonable opportunity to appear before the Court on 13 November 2015 and to present his case; 3. the applicant was, on any view, guilty of substantial delay in seeking belatedly to defend the respondent's claims; 4. a "formidable barrier" in the form of admissions made in the document allegedly signed by the applicant, referred to at [65], stood in the way of describing the applicant's defence of the respondent's claims as reasonably, fairly or otherwise arguable; 5. the applicant's case was based on a submission that subjective factors personal to him, such as his misuse of drugs, should be allowed to outweigh objective factors that tended in favour of the respondent being entitled to the benefit of the orders she obtained; and 6. there was an absence of any irregularity affecting the orders challenged, an absence of any satisfactory explanation as to why the applicant allowed the respondent to proceed to judgment without opposition, and a lack of a strong case. These factors all reinforced the importance of the Court giving due respect to the principle of finality of litigation.
The primary judge dismissed the applicant's notice of motion with costs.

Issues on the appeal

The applicant seeks leave to appeal from the orders made on 27 September 2019 which dismissed his notice of motion filed on 26 October 2018 which sought to set aside the orders made against him in the 2015 proceedings.
There are four issues on the appeal: 1. did the primary judge apply the correct legal test for setting aside an undefended judgment?; 2. did the primary judge err in assessing the nature and strength of the applicant's case?; 3. did the primary judge err in assessing the prejudice to the respondent from setting aside the orders?; and 4. did the primary judge err in assessing the explanation offered for the applicant's non-appearance at the hearing and delay?

