The Trustees of the Property of Kim Robinson, a Bankrupt v Robinson

Supreme Court of NSW|2023-07-18|Before: Dhanji J

EXTEMPORE JUDGMENT (REVISED)

HIS HONOUR: By notice of motion filed in this Court on 7 June 2023, the plaintiff in the substantive proceedings sought various orders be made in the proceedings against the defendant (and respondent to the motion).
By way of background, the plaintiff is the trustees of the defendant's bankrupt estate pursuant to the Bankruptcy Act 1966 (Cth). The bankrupt defendant is the occupier of real property, being Folio Identifier XX/XXXXX and known as XX XXXXXXX Crescent, Merimbula in the State of New South Wales (the property).
By way of statement of claim filed in this Court on 20 March 2023, the trustees seek orders for vacant possession of the property, together with ancillary orders to facilitate the sale of the property pursuant to the trustees' powers under s 134 (1)(a) of the Bankruptcy Act. The defendant has not appeared in response to the summons, nor has he filed any defence, nor has he appeared before me today or indeed at any stage of the proceedings.
The notice of motion as originally filed sought orders which replicate the orders sought in the summons. Application has been made this morning to amend the notice of motion. The amended motion abandons each of the prayers in the original motion and seeks the following orders: "(1) Under Rule 13.4 of the Uniform Civil Procedure Rules 2005 (NSW), summary judgment for the plaintiff against the defendant for the relief sought in the statement of claim filed on 20 March 2023. (2) Alternatively under Rules 16.3 and 16.4 of the UCPR default judgment for the plaintiff against the defendant for the relief sought in the statement of claim. (3) The defendant pay the plaintiff's legal costs. (4) Such further or other orders as the Court sees fit."
The amended form of the motion seeks the same result as that sought in the summons, but does so by way of either summary judgment or default judgment rather than the making of the orders in the terms of the relief sought in the summons.
Thus, the ultimate result sought is essentially the same, but the amended notice of motion seeks to achieve that result by what appears to me to be the more appropriate orders of either summary judgment or default judgment, subject to the requirements of summary judgment or default judgment being satisfied.

Evidence

The plaintiff on the motion tendered a Court Book which became Exhibit A in the proceedings. Relevantly, that Court Book contained following: 1. the affidavit of Paul John Cook of 14 March 2023, together with annexures and exhibits; 2. the affidavit of Craig Clive Brooks of 3 May 2023; 3. the affidavit of Adam Johnston of 7 June 2023; 4. the affidavit of the plaintiff's solicitor, Jodie Anne Rodrigues of 19 June 2023; 5. a further affidavit of Adam Johnston of 6 July 2023; and 6. a further affidavit of Ms Rodrigues of 13 July 2023, together with relevant exhibits.

Factual findings

Based on the evidence provided by the plaintiff, I am satisfied of the following.
On 24 February 2012, the defendant became bankrupt upon a sequestration order made in the Federal Magistrates Court of Australia. On 5 May 2022, the trustees were appointed trustees of the defendant's estate.
The defendant is the registered proprietor of the property. Pursuant to s 58 of the Bankruptcy Act, the defendant's interest in the property has vested in the trustees. Pursuant to s 116 of the Bankruptcy Act, the property is property that is divisible amongst the creditors of the defendant's bankrupt estate.
The defendant is in occupation of the property. He is the only known occupier. The source of that knowledge is contained in the trustees' file.
On 20 March 2023, the trustees filed a statement of claim, claiming relief against the defendant, including orders for vacant possession. The statement of claim was served on the defendant on 13 April 2023.
As I have indicated, the defendant has not appeared in these proceedings nor filed any defence. Further, the defendant has not engaged with the trustees since these proceedings were commenced, other than to the limited extent of indicating that he had received some material provided by the trustees. The defendant is in breach of his obligation under s 77 of the Bankruptcy Act, as despite being directed to do so, he has not either: 1. completed a statement of affairs despite being directed to do so by his trustee; or 2. vacated the property.
The evidence establishes that the statement of claim, together with the affidavit of Mr Cook of 14 March 2023 and the associated exhibit, were served on the defendant on 13 April 2023 by being delivered to the defendant personally by a process server on that date.
In addition to the statement of claim having been personally served on the defendant, the plaintiff's motion was brought to the attention of the defendant by posting it by Express Post on 8 June 2023. Checks of records kept by Australia Post indicate that the motion was delivered to the property on 9 June 2023. As I have already indicated, the defendant is the occupier and indeed sole occupier of that property.
The evidence further establishes that the then proposed amended motion was brought to the attention of the defendant by emailing it to an email address on 29 June 2023 and again, on 3 July 2023. The email address is one known to be used by the defendant and from which he had previously confirmed receipt of correspondence sent to that address. In addition to being notified of the orders sought by the plaintiff, the defendant has also been notified that costs are claimed and has been notified of the amount of those costs.

