HIS HONOUR: By motion filed on 1 March 2019, the plaintiff moves for judgment against the defendant for $A9,980,425. The plaintiff also seeks costs. The defendant did not appear to defend the application.
Neither the application for judgment nor the application for costs is exceptional.
However, in relation to costs, there is an issue arising out of clause 24 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) (Regulation) which relevantly provides that:
(1) The costs payable in respect of the following:
(a) the enforcement of a lump sum debt or liquidated sum for damages,
being costs of a legal service specified in Schedule 1, are fixed at the amount specified in that Schedule in respect of that service.
…
(5) This clause does not fix the costs payable for obtaining a judgment in contested matters and, in that case, only the costs payable for the enforcement of the judgment are fixed.
(emphasis added)
Schedule 1 contains a tariff of the maximum legal professional costs chargeable for the recovery of certain debts. The Schedule identifies various attendances and assigns to each one an amount chargeable. So far as default judgment is concerned, the only items identified are preparation of process (comprising costs of taking instructions, preparing documents, and filing statement of claim, including drawing/typing/checking of originating process and cheque to pay account of process server), costs of service, substituted service, service interstate or overseas, and costs on applying for default judgment.
In the circumstances that have occurred, is the plaintiff obtaining judgment in a contested matter? If the answer is yes, the Regulation will not fix the costs payable to the plaintiff for obtaining judgment.
[3]
The Settlement Deed
The plaintiff asserted that it had claims against the defendant in respect of a personal guarantee given by the defendant or pursuant to indemnity provisions contained in certain mortgages. The defendant disputed the claims.
On 24 May 2018, the parties agreed to settle their dispute by entering into a Settlement Deed (Deed).
The terms of the Deed required the defendant pay to the plaintiff a Settlement Amount of $US7m, plus the plaintiff's legal fees and expenses incurred in connection with the dispute up to a maximum of $A50,000 (excluding GST and disbursements) (Legal Fees), less any dividend paid to the plaintiff in the course of the winding up of SNL Mining Limited (in liquidation) (SNL Mining Dividend): cll 1.1 and 2.1(a).
$US2m was due no later than 5.00 pm on the date six months after the Settlement Date (being the date that the Deed was executed by both parties), and US$5m plus the Legal Fees and the Interest less the SNL Mining Dividend were due no later than the date that is 15 months after the Settlement Date: cl 2.1(b).
The defendant agreed to pay interest at a specified rate on the unpaid balance of the $US7m (Interest): cl 2.2.
The Deed provides that, in the event that the defendant does not pay any part of the Settlement Amount on time, the Settlement Amount and any unpaid balance including interest which has already accrued will become immediately due and payable without the need for any demand or further action by the plaintiff: cl 2.4.
The Deed provides that in the event that the Settlement Amount becomes due and payable as aforesaid, the plaintiff may apply to a court of competent jurisdiction for the entry of judgment for $US7m plus the Legal Fees and Interest less the SNL Mining Dividend. It also provides that the defendant consents to the application and orders, and that a copy of the Deed may be produced to the Court as conclusive proof of his consent: cl 2.5.
The Deed is governed by the laws of New South Wales and each party irrevocably submits to the non-exclusive jurisdiction of the courts with jurisdiction in New South Wales: cl 14.
[4]
These proceedings
The defendant had solicitors, HFW Australia, acting for him at the time of the Deed and thereafter.
The defendant failed to make any payment under the Deed.
On 27 November 2018, the plaintiff sued out of this Court a Commercial List Summons and a Commercial List Statement to enforce the Deed. The Summons was allocated a first return date of 7 December 2018.
On 27 November 2018, the plaintiff's solicitors emailed the defendant's solicitors requesting that they confirm whether they had instructions to accept service on behalf of the defendant.
On 28 November 2018, the defendant's solicitors confirmed that they held instructions to accept service on his behalf.
On 29 November 2018, the plaintiff's solicitors served the Summons and List Statement on the defendant's solicitors by email and notified them of the first return date.
