The Owners – Strata Plan No 93543 v Zhang (No 4)

Decision date: 19 September 2025

Jurisdiction: Equity - Technology and Construction List

Before: Peden J

Decision: See [28]

Catchwords: CIVIL PROCEDURE – default judgment – procedural imbroglio – non-compliance with self-executing order – mistake by defendant’s solicitor – whether Court has power to extend time for compliance – where no ongoing prejudice to plaintiff and defendant’s solicitor submits to personal costs order

Legislation Cited: Civil Procedure Act 2005 (NSW)
Home Building Act 1989 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited: Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104
Australian Lending and Finance Pty Ltd v D & D Properties Australia as trustee for the D & D Property Trust [2021] NSWSC 1110
Bailey v Marinoff (1971) 125 CLR 529
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13
The Owners – Strata Plan No 93543 v Zhang (No 3) [2025] NSWSC 571

Category: Procedural rulings

Parties: The Owners – Strata Plan No 93543 (Plaintiff)
Hui Zhang (Defendant)

Representation: Counsel:
A G Rogers (Plaintiff)
M Condon SC with P Sharp (Defendant)
Solicitors:
Alexander Richards Lawyers (Plaintiff)
MPM Legal (Defendant)

File Number(s): 2018/382960

Publication restriction: Nil

JUDGMENT

1. The plaintiff’s notice of motion seeking the entry of a default judgment was heard in the Technology and Construction List on 19 September 2025. What follows are my reasons for dismissing the plaintiff’s motion and making the orders proposed by the defendant.

2. This matter has an unfortunate procedural history characterised by default and delay, largely on the part of the defendant, Mr Zhang, and his solicitor, Mr Mark Marando. Some explanation of that history is necessary to give context to the plaintiff’s motion.

3. The plaintiff is the Owners Corporation in respect of a 20-unit development in Cabramatta, New South Wales, which was developed by Mr Zhang.

4. On 24 May 2018, the Owners Corporation commenced these proceedings against Mr Zhang, claiming damages for defects in parts of the development.

5. The proceedings were heard by Stevenson J over six days in March and June of 2021. Before final submissions, the proceedings were adjourned to enable a mediation and settlement discussions. On 2 May 2023, the parties entered into a deed of settlement, the terms of which required Mr Zhang to perform further rectification work and entitled the Owners Corporation to rescind the deed in particular circumstances.

6. At a mention on 26 March 2025, the parties informed Stevenson J of the possibility that the deed might be rescinded and requested that final submissions be reserved to 15 May 2025.

7. In April 2025, the Owners Corporation purported to rescind the deed, because Mr Zhang had failed to perform his obligations. Mr Zhang disputed that the rescission was effective and filed a notice of motion seeking a declaration that the deed remained binding and enforceable.

8. On 15 May 2025, Stevenson J heard final submissions on liability issues. As Mr Zhang was not prepared to deal with issues of defects on that day, his Honour proposed to refer to a referee questions as to the existence of defects, the costs of rectification and whether the defects were on common property. Mr Zhang was to pay for the costs of the reference.

9. On 27 May 2025, his Honour heard and dismissed Mr Zhang’s motion, finding that the Owners Corporation had validly rescinded the deed.

10. His Honour published reasons on 4 June 2025: The Owners – Strata Plan No 93543 v Zhang (No 3) [2025] NSWSC 571. His Honour concluded that the Owners Corporation brought the proceedings within the warranty period under the Home Building Act 1989 (NSW) and was entitled to damages for the defective works on the common property, but not otherwise. His Honour invited the parties to confer and agree on appropriate orders, including for a reference of the issue of quantification of damages.

11. On 12 June 2025, his Honour made orders to give effect to the reasons published on 4 June 2025, which included the following:

4A. The Defendant to provide the Plaintiff with written notice on or before 19 June 2025 containing:

(a) The name of three proposed referees including Mr Ian Roberts SC;

(b) Each referee’s experience and availability;

(c) Each referee’s estimated fees and charges; and

(d) Each referee’s written consent to be appointed as referee.