Issue 1: The test for setting aside an undefended judgment

As the present case involves a discretionary judgment, House v The King (1936) 55 CLR 499; [1936] HCA 40 error must be established. In the absence of a statutory mandate as to the weight to be given to various relevant factors in the exercise of a discretion, the weight to be given to them is a matter for the primary judge alone: Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [137]-[138] (Gummow ACJ, Kirby, Hayne and Heydon JJ); Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61 at [20] (Bathurst CJ and Leeming JA).
The discretionary power of the Court to set aside an undefended judgment is contained in r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW): 36.16 Further power to set aside or vary judgment or order … (2) The court may set aside or vary a judgment or order after it has been entered if - … (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order.
The essence of the debate between the parties about the proper exercise of this discretion centred on an analysis of part of the judgment of Jordan CJ in Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239. Some aspects of the history of this provision were raised in oral argument by counsel for the respondent. As Leeming JA pointed out in response, Vacuum Oil was a case at law decided before 1972 when proceedings at law were governed by the Common Law Procedure Act 1899 (NSW). From the facts recited in the State Reports (NSW) version of the case (which are recited verbatim from the decision of Jordan CJ) [1] there was evidence given and cross-examination before the Full Court. There were two processes before the Full Court; a summons to set aside a judgment and a motion for a new trial. The question arose whether the different rules at law and in equity prior to 1972 in New South Wales for setting aside an undefended judgment cast any light on the correct interpretation of UCPR r 36.16(2)(b).
Pursuant to leave, each party made additional written submissions about the historical foundations of the rule. Counsel for the applicant referred to the New South Wales Law Reform Commission, LRC 7, Report of the Law Reform Commission on Supreme Court Procedure (1969, LRC 7) which preceded the implementation of the Supreme Court Rules 1970 (NSW), and which contained the progenitor of UCPR, r 36.16(2)(b). The NSW Law Reform Commission Report referred to differing approaches to setting aside an order but did not mention a different approach between the position at law and in equity.
Ultimately, both the applicant and the respondent submitted that the Vacuum Oil test does not reflect a peculiarly common law approach to setting aside undefended judgments. The applicant submitted that the decisions cited in WA Parker, The Practice in Equity (New South Wales) (1930, Law Book Co of Australasia) made plain, consistent with the position in Vacuum Oil, that: 1. a defendant needed to demonstrate a defence on the merits in seeking to set aside orders made in his or her absence: Farden v Richter (1889) 23 QBD 124 at 129. [2] This was consistent with the requirement to demonstrate an "additional factor" beyond mere absence and reflected the requirement that some "useful purpose would be served by setting aside the judgment": Vacuum Oil at 243; and 2. delay in bringing an application could prove fatal: Wilkins v Bedford (1876) 35 LT 622.
Given that in addressing this question both parties referred to English cases decided after the passage of the Supreme Court of Judicature Act 1873 (36 & 37 Vict c. 66) and the Supreme Court of Judicature Act 1875 (38 & 39 Vict c. 77), I do not think that either party really grappled with the question of whether the different rules at law and in equity prior to 1972 in NSW for setting aside an undefended judgment cast any light on the correct interpretation of UCPR r 36.16(2)(b).
Both parties submitted that the approach to setting aside an undefended judgment described by Jordan CJ in Vacuum Oil remained appropriate for the purposes of UCPR r 36.16(2)(b). That this is so is made clear by a number of cases in this Court which were either not referred to or referred to in passing by the parties. It is necessary to refer to only a few.
In Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331, this Court determined an appeal about the exercise of discretion under Supreme Court Rules 1970 (NSW) Pt 40 r 9. Supreme Court Rule Pt 40 r 9 provided, relevantly: 9 Setting aside or varying judgment or order … (2) The Court may set aside or vary a judgment: .… (b) where the judgment has been entered after judgment has been given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the judgment, … (3) The Court may, on terms, set aside or vary an order: (a) where the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default, and whether or not the absent party had notice of motion for the order, or (b) where notice of motion for the setting aside or variation is filed before entry of the order. (4) In addition to its powers under subrules (1), (2) and (3), the Court may, on terms, set aside or vary any order (whether or not part of a judgment) except so far as the order determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief and excepting an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief. (5) Nothing in this rule affects any other power of the Court to set aside or vary a judgment or order.
In Magnate Projects, judgment had been obtained by the plaintiff after a final hearing from which the defendant was absent. The absence of the defendant was found to be due to the gross default of the defendant's solicitor. Hodgson JA, with whom M Campbell AJA agreed, specifically approved the passage from Vacuum Oil at 243 as identifying the principles applicable to the exercise of discretion in that case. Hodgson JA went on to explain, in a passage relevant to the present proceedings: "[52] In my opinion, an applicant seeking to set aside a judgment obtained after an undefended hearing does not have to show that a different result is likely should the judgment be set aside and a new trial ordered. However, the circumstances may be such, as Jordan CJ says, as to require 'a reasonably clear case of merits to be shown'; that is, that it appear reasonably clearly that there is a defence capable of producing a different result. If that defence depends on facts, then there should be some evidence of those facts; and the circumstances may be relevant to the quality of the evidence that is required to show a defence on the merits in particular cases. Among such circumstances could be the degree of the applicant's default, and hardship to the respondent."
That is, to succeed in an application under the predecessor to UCPR, r 36.16(2)(b), the applicant does not have to show that a different result is likely should the judgment be set aside and a new trial ordered. This general observation is subject to an important qualification, relevant in the present case. The more egregious the delay in seeking to set aside an undefended judgment, the greater the burden of persuasion that will be required of the applicant.