On 4 December 2018, the plaintiff's solicitors sent a letter to the defendant's solicitors requesting that the defendant execute an Acknowledgement of Liquidated Claim form pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) Pt 20 r 20.34. [1]
On 5 December 2018, the defendant's solicitors wrote to the plaintiff's solicitors saying that the defendant was not willing to adopt the proposed course. They proposed consent orders ahead of the first directions hearing for the parties to participate in a mediation and for the defendant to file and serve a Commercial List Response if the mediation failed.
On 6 December 2018, the plaintiff's solicitors wrote to the defendant's solicitors saying that they did not agree with the defendant's proposed timetable. They declined to mediate until after the pleadings had closed and proposed a different timetable providing for a Commercial List Response to be filed and served by 10 January 2019, a Reply to be filed and served by 24 January 2019, and a listing for directions on 1 February 2019.
A telephone discussion about the proposed timetable took place between the solicitors on 6 December 2018. Later that day, the defendant's solicitors provided proposed short minutes with a slightly varied timetable for a Commercial List Response to be filed and served by 17 January 2019 and a Reply to be filed and served by 31 January 2019. They also asked whether the plaintiff's solicitors would mention their appearance before the Commercial List Judge on the following day.
On 7 December 2018, McDougall J made directions by consent that included that the defendant file and serve his Commercial List Response by 17 January 2019, the plaintiff file and serve any Reply by 31 January 2019, and the matter be listed for directions in the Commercial List on 1 February 2019.
On 14 January 2019, the defendant's solicitors wrote to the plaintiff's solicitors requesting an extension of time to 25 January 2019 to serve the defendant's defence. Later that day, the plaintiff's solicitors responded by email stating that the plaintiff could not consent to an extension without a further appropriate order being made by the Court and requesting reasons why the extension was necessary.
On 15 January 2019, the defendant's solicitors emailed the plaintiff's solicitors stating that the plaintiff and defendant were negotiating amendments to the Deed.
On 17 January 2019, the plaintiff's solicitors emailed the defendant's solicitors stating that the plaintiff disputed their assertion that it was negotiating amendments to the Deed with the defendant.
The defendant failed to file and serve his Commercial List Response by 17 January 2019, and he has never done so.
On 21 January 2019, the defendant's solicitors emailed the plaintiff's solicitors stating that their instructions were that the plaintiff had agreed to refrain from taking steps in the proceedings until 1 February 2019.
Later on 21 January 2019, the plaintiff's solicitors emailed the defendant's solicitors stating that their instructions were that no such negotiations were taking place.
On 22 January 2019, the defendant's solicitors emailed the plaintiff's solicitors stating that Mr Meng, a director of the plaintiff, had agreed to refrain from taking steps in the proceedings until 1 February 2019 and to discontinue the proceedings on receipt of US$2m from the defendant payable on or before 1 February 2019.
Later on 22 January 2019, the plaintiff's solicitors emailed the defendant's solicitors stating that their express instructions were that no agreement had been reached between Mr Meng, on behalf of the plaintiff, and the defendant.
On 30 January 2019, the plaintiff's solicitors emailed the defendant's solicitors stating that, since the defendant had not filed any defence or notice of appearance, the plaintiff proposed to seek timetabling orders to file and serve an application for default judgment at the directions hearing listed on Friday 1 February 2019.
The plaintiff's solicitors did not receive a response to that email.
At the directions hearing on 1 February 2019, the matter was called out of Court. There was no appearance by the defendant. The Court stood the proceedings over for directions in the Commercial List on 8 March 2019 and gave the plaintiff leave to make returnable on that date any application for judgment, provided it was filed by 1 March 2019.
On 7 February 2019, the plaintiff's solicitors sent an email to the defendant's solicitors indicating that the Court had made the above orders.
By motion filed on 1 March 2019, the plaintiff moves pursuant to UCPR Pt 16 r 16.16 for default judgment plus costs. UCPR Pt 16 r 16.2(1) provides that a defendant is "in default" for the purposes of the Part if the defendant fails to file a defence within the time limited by r 14.3(1) or within such further time as the Court allows. UCPR Pt 16 r 16.6 provides that if the plaintiff's claim against a defendant in default is for a debt or liquidated claim, judgment may be given for the plaintiff against the defendant for a sum not exceeding the sum claimed and interest up to judgment and costs.