12. On 30 June 2025, Mr Zhang filed a Notice of Intention to Appeal.

13. Mr Zhang failed to comply with order 4A by 19 June 2025. The parties agreed orders affording Mr Zhang an extension of time to comply with that order, which I made on 4 July 2025 (4 July Orders). Those orders relevantly provided:

1. Time for the Defendant to comply with order 4A made on 12 June 2025 be extended to 4 PM on Friday 11 July 2025.

…

3. In default of compliance with order 1 by the Defendant:

(i) the Defendant's defence be struck out;

(ii) the Plaintiff be at liberty to enter judgment with damages to be assessed;

(iii) the Plaintiff to be at liberty to nominate, on or before 24 July 2025, Mr Ian Roberts SC as referee;

(iv) should the Plaintiff so nominate Mr Ian Roberts as referee on or before 24 July 2025 then, pursuant to Part 20.14 of the Uniform Civil Procedure Rules … the matters referred to in the Schedule to the orders made on 12 June 2025 are referred to Ian Roberts SC for enquiry and report.

14. Mr Zhang failed to comply with order 1 of the 4 July Orders, with the effect that his defence was struck out as from 11 July 2025. According to counsel for Mr Zhang, that noncompliance was the fault of Mr Marando, whose evidence was that he mistakenly believed that filing the Notice of Intention to Appeal would automatically cause the orders made on 12 June 2025 to be stayed.

15. On 16 July 2025, Mr Asfour, the solicitor for the Owners Corporation, wrote to Mr Marando indicating that Owners Corporation nominated Mr Ian Roberts SC as referee (ostensibly in accordance with order 3(iii) of the 4 July Orders).

16. On the same day, the Owners Corporation filed its notice of motion seeking default judgment with damages to be assessed.

17. On 24 July 2025, Mr Marando wrote to Mr Asfour indicating that Mr Zhang consented to the appointment of Mr Roberts as referee.

18. The Owners Corporation’s motion was adjourned on two occasions and then listed for hearing on 5 September 2025. However, Mr Marando was not ready to proceed on that date and the motion was adjourned to 19 September 2025, on the basis that he would personally pay the costs thrown away by reason of the adjournment on an indemnity basis.

Should default judgment be ordered?

19. Although the history of delay and default attending this matter is regrettable, as I will explain, the Owners Corporation’s motion is misconceived. It is not appropriate to enter default judgment in the particular circumstances.

20. The Owners Corporation advanced two principal contentions in support of its application for default judgment.

21. First, it submitted that to avoid the entry of default judgment Mr Zhang was required to apply to set aside order 3(i) of the 4 July Orders. Under rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), that application had to be made within 14 days after the order was entered, so Mr Zhang was out of time to do so now. Further, it contended that Mr Zhang would have no basis to set aside the order in any event, because it was made by consent and there had been no relevant mistake or other vitiating factor, referring to Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13. However, as Mr Zhang does not seek to set aside the 4 July Orders, only to extend the time for compliance with order 3(i), the Owners Corporation’s reliance on UCPR 36.16 was misplaced.

22. Secondly, the Owners Corporation submitted that the 4 July Orders left the Court with no discretion but to enter judgment for the Owners Corporation, or even if the Court had a discretion, it should not be exercised in Mr Zhang’s favour. However, despite that submission, the Owners Corporation accepted that it required leave to enter any judgment under order 3(ii). The 4 July Orders were only self-executing insofar as Mr Zhang’s defence was struck out by virtue of his solicitor’s failure to notify the Owners Corporation of Mr Zhang’s proposed referees by 11 July 2025. Those orders did not have the effect that judgment was automatically entered, or that the proceedings were brought to an end: cf Bailey v Marinoff (1971) 125 CLR 529.