In Ibrahim v Ayoubi [2013] NSWCA 405 orders were made in the Equity Division following a hearing at which the defendant did not appear. A notice of motion was subsequently filed seeking to have those orders set aside under UCPR r 36.16(2)(b). A judge of the Equity Division refused to set the orders aside. This Court, per Emmett JA and Sackville AJA, applied Vacuum Oil and Magnate Projects, finding that these cases set out the appropriate principles in a case under UCPR, r 36.16(2)(b). Their Honours said: "[26] … if Mr Abraham demonstrated before White J that he had an arguable defence to the claim, there may be a basis for extending time for the filing of an application for leave to appeal and for permitting Mr Abraham to defend the proceedings. But Mr Abraham has not shown that White J erred in concluding that he (Mr Abraham) failed to establish that he had an arguable defence. In order for a defendant to succeed in an application to set aside a judgment obtained after an undefended hearing on the merits, it is ordinarily necessary for him or her to show, by affidavit or otherwise, that he or she has a good defence on the merits: Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243; Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331, at [48]-[51]. Mr Abraham has not done so."
Ibrahim v Ayoubi emphasises the necessity for an applicant under UCPR, r 36.16(2)(b) to show that he or she has a good defence on the merits.
More recently, in Foundas v Arambatzis [2020] NSWCA 47, this Court addressed a case where orders had been made in the Equity Division on 15 October 2018 after a hearing in the appellant's absence. As in the present case, orders for substituted service on the appellant had previously been made and service had been effected in accordance with those orders. The appellant did not appear on the return of the summons. On 24 April 2019, the appellant filed a notice of motion seeking the setting aside of the orders made on 15 October 2018. On the hearing of that notice of motion, the primary judge accepted her evidence that it was not until after the orders had been made that she became aware of the proceedings. This Court again approved the passage in Vacuum Oil as illustrative of the correct test to be applied under UCPR, r 36.16(2)(b). White JA, with whom Bell P and Basten JA agreed, said: "[14] The appellant's application to set aside the orders of 15 October 2018 was made under r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW). The orders of 15 October 2018 were made regularly. The appellant is not entitled ex debito justitiae to have the orders set aside because they were made in her absence and without her having notice of the proceeding. It was incumbent on her to show by evidence a reasonably arguable defence (Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243; Magnate Projects Pty Ltd v Youma Constructions Pty Ltd (No. 2) [2005] NSWCA 331 at [52])."
In the present case, the applicant and the respondent each agreed that the correct test in addressing the exercise of the discretionary power identified in r 36.16(2)(b) of the UCPR is set out by Barrett JA in Northey v Bega Valley Shire Council [2012] NSWCA 28 at [16]: "[16] The central question is whether it is unjust to let the perfected order stand. The matter was put thus by Jordan CJ (Davidson J and Roper J concurring) in Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR NSW 239 at 243-4: 'The question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand. If so, it should be set aside on such terms as it will minimise the possibility of injustice to the plaintiff. If not, we should not interfere.'"
In the present case, after citing [16] of Northey quoted above, the primary judge explained how he proposed to approach the application of UCPR r 36.16(2)(b), including by referring to the passage from Vacuum Oil which was at the forefront of the applicant's submissions in this case: "[26] Although directed to an exercise of the power in UCPR rule 36.16(2)(a) to set aside a 'default judgment', the observations of McCallum J in Cronau v Vavakis (No 3) [2008] NSWSC 1973 at [5] have resonance in the context of UCPR rule 36.16(2)(b): '[5] … in my view, in determining 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, it is appropriate for the Court to consider the relative weight of each of the individual considerations of the strength of any defence, the adequacy of the explanation for the failure to defend the proceedings and the length of any delay. So that, for example, although the Court does not embark upon a hearing of the full merits of the case, the existence of what would appear to be a strong defence would warrant a more indulgent approach regarding the adequacy of the explanation for the failure to defend. …'. [27] These observations are consistent with the observations of Jordan CJ in the seminal judgment of the Full Court of this Court in Vacuum Oil Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243-244 (with emphasis added): 'The present is not a case in which judgment was signed by default through some procedural omission on the part of the defendant or his legal advisors. The action followed the ordinary course, except that its coming on for trial was delayed through dilatoriness on the part of the defendant. It is one in which, the action coming on for trial in its ordinary place in the list, no one was present in Court to conduct it for the defendant, and it therefore proceeded in his absence. In such a case, when the plaintiff is in no respect in default, a new trial will not be granted save in very special circumstances: Chitty's Archbold, 10th ed, 1457; 12th ed, 1526. In every such case, the Court has an inherent and unfettered, though judicial, discretion, in the exercise of which it will, however, necessarily consider (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained: Evans v Bartlan [1937] AC 473 at 482. As a general rule (although not necessarily in every case, if some reason exists for departing from it: Collins' Book Depot Pty Ltd v Bretherton [1938] VLR 40), the Court requires an affidavit showing prima facie that the defendant has a good defence on the merits: Evans v Bartlan [1937] AC 473 at 480 and 488-489, and also an explanation of his absence which shows that justice requires that in the circumstances it should be excused. And if there has been gross negligence on the defendant's part, the Court will be the more disposed to require at least a reasonably clear case of merits to be shown, to incline it to interfere: Nash v Swinburne 3M & G 630 a t 635; Weitzel v Friedenreich 14 WN 7. It is obvious that decisions on other sets of facts are of no assistance in arriving at a decision as to how it would be proper to exercise the Court's discretion in the present case. The question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand. If so, it should be set aside on such terms as will minimise the possibility of injustice to the plaintiff. If not, we should not interfere'. [28] It was from Jordan CJ's judgment that [Barrett] JA drew his identification of 'the central question' as one 'whether it is unjust to let the perfected order stand'." (Emphasis in original.)