UCPR Pt 16 r 16.1, however, provides that the Part applies to proceedings commenced by statement of claim. Accordingly, the Part does not, strictly, apply to these proceedings. The Court undoubtedly nevertheless has power to enter judgment for the plaintiff in light of the defendant's failure to file its Commercial List Response.
Section 61 the Civil Procedure Act 2005 (NSW) provides that:
(1) The court may, by order, give such directions as it thinks fit (whether or not inconsistent with rules of court) for the speedy determination of the real issues between the parties to the proceedings.
(2) In particular, the court may, by order, do any one or more of the following:
(a) it may direct any party to proceedings to take specified steps in relation to the proceedings,
(b) it may direct the parties to proceedings as to the time within which specified steps in the proceedings must be completed,
(c) it may give such other directions with respect to the conduct of proceedings as it considers appropriate.
(3) If a party to whom such a direction has been given fails to comply with the direction, the court may, by order, do any one or more of the following:
(a) it may dismiss the proceedings, whether generally, in relation to a particular cause of action or in relation to the whole or part of a particular claim,
(b) it may strike out or limit any claim made by a plaintiff,
(c) it may strike out any defence filed by a defendant, and give judgment accordingly,
(d) it may strike out or amend any document filed by the party, either in whole or in part,
(e) it may strike out, disallow or reject any evidence that the party has adduced or seeks to adduce,
(f) it may direct the party to pay the whole or part of the costs of another party,
(g) it may make such other order or give such other direction as it considers appropriate.
(4) Subsection (3) does not limit any other power the court may have to take action of the kind referred to in that subsection or to take any other action that the court is empowered to take in relation to a failure to comply with a direction given by the court.
The section clearly gives the Court power to give judgment to the plaintiff in the current circumstances. To the extent it is necessary (and I do not think that it is) to order that judgment may be entered, notwithstanding that the proceedings were commenced by summons, I so order.
The plaintiff served the motion and two supporting affidavits on the defendant's solicitors on 1 March 2019. On 4 March 2019, the plaintiff notified the defendant that the motion had been listed on 8 March 2019. When the motion came before me, the defendant was called out of court but did not appear.
The motion is supported by the following affidavits:
1. Yong Yue, in-house counsel of the plaintiff, sworn 1 March 2019, which establishes the quantum of the debt in Australian currency as at that date as $9,953,351.42, the fact of non-payment and service of the Summons and Commercial List Statement;
2. Ryan Keith Jameson, the solicitor employed by the plaintiff's solicitors, affirmed 1 March 2019, which also establishes service and testifies as to the course of dealings between the parties during the proceedings;
3. an updating affidavit from Mr Yue, sworn 8 March 2019, which establishes the quantum of the debt in Australian currency (on an updated conversion rate) as at that date as $10,110,596.95.
UCPR Pt 16 r 16.6 limits the judgment that the plaintiff may obtain to a sum not exceeding the sum claimed, interest up to judgment and costs. Although the rule does not strictly apply, I consider that, where the plaintiff has purported to invoke it, it should be applied by analogy where not to do so would result in an outcome potentially less favourable to the defendant.
The amount claimed in the motion is $A9,980,425. This amount comprises the debt owing (calculated as the Settlement Amount plus Interest to 1 March 2019 converted into Australian Dollars) plus the costs of and filing fees for the motion.
As at the date of hearing, the debt (calculated as the Settlement Amount plus Interest to 8 March 2019 converted into Australian Dollars) totalled $10,110,596.95. However, it is not appropriate to enter judgment for this because it exceeds the amount claimed in the motion.
Accordingly, the plaintiff should have immediate judgment for the amount claimed in the motion of $A9,980,425 plus costs, including filing fees, which can be assessed and then pursued by the plaintiff in due course.
[5]
contested matter?