23. It is not appropriate to grant the Owners Corporation that leave and enter default judgment where there has already been a hearing on the merits of the Owners Corporation’s claim and Mr Zhang’s defence, part of which was successful, and where Stevenson J has concluded that the Owners Corporation is, in effect, entitled to judgment with damages to be assessed by a referee. The Owners Corporation is, as it accepted, bound by Stevenson J’s reasons and the striking out of Mr Zhang’s defence or the entry of default judgment will not enlarge its entitlement to damages.

24. Further, the Court has a discretion under UCPR 1.12 to entertain Mr Zhang’s application for extension of time for compliance with an order, including a self-executing order: see eg Australian Lending and Finance Pty Ltd v D & D Properties Australia as trustee for the D & D Property Trust [2021] NSWSC 1110 at [55], [59] (Ward CJ in Eq, as the President then was), following dicta in FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268. While I accept that the facts involved in Australian Lending and Finance were different to those here, the discretion is still relevant and may be exercised.

25. The exercise of the UCPR 1.12 discretion should occur “in the context of and by reference to the statute by which it is conferred (and any other statute that is relevant to the legislative context) and in accordance with principles developed by judicial decisions”: Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq*)* [2009] NSWCA 104 (Arthur Andersen) at [28] (Ipp JA, Tobias and McColl JJA agreeing). When exercising that discretion, regard should be had to the guiding principles in Part 6, Division 1 of the Civil Procedure Act 2005 (NSW), and, in particular, ss 56 to 60: Arthur Andersen at [35]-[36]. In doing so, the Court must seek to act in accordance with the dictates of justice, and may have regard to the matters in s 58(2), which include:

(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

…

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction…

26. I consider that it is in the interests of justice for Mr Zhang to be granted an extension of time under UCPR 1.12 because:

27. The noncompliance with the order was not the fault of Mr Zhang personally, but rather his solicitor, Mr Marando, and has since been explained and was cured within days. I reject the Owners Corporation’s submission that Mr Marando was not mistaken about the effect of the notice of intention to appeal because he consented to the 4 July Orders; I do not consider a mistaken belief is inconsistent with that conduct.

28. There is no evidence of any ongoing prejudice to the Owners Corporation, because belatedly Mr Zhang did consent to the appointment of Mr Roberts SC as referee and, even before that, Mr Roberts has become seized of the enquiry made available by order 3(iii) of the 4 July Orders. Counsel for the Owners Corporation could not identify any other prejudice to it, should an extension of time be granted to Mr Zhang.

29. Insofar as costs are concerned, Mr Marando has agreed to submit to a personal costs order, on an indemnity basis, in relation to the Owners Corporation’s costs of the motion, and for those costs to be paid forthwith.

30. On the other hand, I accept that there would be prejudice and injustice to Mr Zhang if default judgment were entered. Senior Counsel for Mr Zhang submitted that the entry of default judgment may interfere with an ability to prosecute an appeal from the findings made by Stevenson J after final orders have been entered following the outcome of the reference. Should that be correct, and Mr Zhang be required to apply to set aside the default judgment, it would put him to further cost and inconvenience through no fault of his own.

Conclusion

27. Although the Owners Corporation’s dissatisfaction with the progression of this proceeding on the part of Mr Zhang and Mr Marando is understandable, it is in the interests of justice to make the orders sought by Mr Zhang, including that Mr Marando personally pay the Owners Corporation’s costs of the motion on an indemnity basis forthwith.

28. I make the following orders:

29. Pursuant to UCPR 1.12, the time for compliance with order 4A made on 12 June 2025 be extended to 4pm on 24 July 2025.

30. Dismiss the plaintiff’s notice of motion filed on 16 July 2025.

31. Grant leave to the defendant to file a defence in the same form as it was on 4 July 2025 prior to being struck out by 24 September 2025.

32. The defendant’s solicitor pay the plaintiff’s costs of the notice of motion filed on 16 July 2025 assessed on an indemnity basis and payable forthwith.

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