The real issue between the parties was the meaning to be attributed to the phrase in Jordan CJ's judgment about identifying "a real likelihood that it would be unjust to the defendant to allow the judgment to stand". The applicant's central point was that the primary judge erred when concluding that the "true inquiry" for setting aside an undefended judgment under r 36.16(2)(b) was the identification of "injustice" as opposed to the "real likelihood of injustice". The applicant submitted that the primary judge overstated the threshold to be met in two respects: 1. the true inquiry is whether there is a "real likelihood that it would be unjust to the [applicant]" to allow the orders to stand. That, it was submitted, provides a lower threshold than asking whether "it is unjust to let the perfected orders stand"; and 2. too much emphasis was placed on the importance attributed by the law to the finality and certainty of the outcome of litigation.
"Real likelihood" was said by the applicant in written submissions to be a "term that connotes the existence of a non-fanciful probability". In oral submissions an alternative meaning of "real likelihood" emerged, namely, "we would contend it means … not fanciful, not speculative, substantial possibility, seriously arguable. They're all words or expressions interchangeably to be used which is the reason why the expression 'beyond reasonable doubt' is an expression also not sought to be substituted".
The first observation about the applicant's submission is that the reference to the standard of proof in crime is unhelpful. A similar observation may be made about the respondent's submissions which spent a deal of time addressing criminal cases where the statutory framework and context are quite different. As McCallum JA pointed out in argument, one important difference is that the establishment of a reasonable doubt means that an acquittal follows inexorably whereas the establishment of an "arguable defence" does not mandate the conclusion that the application under UCPR, r 36.16(2)(b) must be allowed. All other relevant factors need also to be considered. More generally, the reference by both parties in submissions to tests derived from other fields of discretionary decision making, such as Metwally v University of Wollongong (No 2) [1985] HCA 28; (1985) 59 ALJR 481, were unhelpful. Whether a party should be permitted to conduct a different case than the one advanced at trial raises quite different questions to those in this appeal.
The second observation about this aspect of the applicant's submission is that his acceptance of the correctness of paragraph [16] of Northey underlines the difficulty the applicant experienced in identifying any difference between the central question expressed as "whether it is unjust to let the perfected order stand", and that question expressed as whether "there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand". Barrett JA in Northey plainly understood the test expressed in the first way as functionally equivalent to and indistinguishable from the test as described by Jordan CJ quoted immediately thereafter. To the extent that the respondent's counsel in oral submissions accepted that the formulations were materially different, he too was unable to explain why. The primary judge took the same view as Barrett JA as is demonstrated by his specifically emphasising the expression of the test by Jordan CJ.
A third observation about this aspect of the applicant's case is that it tended to treat the expression of the test in Vacuum Oil as if it were a statute. It is true that in contexts far removed from the present, such as proof of a "likely" substantial lessening of competition, "likely" has been held to mean a real chance or possibility. I do not think, in context, that Jordan CJ by expressing the test as being "a real likelihood" of injustice meant anything other than whether the Court was satisfied that it would be unjust to allow the order to stand. The suggestion that Jordan CJ regarded a mere possibility as being "a real likelihood" of injustice is inconsistent with the judgment read as a whole. In the passage cited by the primary judge, Jordan CJ makes clear that "a new trial will not be granted save in very special circumstances". In addition, Jordan CJ explains that in the case of gross negligence on the defendant's part, the court will be more disposed to require at least a reasonably clear case of merits to be shown, to incline it to interfere. These conclusions are inconsistent with a possibility of injustice being a sufficient basis to set aside an order made in the absence of the defendant where the plaintiff is in no respect in default. That was the view taken by Barrett JA in Northey at [16], which the parties accept correctly states the test. That is unsurprising when consideration is given to the subject matter of the test - injustice. A state of satisfaction that it would be "unjust" to let a perfected order stand necessarily involves the court making a broad evaluative judgment about a conclusion, injustice, which itself will be highly fact-dependent.
A fourth observation about the applicant's submissions on this issue is that they tended to elide questions about the real likelihood of injustice with questions (albeit related) about the burden of proof and whether a different result was likely should the judgment be set aside and a new trial ordered. As the authorities in this Court described above make clear, to succeed in an application under UCPR, r 36.16(2)(b), the applicant does not have to show that a different result is likely should the judgment be set aside and a new trial ordered. Having said that, in a case involving egregious delay in seeking to set aside an undefended judgment, a greater burden of persuasion will be required of the applicant.
UCPR r 36.16(2)(b) provides an unfettered, though judicial, discretion. It is unwise to attempt to lay down rules of universal application in the exercise of that broad discretion which, as I have said, necessarily involves the Court in making a broad evaluative judgment. Unsurprisingly, given the authority of the author, the questions posed by Jordan CJ in Vacuum Oil about the exercise of a predecessor to this judicial discretion remain appropriate: it is necessary to consider (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant became bound by a judgment regularly obtained. I do not discern any difference in substance between the ways of expressing this broad evaluative judgment in the passages cited from Vacuum Oil and Northey. Neither case should be read as a formulation of any rigid rule for setting aside an undefended judgment under UCPR r 36.16(2)(b). In reaching that conclusion I acknowledge the judgment of Leeming JA, with which I agree, which explains the decision in Vacuum Oil in its proper historical context.
The primary judge quoted the passages from Northey and Vacuum Oil in setting out the principles his Honour considered relevant to the exercise of discretion under r 36.16(2)(b). The applicant's submission that the primary judge found that as a general rule "exceptional circumstances" must be shown to set aside a judgment made in the absence of a party should be rejected. The primary judge did not state as a general rule that "exceptional" circumstances were required to be shown to set aside an undefended judgment.
What is clear, based on the authorities in this Court described above, is that the applicant's egregious delay in seeking to set aside an undefended judgment imposes a greater burden of persuasion in the present case.
The primary judge did not misstate or misapply the test for setting aside an undefended judgment under UCPR r 36.16(2)(b). No House v The King error has been shown.