Application of the relevant legal principles to the facts

Amendment of the notice of motion

Section 64 of the Civil Procedure Act 2005 (NSW) provides as follows: 64 Amendment of documents generally (cf SCR Part 20, rules 1 and 4; DCR Part 17, rules 1 and 4) (1) At any stage of proceedings, the court may order - (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings. (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. (3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made. (4) If there has been a mistake in the name of a party, this section applies to the person intended to be made a party as if he or she were a party. (5) This section does not apply to the amendment of a judgment, order or certificate.
In the present matter, as I have indicated, the relief sought in the amended motion is for summary judgment or default judgment and effectively replicates the orders that had been sought in the original motion. The amendment does therefore not require the defendant to consider any alternative course of action. The defendant is aware of the nature of and basis for the relief sought by the trustees in the amended motion as it was explained in the original submissions. In those circumstances, it appears to me that the form in which the orders are sought in the amended motion are more appropriate to the circumstances of the case. There is no prejudice to the defendant, and it is consequently appropriate in my view to order that the motion be amended in accordance with the amended notice of motion filed in Court this morning.

Application for summary judgment

I turn then to the application for summary judgment.
Rule 10.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) is relevantly in the following terms: 10.1 Service of filed documents (cf SCR Part 15, rule 28) (1) Unless the court orders otherwise, a party that files a document must as soon as practicable serve copies of the document on each other active party. (2) In the case of proceedings in the Local Court, an originating process may, and a defence must, be served on the other parties, on behalf of the party by whom it was filed, by an officer of the Local Court. Note - See rules 10.7 and 10.8 as to how service is to be effected by a court. (3) Despite subrule (2), a defence that is filed in proceedings in the Local Court by means of Online Registry (within the meaning of Part 3) must be served on the other parties by the party that filed the defence rather than by an officer of the Local Court.
As I have already observed, the statement of claim and related documents were personally served on the defendant on 13 April 2023. The statement of claim was served without a cover sheet in the approved form, as is ordinarily required by r 6.8A of the UCPR. The relevant form is Form 93.
That form includes the words, "[y]ou may be evicted from your property and the lender may take action to sell your property". In the present matter, there is no lender and it is the trustees that are taking action to sell the property which is vested in them. Service of the cover sheet in those circumstances would be likely to cause confusion to the extent that it would direct the defendant's attention to a non-existent lender and action by such lender. The purpose of the cover sheet is to: "[d]raw the recipients attention in his or her first language of the significance of the document": see Caro by her Tutor NSW Trustee & Guardian v Caro [2015] NSWSC 1645 at [17].
In the present case, the defendant was already on notice that the trustees may take action to sell the property. Additionally, the evidence establishes that the defendant has a fair command of English, he having been communicating with the trustees' office in English without apparent difficulty.
The Court has the ability to dispense with the rules in particular cases pursuant to s 14 of the Civil Procedure Act. In the present circumstances, I am of the view that it is appropriate to order that the requirement to serve the cover sheet in r 6.8A be dispensed with given, as I have indicated, the cover sheet is inapposite to the present matter and consequently would be likely to cause confusion. The defendant has been provided with sufficient information to understand the claim.
I turn then to the question of service of the trustees' motion upon the defendant. I have already indicated, the statement of claim was personally served on the defendant. Relevant to the motion is r 18.5 of the UCPR, which is in the following terms: 18.5 Notice to be personally served on persons who have not entered appearance (cf SCR Part 19, rule 4; LCR Part 15, rule 2(4)) A notice of motion must be personally served if the person on whom it is to be served - (a) is not a party to the proceedings, or (b) is a party to the proceedings, but is not an active party (otherwise than because the party has failed to comply with the requirements of these rules with respect to entering an appearance)..
Despite receiving the statement of claim on 13 April 2023, the defendant has still not filed an appearance or defence in the proceedings. While he is consequently not an active party, that is due to his failure to comply with the rules with respect to entering an appearance: see UCPR, r 18B. The rules, consequently, do not require that the motion be served on the defendant. Nonetheless, as I have indicated, the notice of motion was brought to the defendant's attention having been delivered to the property on 9 June 2023. The amended notice of motion has also been brought to the defendant's attention by emailing it to an address known to be used by the defendant.
Rule 13.1 of the UCPR is in the following terms: 13.1 Summary judgment (cf SCR Part 13, rule 2; DCR Part 11A, rule 2; LCR Part 10A, rule 2) (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief - (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires. (2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed. (3) In this rule, a reference to damages includes a reference to the value of goods..
In Bengour Pty Ltd v Figtree [2020] NSWSC 1143, Wright J conveniently set out the test for summary judgment as follows (at [58]-[61]): "58 The principles which apply to an application for summary judgment are well established and can be stated shortly. 59 The exercise of powers to terminate proceedings summarily must always be attended with caution and should never be exercised unless it is clear that there is no real question to be tried: Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 (Spencer) at [24]; Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99; [1983] HCA 25. 60 On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded: Spencer at [23]; O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 (O'Brien) at [3]. 61 The critical question can be expressed as whether there is more than a "fanciful" prospect of success or whether the outcome is so certain that it would be an abuse of the process of the Court to allow the action to go forward. Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success: Spencer at [25] and [54]; O'Brien at [3]. 62 Accordingly, it will be necessary to understand the nature of, and factual foundation for, the defence to the plaintiff's claim for possession sought to be propounded by the defendants in this case. For the reasons given above, it does not appear that the defence filed on 13 May 2020 discloses any viable defence."
The evidence relied upon by the plaintiff appears to me to establish a sound foundation for the grant of relief sought. There is, however, no evidence from the plaintiff or a responsible person that, in that person's belief, the defendant has no defence to the claim, as required by r 13.1 of the UCPR. There is, in that regard, a significant body of evidence which would tend to suggest that the plaintiff's claim may be unassailable, but that to my mind is not the same thing. In these circumstances, it is not appropriate to award summary judgment.
In any event, having regard to the high bar for summary judgment in circumstances where the defendant has taken no action and I am consequently unaware of any matters that he may have raised, it is at least arguable that the more appropriate relief is, subject to the requirements having been established, to award default judgment in favour of the plaintiff.