An initial observation is that the Regulation has in mind proceedings commenced by statement of claim, and not proceedings commenced by summons and Commercial List Statement as occurs in this List. The clear implication from the fact that the Schedule isolates and identifies the number of discrete steps culminating, relevantly, in default judgment is that the matter can and will be resolved by taking only those steps, that is, that it will be truly uncontested. I doubt that the framer of the Regulation intended it to apply to proceedings in this List, as opposed to common or garden-variety debt collection cases. It is not necessary to decide that now because I have concluded that these proceedings are a "contested matter" within the meaning of cl 24(5) of the Regulation in any event.
Similarly, the defendant's omission to file an appearance does not affect my conclusion that the matter was contested. UCPR Pt 6 r 6.1 provides, relevantly, that except with leave of the Court, a party may not take any step in proceedings unless the party has entered an appearance. The time limit for the defendant to enter an appearance under UCPR Pt 6 r 6.10(1)(b)(i) was on or before the return date stated in the Summons. [2]
The Summons was returnable on 7 December 2018. On 7 December 2018, directions were made by consent by McDougall J in circumstances where the defendant had requested the plaintiff's solicitors to appear at the hearing on his behalf. Strictly, consenting to the directions made on 7 December 2018 was the taking by the defendant of a step in the proceedings that should not have occurred unless an appearance had been filed or leave had been given. It would not lie in the mouth of the defendant to now say that the proceedings were not contested because of his own default.
Contested in its ordinary grammatical meaning means "disputed". [3] No particular level, intensity or quality of opposition is required to make a matter contested.
I take "matter" in this context to mean the proceedings.
The matter becomes contested if there is any opposition to the relief sought, even if that opposition is as to timing only.
It is arguable that the defendant's refusal to file a statement under UCPR Pt 20 r 20.34 was enough on its own to take the matter out of the category of uncontested. It is not necessary to decide this because the defendant's later conduct put it beyond doubt that he was contesting the plaintiff's claim. This conduct was:
1. calling for a mediation,
2. asking the plaintiff's solicitors to mention his appearance at the first directions hearing,
3. consenting to directions, which included a direction for the filing of a Commercial List Response,
4. being in Court through the agency of the plaintiff's solicitors when the consent directions were made,
5. asking for an extension of time to serve his Commercial List Response,
6. asserting that the parties were negotiating amendments to the Deed, and
7. asserting an agreement that the plaintiff would refrain from taking steps in the proceedings until 1 February 2019.
[6]
conclusion
Judgment for the plaintiff for $A9,980,425.
The defendant is to pay the plaintiff's costs on the ordinary basis. The judgment is to bear a notation that the costs are not fixed by cl 24 of the Legal Profession Uniform Law Application Regulation 2015 (NSW).
[7]
Endnotes
Uniform Civil Procedure Rules 2005 (NSW) Pt 20 r 20.34(1)-(4) provide:
(1) In proceedings with respect to a liquidated claim, the defendant may file a statement acknowledging the whole of the amount of the claim.
(2) Subrule (1) does not apply if the defendant has filed a defence or the plaintiff has, in accordance with these rules, filed an application for a default judgment.
(3) On the filing of a statement under subrule (1), judgment is to be entered for the plaintiff for the whole of the amount of the claim.
(4) Judgment entered as referred to in subrule (3) fully discharges all of the plaintiff's claims in the proceedings.
Uniform Civil Procedure Rules 2005 (NSW) Pt 6 r 6.10(1)(b)(i) provides:
(1) For the purposes of these rules, the time limited for a defendant to enter an appearance (whether by filing a notice of appearance in accordance with this Division or by filing a defence in accordance with Division 4) is: …
(b) in the case of proceedings commenced by summons:
(i) on or before the return day stated in the summons …
Macquarie Dictionary (7th ed, 2017) 'contest' (def 8).
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Decision last updated: 15 March 2019
Parties
Applicant/Plaintiff:
Sinopec International (Australia) Pty Ltd
Respondent/Defendant:
Wenwu Su
Legislation Cited (3)
Legal Profession Uniform Law Application Regulation 2015(NSW)