Issue 2: The nature and strength of the applicant's proposed defence

The applicant contended that the primary judge misconstrued facts and failed to take into account relevant considerations when assessing the existence and strength of the applicant's proposed defence. Two principal submissions were advanced. First, that the primary judge erred in finding at [51] that the applicant's case depended "upon an acceptance of the [applicant's] word". Secondly, that the primary judge's finding at [46] that the 12 February 2010 document presented a "formidable barrier" to the applicant's defence proceeded upon erroneous findings of fact and a failure to take into account relevant considerations.
What the primary judge actually found on these topics was more nuanced. Those findings should be set out in full: "[47] Much of the defendant's challenge to the plaintiff's claims involves his disputation of her account of conversations between them ('word against word') coupled with the fact that (albeit, perhaps, in the circumstances summarised in Risa Gall v Andrew Minh Luan Pham [2015] NSWSC 1710 at [7]) she acquiesced in the lottery win being registered in the office of NSW Lotteries in the name of the defendant. [48] However, the plaintiff's case against the defendant calls in aid a document dated 12 February 2010 - the 'contract' or, perhaps more accurately, an admission by the defendant of the plaintiff's beneficial entitlement to the lottery annuity - which, she says, he signed. Written in her hand and countersigned by her, that document is in the following terms 'I, Andrew Minh Luan Pham of … agree to transfer all amount of $AUD75,000 every year for the next 13 years on the 19 Dec, which will be paid by NSW Lotteries to Risa Abe [the plaintiff]. The account number registered as the account for installments is not to be changed without first notifying Risa Abe. The joint account currently registered is also not to be terminated until 2024 without discussion. All statements above are agreed and signed by Andrew Pham himself. Any changes to this contract will not be allowed without Risa Abe's consent'. [49] The defendant both denies that what plausibly appears on that document to be his signature is in fact his signature, and offers (with corroboration from a friend) an alternative explanation that, for a large part of the date which the document bears (but not all day), he was engaged in drinking so much alcohol as to be beyond knowing what he was doing. [50] The plaintiff makes the point (which is available to be made, but not in any way decisive) that the defendant's denial that he signed the document is unaccompanied by expert evidence from a document examiner expressing an expert opinion as to the authenticity of the disputed signature. [51] Although the Court is not, on a hearing of the defendant's motion, trying issues of fact arising from the defendant's foreshadowed defence of the plaintiff's claims, it must be satisfied that the proposed defence is fairly arguable, and the strength or otherwise of any defence is a factor to be taken into account (in all the circumstances) in deciding whether or not to set aside orders under challenge. In this context, I am not satisfied that the defendant's proposed defence has sufficient strength to justify, or warrant, interference with the orders under challenge. It depends ultimately upon an acceptance of the defendant's word."
It is of course correct that there was no cross-examination of either the applicant or the respondent here. The primary judge was nevertheless required to conduct an evaluation of the applicant's case, and was entitled to be sceptical about some claims made by the applicant, even in the absence of cross-examination.
There were aspects of the applicant's case which, on their face, were not credible. In his first affidavit, sworn on 26 October 2018, the applicant asserts that in or about February 2010, he and the respondent travelled to Taiwan for a holiday. While on holidays, he had a conversation with the respondent to the following effect: "Respondent: 'What's going to happen with the money?' (I understood this to be a reference to the lottery money) Applicant: 'As long as you're still studying and not married you can use the money. If you meet someone and marry, your husband will look after you instead of me.'"
When the relationship between the applicant and the respondent ended, which the applicant says occurred in September 2010, he says that he told the respondent: "You can continue to use [the] money while you study. I know you need it and I don't need to it at all."
The applicant accepts that he found out about the present proceedings no later than February 2015. He states that he was consumed by "crystal meth" most of the time and was not able to attend to basic administrative matters, like paying bills.
The applicant first saw a lawyer about these proceedings in December 2016, after he had recovered from his drug addiction. He says, however, that he "needed to return to the bread shop to make money" and "was solely focused on getting better and the family's financial problems at the time" and he "forgot to see [the solicitor] again".
Over a year passed before the applicant again consulted a solicitor in or around December 2017. For reasons which the affidavit does not make clear, the solicitor did little or no work for the applicant until leaving the law, the applicant says, in September 2018. It was not until almost three years after the conclusion of the 2015 proceedings that the applicant sought to set aside the orders made under UCPR, r 36.16(2)(b).
In his second affidavit, sworn on 14 August 2019, the applicant swore that "[w]hen I first found out about these proceedings from my brother, I initially contacted a law firm to act on my behalf. I do not recall the amount of times I spoke to the law firm however l do not recall receiving any documentation from them about the proceedings". No explanation was given as to how the applicant was able to retain solicitors to appear for him in relation to the respondent's letter of demand in early 2015 in circumstances where he says that at that time "I was not able to attend to basic matters including reading letters, responding to letters or speaking over the phone for longer than a minute".
The applicant's third affidavit, sworn on 11 September 2019, contains the most dramatic, and least credible, assertion in his evidence: "I cannot recall any lucid moments from on or about end-2013 to 2016, when I stopped using crystal meth. The memories I have of that period are of me consuming crystal meth, staying at the warehouse watching movies, going to the bread shop for money and food/drink, seeing my children sporadically and buying crystal meth from my dealer. I cannot recall periods of time where I was able to function to work, socialise or hold a conversation with anyone."
This evidence was flatly inconsistent with the applicant's acknowledgement in his first two affidavits that he was aware in 2015 of the respondent's legal claim and that he had actually instructed lawyers at that time to defend that claim.
In the absence of cross-examination, however, doubts about the applicant's account should not be overdone. I am prepared to assume, in the applicant's favour, that relatively little weight was given by the primary judge to what the applicant emphasised as the central feature of his case, namely that he was the legal owner of the winning lottery ticket and until the order made by the Court after the 2015 proceedings, legally entitled to the proceeds. The weight to be given to various relevant factors in the exercise of discretion was a matter for the primary judge alone. No House v King error in the primary judge's evaluation of the nature and strength of the applicant's defence has been demonstrated.