Application for default judgment

I turn then to the question of default judgment.
Pursuant to r 16.2 of the UCPR, the defendant is in default if the defendant "fails to file a defence within the time limited by rule 14.3(1)", being the period of "28 days after service on the defendant of the statement of claim".
Rule 16.3 of the UCPR is relevantly in the following terms: 16.3 Procedure where defendant in default (cf SCR Part 17, rule 3; DCR Part 13, rule 1) (1) If a defendant is in default, the plaintiff - (a) may apply for judgment to be given under this Part, according to the nature of his or her claim for relief, against the defendant in default, and (b) may carry on the proceedings against any other party to the proceedings. (1A) Unless the court otherwise orders, an application under this rule - (a) may be dealt with in the absence of the parties, and (b) need not be served on the defendant. (2) Unless the court orders otherwise, an application for judgment to be given under this Part must be accompanied by - (a) an affidavit of service of the statement of claim (the affidavit of service), and (b) an affidavit in support of the application (the affidavit in support). …
Rule 16.4 of the UCPR is relevantly in the following terms: 16.4 Default judgment on claim for possession of land (cf SCR Part 17, rule 7) (1) Subject to rule 36.8, if the plaintiff's claim against a defendant in default is for possession of land only, judgment may be given for the plaintiff for possession of land, as against the defendant, and for costs. … (3) The relevant affidavit in support - (a) must identify any persons (other than parties to the proceedings) who were in occupation of the whole or any part of the land - (i) as at the time the originating process was filed, or … (d) must state the source of the deponent's knowledge of the matters stated in the affidavit concerning the occupation of the land and any default in the payment of money referred to in paragraph (c), and … (f) must state when and how the originating process was served on the defendant. …
Rule 36.8 of the UCPR is relevantly in the following terms: 36.8 Possession of land (cf SCR Part 40, rule 11) (1) Unless the court orders otherwise, judgment for possession of land may not be given or entered against a defendant in his or her absence unless the plaintiff files an affidavit - (a) stating that, when the originating process was filed or (if the claim for possession arises from an amendment to the originating process) when the amendment was made - (i) specified persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, or (ii) no persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, and (b) stating that, as to each person specified in accordance with paragraph (a)(i) (other than a person whose occupation the plaintiff does not seek to disturb) - (i) the originating process has been duly served on the person, or (ii) the person has, since the time referred to in paragraph (a), ceased to be in occupation of any part of the land, and (c) in relation to a claim for possession by reason of default in the payment of money, stating particulars of the default. …
Rule 16.10 of the UCPR is relevantly in the following terms: 16.10 Judgment not limited by plaintiff's claims for relief (cf SCR Part 17, rules 9 and 10(2)) Whatever the plaintiff's claims for relief against a defendant in default, the court may, on application by the plaintiff, give such judgment against the defendant as the plaintiff appears to be entitled to on his or her statement of claim.
I am satisfied that the trustees have filed an affidavit of service and an affidavit in support for the trustees' motion. The affidavit of Mr Brooks of 3 May 2023 confirms service of the statement of claim on the defendant on 13 April 2023.
The further affidavit of Mr Johnston of 6 July 2023 identifies that the defendant is the only known occupier of the property and sets out the costs claimed. The affidavit of Mr Brooks identifies that when the statement of claim was served, the defendant was in occupation of the property. The further affidavit of Mr Johnston identifies that no other persons, to the knowledge of the trustees, were in occupation of the property.
Consequently, I am satisfied that the requirements of rr 16.3, 16.4, and 36.8 of the UCPR have been met. Consequently, the Court is empowered to make the orders sought consistent with r 16.10. Having regard to all of those matters, I am satisfied that it is appropriate that default judgment be given for the plaintiff. I make the following orders: 1. Pursuant to rr 16.3 and 16.4 of the Uniform Civil Procedure Rules 2005 (NSW), I order default judgment for the plaintiff against the defendant for the relief sought in the statement of claim filed on 20 March 2023. 2. The defendant is to pay the plaintiff's costs in the sum of $4,365.73.

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: 02 August 2023

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