As to the complaint that the primary judge erred in concluding that the applicant's case depended "upon an acceptance of the [applicant's] word", it is of course correct that it was the respondent who bore the onus of proof. I do not think that the primary judge overlooked that matter. Rather, his Honour in referring to an "arguable defence" was adopting a shorthand for the matters the applicant would advance in his defence if leave was granted and the orders made at the conclusion of the 2015 proceedings were set aside. Senior Counsel then appearing for the applicant accepted before the primary judge that the case was "essentially word against word": "HIS HONOUR: When you strip away the form of the pleadings - and I'm not intending to do that entirely, but just trying to get to the core of it - the arguable defence fits not entirely, but pretty close to, 'I said', 'he said', doesn't it? MEEK: Essentially, yes. There seem to be - without trying to oversimplify - two aspects to it. There is the initial purchase of the ticket, discussions around that, attendance at a lotteries office and then a course of - perhaps not the aptest description but let me call it just a 'course of conduct' of the parties, just dealing with things over a number of years from the end of 2008 through to the time when there is a contestability around it in 2014, 2015."
I would reject the applicant's attempt to retreat from that characterisation on this application for leave. Virtually all of the matters called in aid by the applicant are sourced in the applicant's affidavits providing a competing narrative of relevant events to those in the respondent's affidavits. Although, of course, the respondent bore the onus of proof, the primary judge's conclusion that the outcome of the case would likely be determined based on a consideration of disputed accounts of conversations was open to his Honour.
The second aspect of this part of the applicant's case, the primary judge's approach to the 12 February 2010 document (set out at [65]) raises different questions. It may readily be accepted, as the applicant emphasised, that the document was not a contract and did not effect an assignment of the proceeds of the lottery winnings. The document is not framed as an immediate irrevocable disposition of an existing interest but as a promise to do something in the future.
The references by the primary judge to the document being a "contract" were in quotation marks. His Honour was using shorthand descriptions of the document taken from the evidence, including the description of the document contained within it. His Honour actually described the document as containing an "admission" by the applicant: "[48] However, the plaintiff's case against the defendant calls in aid a document dated 12 February 2010 - the "contract" or, perhaps more accurately, an admission by the defendant of the plaintiff's beneficial entitlement to the lottery annuity - which, she says, he signed. …"
In order to be an "admission" as defined in the Dictionary in the Evidence Act 1995 (NSW), a statement must be a previous representation made by a party that is adverse to that party's interest in the outcome of the proceeding.
Assuming the 12 February 2010 document is genuine, it contains a representation plainly adverse to the applicant's interest in the outcome of the proceeding. The central question in that proceeding is whether the applicant made a gift of the scratch lottery ticket to the respondent in December 2008. The representations in the 12 February 2010 document are capable of being understood as consistent with the respondent's assertion that she was beneficially entitled to the proceeds from the beginning. If, as the applicant asserts, he believed in 2010 that he was entitled to those proceeds and to the extent that funds had been advanced from the proceeds to the respondent they were gifts or loans, the statement that "I … agree to transfer all amount of $AUD75,000 every year for the next 13 years on the 19 Dec" to the respondent was significant. That representation is consistent with the respondent's case that in 2010 both she and the applicant understood that the respondent was beneficially entitled to the proceeds of the lottery win. In the context of the discretionary decision the primary judge was called upon to make, the 12 February 2010 document was an important piece of evidence from which inferences could be drawn. The document was capable of being viewed as an admission by the applicant of the respondent's beneficial entitlement to the lottery annuity.
Subject to the question of onus, the applicant's remaining objections to the primary judge's reliance on the 12 February 2010 document as an admission depend upon a rejection of the respondent's evidence that the document was signed in front of her and an acceptance of the applicant's evidence that the document does not bear his signature and/or that he was drunk to the point of incompetence for most of the day on 12 February 2010. The primary judge was entitled to regard those assertions, in themselves, as insufficiently persuasive to satisfy his Honour that setting aside the orders made as result of the 2015 proceedings was justified.
The primary judge found that the signature on the 12 February 2010 document "plausibly appears" to be that of the applicant. His Honour was entitled to so find. The applicant invited a comparison of what he submitted was "a material difference between the signature that appears on this document, being the disputed signature, and the signatures that appear on documents 392 and also 408 of Mr Pham, where he doesn't dispute his signature …". [3]
Taking up the applicant's invitation, I do not consider that any error has been shown in the finding of the primary judge that the signature on the 12 February 2010 document "plausibly appears" to be that of the applicant. A comparison between that signature and the handwriting immediately below that signature with the signatures and handwriting on the documents the applicant accepts are in his hand supports the finding of the primary judge.
Even in the absence of cross-examination, the primary judge was entitled to be sceptical about this aspect of the applicant's evidence. The applicant made what amounted to an allegation of forgery against the respondent, who repeated the evidence she had given in the 2015 proceedings that the document was signed in her presence by the applicant. Substantial payments were made by the applicant to the respondent after the date the document bears, despite the fact that the relationship ended and the applicant married in 2012. Substantial payments were made by the applicant to the respondent in 2013 and 2014 when the applicant's sworn evidence is that the "memories I have of that period are of me consuming crystal meth, staying at the warehouse watching movies, going to the bread shop for money and food/drink, seeing my children sporadically and buying crystal meth from my dealer. I cannot recall periods of time where I was able to function to work, socialise or hold a conversation with anyone". How this is consistent with substantial payments being made to the respondent from the lottery winnings was not explained. When the applicant's payments ceased, the 2015 proceedings were commenced by the respondent.
The applicant advanced an alternative case, namely that he did not see the respondent and/or was in a drunken stupor on the date the document bears and could not for those reasons have signed the document. The problem with this alternative submission is that the allegedly corroborative evidence of this drinking binge was inconsistent as to timing with the applicant's account. The friend who allegedly provides that corroboration, Chin-Chih Lee, in his affidavit says the events he describes took place "on Chinese New Year in 2010". 12 February was not Chinese New Year in 2010.
In the context of the importance of the issue, the primary judge was entitled to conclude that the absence of expert evidence led by the applicant about his signature was significant. So too was the absence of evidence such as travel records, bank records or tax receipts corroborating his account that the drunken binge occurred on 12 and 13 February 2010.
There was no House v The King error in the conclusion of the primary judge that his Honour was "not satisfied that the [applicant's] proposed defence has sufficient strength to justify, or warrant, interference with the orders under challenge".

Issue 3: The prejudice to the respondent from setting aside the orders

The conclusion of the primary judge on this topic was that: "[52] Fifthly, the defendant's plea to be allowed in to defend the plaintiff's claims is based, essentially, on a submission that subjective factors personal to him (focusing principally upon his misuse of drugs and associated problems) should be allowed to outweigh objective factors that tend in favour of the plaintiff being entitled to hold onto the orders she obtained, in a regular way and without any default on her part, in the ordinary course of the principal proceedings. [53] That the defendant is the author of his own misfortune is not, of itself, a decisive factor against a grant of the relief he seeks in his motion. But it is a factor tending against his application to be allowed to be let in to defend the plaintiff's claims when viewed in context."
The applicant's submission is that the primary judge failed properly to take into account the absence of prejudice to the respondent from setting aside the orders. I reject the premise of the submission. There was no "absence of prejudice" to the respondent. The respondent is an individual funding her own case and is not a commercially sophisticated party. The effect of delay, particularly the length of delay engaged here, gives rise to relevant prejudice to the respondent. The applicant seeks a new trial to be held over a decade after critical events in question took place and almost 5 years after the initial trial. Orders were pronounced by the primary judge on 13 November 2015. The orders were obtained in a regular way and without any default on the respondent's part. It is relevant that the respondent has been unable to vindicate her rights since that date. The surplus funds from the sale of the Chipping Norton property remain with the Court.
It is true that in this Court the applicant offered to pay the respondent's costs thrown away and to undertake "to pursue the proceedings expeditiously … and not seek to recover any instalment of the annuity received by [the respondent] from 13 November 2015 to date, which is $375,000".
The primary judge was entitled to regard the objective factors his Honour identified as tending in favour of the respondent being entitled to the benefit of orders regularly obtained, without any default on her part, in the ordinary course of the principal proceedings. That was particularly so having regard to the effect of the lengthy delay upon an individual.
There was no House v The King error shown in the conclusion of the primary judge on this issue.

Issue 4: Explanation for non-appearance and delay

Perhaps the most important factor in the discretionary decision here was delay. The lack of any satisfactory explanation for most of the egregious delay in seeking to set aside the orders made in the 2015 proceedings is a significant matter in the disposition of this case.
The primary judge accepted that the applicant suffered from a drug addiction between 2013 and 2016. His Honour was not, however, satisfied that the applicant's drug addiction provided a sufficient explanation as to why he did not appear in the 2015 hearing and why, up until October 2018, he took no steps to set aside those orders: "[38] The defendant has proffered no satisfactory explanation for why he failed to provide ongoing instructions to his solicitors beyond reference to his distraction by drugs and associated personal problems. Nor has he offered any explanation as to why, if incapacitated by misuse of drugs, his interests could not have been protected by James acting as a tutor. [39] That said, the defendant has adduced no medical evidence in support of the proposition that his distraction by drugs was such as to render him incapable of providing instructions to his solicitors, or of arranging for James to protect his interests. True it is that he was not cross examined by the plaintiff on his assertions of incapacity, but those assertions were of a general character at best. I accept that the defendant had a drug problem which impacted on his personal affairs, but I remain doubtful as to the extent to which it impeded him (personally or through his supportive brother, James) from defending the plaintiff's claim."
Having considered all of the evidence and paying regard to the absence of cross-examination, my conclusion is that the applicant's evidence about the delay in seeking to set aside the orders made in 2015 is internally inconsistent and lacking reliability. The primary judge was entitled to regard those assertions as being "of a general character at best".
Even accepting the assertion that the applicant had a significant drug problem in the period 2013 to 2016, on his own evidence he knew about these proceedings from at least February 2015 and engaged lawyers to act on his behalf. In addition, the applicant's brother, on the face of the documentary record, was closely involved in his financial affairs and able to give instructions to lawyers and doctors. No error has been shown in the conclusion of the primary judge about the extent to which drug addiction impeded the applicant (personally or through his supportive brother) from defending the respondent's claim.
Further, in December 2016, after the applicant says he had recovered from his drug addiction, having consulted a lawyer about setting aside the orders made in 2015, he "forgot to see [the solicitor] again" for about a year. There was then another year of delay which was the subject of a wholly unsatisfactory explanation about the lawyer who was retained seeking an unexplained career change.
The primary judge was correct to conclude that there was "no satisfactory explanation" for the applicant's non-appearance at the trial in 2015 or for the egregious three year delay in seeking orders under UCPR r 36.16(2)(b).
I also reject the applicant's submission that the primary judge erred in overstating the importance of the principle of finality. What the primary judge said on this topic was: "[31] The fact that 'the principle of finality in litigation' may, as his Honour observed, weigh 'heavily in the exercise of the discretionary power of the Court to set aside any judgment' is not inconsistent with a predisposition on the part of the Court (all else being equal) to allow proceedings to be determined on their merits. … [54] Sixthly, the absence of any irregularity affecting the orders under challenge or the manner in which they were obtained, the absence of any satisfactory explanation as to why the defendant allowed the plaintiff to proceed to judgment without opposition, the defendant's subsequent delay in asserting the entitlements he now asserts, and the lack of a strong case, all reinforce the importance of the Court giving due respect to the principle of finality of litigation."
Mr Pritchard SC for the applicant properly accepted that finality in litigation was one relevant matter for the primary judge to take into account in exercising the power under UCPR r 36.16(2)(b). In the present case, the weight to be given to a relevant consideration, the principle of finality, was a matter for the primary judge alone: Macedonian Orthodox Community Church at [137]-[138]. The extent to which the principle was taken into account does not demonstrate error, let alone House v The King error.
The applicant also submits that the absence of a sufficient explanation for non-appearance (or indeed for delay in seeking to set aside the orders made) is not determinative of an application. Assuming this proposition may be accepted, in the present case the primary judge made no such finding.
No House v The King error has been shown in his Honour's conclusions. The applicant's bare assertion that by reason of his drug addiction he was unable to participate in the 2015 proceedings was a manifestly inadequate explanation for his non-appearance in 2015. There was no real or adequate explanation for the delay until October 2018 in seeking to set aside the orders made in 2015.

Conclusion and proposed orders

Leave to appeal is required as the orders sought to be appealed are interlocutory in nature: Supreme Court Act 1970 (NSW) s 101(2)(e). I was initially attracted to the proposition that leave should be granted as issues of principle about the application of UCPR, r 36.16(2)(b) were raised. Having regard to the fact that this Court has addressed UCPR, r 36.16(2)(b) recently I have re-considered. In addition, I take into account on the question of leave the fact that the respondent has now spent at least $177,250.19 on these proceedings which she commenced in early 2015. This is virtually the entire amount lodged with the Court. I would refuse leave to appeal.
For the foregoing reasons I reject the applicant's case. I propose the following orders: 1. Leave to appeal refused; 2. Applicant to pay the costs of the respondent.
McCALLUM JA: I agree with Payne JA and would make the following additional remarks. The case was said to warrant a grant of leave to appeal because it raised an important issue of principle concerning the relevant inquiry to determine an application to set aside orders made in the absence of a party. Mr Pham sought to establish that "all he was required to demonstrate was that there was a 'real likelihood' that it would be unjust to allow the judgment to stand". He contended that, in posing the question "whether it is unjust to let the perfected order stand", the primary judge "overstated the threshold to be met."
The argument fastened on the difference between the words of Barrett JA in Northey at [16] ("the central question is whether it is unjust to let the perfected order stand") and the words of Jordan CJ cited by Barrett JA to support that very proposition ("the question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand"). Plainly, Barrett JA saw no difference between the two. His Honour said at [16]: The central question is whether it is unjust to let the perfected order stand. The matter was put thus by Jordan CJ (Davidson J and Roper J concurring) in Vacuum Oil Co Pty Ltd v Stockdale [1942] NSWStRp 31; (1942) 42 SR NSW 239 at 243-4: 'The question is whether, upon the material that has been placed before us, there is a real likelihood that it would be unjust to the defendant to allow the judgment to stand. If so, it should be set aside on such terms as it will minimise the possibility of injustice to the plaintiff. If not, we should not interfere.'
Upon analysis, the distinction posited by the applicant is illusory. The term "real likelihood" simply acknowledges the prospective nature of part of the inquiry (whether, if allowed in to defend the case, the defendant is likely to obtain a different result). The stronger the apparent merits of the proposed defence, the greater the likelihood that it is (would be) unjust to the defendant to allow the orders to stand, depending on other factors relevant to the exercise of the discretion. Barrett JA's formulation does not overlook that aspect of the inquiry but simply expresses the test more succinctly.
I am grateful for Leeming JA's detailed analysis of the decision in Vacuum Oil and the context in which that case was decided. I agree with the conclusions his Honour has reached based on that analysis.
I agree with the orders proposed by Payne JA.

Endnotes

Sir Frederick's original judgment is retained by the Law Courts Library. See also Mason, Sir Frederick Jordan: Fire Under the Frost (2019, The Federation Press) at 210.
Farden was a case arising from a series of cases in which Field J sat "at the instance of the Lord Chancellor in order to superintend the formation of the practice under the [then] new rules": at 129.
The NSW Lotteries claim form dated 19 December 2008 and the NSW Lotteries form dated 27 August 2009.

Amendments 20 October 2020 - Minor typographical amendments to the coversheet, headnote, [71], [77], [92], [98], [99], [100], [101], [106], [121] and [154] 18 December 2020 - [4] "(1899)" replaced by "(1889)" in citation of Farden v Richter [15] "Dixon J" replaced by "Dixon CJ" [33] In quotation, "power of discretion" replaced by "power or discretion" [37] "office of the" inserted before "Primary Judge" [41] "obtained at common law and in equity" replaced by "obtained at common law or in equity" 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: 18 December 2020

Common Law Procedure Act 1899(NSW)

Consolidated Equity Rules 1902(NSW)

Pt XVII District Court Act 1973(NSW)

(NSW), Dictionary Equity Act 1880(NSW)

Equity Act 1901(NSW)

& 39 Vict c. 77) Supreme Court Rules 1970(NSW)

Supreme Court Act 1970(NSW)s 101(2)(e).

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