Toyota Finance Australia Limited v AHG Logistics Pty Limited

Supreme Court of NSW|2019-01-30|Before: Schmidt J

Judgment

On 8 August 2018 default judgment for $1,110,182.89 was entered against Mr Micevski, the sole director, secretary and shareholder of AHG Logistics Pty Limited, no defence to Toyota's claim in respect of 42 separate finance agreements under which it had provided AHG with finance for the purchase of 40 vehicles, which had been entered under the terms of a Master Fleet Facility Agreement which Mr Micevski had guaranteed, having been filed.
There is no issue that Toyota served its statement of claim by post at the address specified for such service in the parties' written agreement, where Mr Micevski resides, or that such service was permitted: Rule 10.6 of the Uniform Civil Procedure Rules 2005 (NSW).
AHG is in liquidation and Toyota has issued a bankruptcy notice against Mr Micevski. He now seeks to have the default judgment set aside. There is no issue as to the Court's power to make that order, given that the default judgment was not entered in open court: Rule 36.16(2)(a).
On the cases which the parties advanced by their written submissions, it was also apparent that the applicable principles were not in dispute. Ultimately whether the orders Mr Micevski finally pressed should be made depends on what the interests of justice require, that being considered in light of the requirements of the Civil Procedure Act 2005 (NSW), as discussed in Dai v Zhu [2013] NSWCA 412 at [83] - [93].

A reasonable excuse for the delay has not been established

While an affidavit sworn by Mr Micevski was filed, it was not relied on at the hearing, with the result that there is no evidence as to why he did not defend Toyota's claims.
To advance his case Mr Micevski relied on the affidavit sworn by his solicitor, Ms Pratt, but she did not there deal with this issue. In those circumstances it is not open to conclude that Mr Micevski did not receive the statement of claim when it was served, or that he was denied an opportunity to defend Toyota's claim.
It was contended for Mr Micevski that his failure, finally, to adduce evidence of his excuse for not having defended Toyota's claim, was not fatal to his application, relying on Byron v Southern Star Group (1995) 123 FLR 352 at 364, where it was observed: "Frequently, persons have been let in to defend who have had little or no explanation for their delay but who have shown reasonable grounds of defence; in some cases such persons are put on severe terms concerning provision of security or payment into court or the like, but the court sees to it that subject to compliance with such terms, a person who has an arguable defence and wishes to have it determined on the merits, will be heard by the court before judgment."
In the circumstances which her arise for consideration, those observations, that cannot assist him, it appearing that not only did Mr Micevski have the opportunity which the Rules envisaged he be given, to defend Toyota's claim and he simply chose not to avail himself of it, but that he has not established that he had reasonable grounds on which to defend its case.

A good defence on the merits has not been established

It emerged that Toyota had last year produced documents which Mr Micevski had subpoenaed, but the documents on which Ms Pratt's opinions rested were not all tendered and she also deposed that she had not received all the evidence to plead "at this time"; that various matters she dealt with were on the basis of her instructions; and that many of her instructions "still await further inquiries". Still, Ms Pratt deposed to her view that Mr Micevski had an arguable defence and cross-claim, but that those views have a foundation in fact, was not established, Mr Micevski not having put on an affidavit as to the facts about which he had instructed Ms Pratt.
Annexed to Ms Pratt's affidavit was a proposed defence and cross-claim, counsel having been engaged to assist in their preparation. The views which she expressed about Mr Micevski having an arguable defence and cross-claim, had to be considered in light of those proposed pleadings, but as it emerged, they were not relied on to advance Mr Micevski's application.
Instead there was a further proposed defence and cross-claim attached to the written submissions advanced for Mr Micevski, but it also emerged at the hearing that what he really sought was yet another opportunity to put the case which he wished to plead into order. It was thus conceded that those pleadings would also have to be amended, in order to advance the common law misrepresentation case and claims under ss 18 and 236 of the Australian Consumer Law, which, it was explained, he really wished to pursue.
The claims which it was finally explained that Mr Micevski wished to advance was first, that he was the subject of a misrepresentation by Toyota, as to the amount he was to be the guarantor of, for AHG's liabilities in relation to the vehicles it had financed. Alternatively, that there was a misrepresentation as to how much risk he was taking on, in guaranteeing its liabilities.
These misrepresentations were explained to relate to the value of the vehicles which AHG had purchased from the vendor of a business it had acquired, the purchase of which Toyota had financed under the Master agreement, that being connected with each vehicles' roadworthiness.
This made apparent that the claim, so explained, was not yet adequately reflected in the proposed pleadings, that necessitating that they be further repleaded, for which a further period of 4 weeks was then sought.
Despite these difficulties it was contended for Mr Micevski that even though he had not sworn an affidavit in which he deposed to the facts on which he sought to establish that the claims which he really sought to pursue were not futile, but rather advanced bona fide defences and claims on arguable and triable issues, what Ms Pratt had deposed to, based on his instructions, still provided a sufficient evidentiary basis for the leave which he sought being granted.
That remained in dispute.
Reliance was placed on Dai, but as there observed at [91], as long ago as 1912 it was held in Rubin v Eacott [1912] HCA 55; (1912) 15 CLR 386, that the Supreme Court of Western Australia was right in refusing to set aside a default judgment entered in the absence of a defence, where the evidence established that the defendant was out of the country and the principal witness had died, absent "the customary evidence that a good defence on the merits existed". Here there was simply no explanation for Mr Micevski's failure to defend Toyota's case.
It was concluded in Dai that the failure there to adduce evidence demonstrating that there was a bona fide defence to the claims, militated strongly against the Court exercising the discretion to set aside the judgment there in issue, particularly given that there was no explanation for the failure to defend those proceedings. This is a similar situation.
Still the absence of evidence from Mr Micevski was argued not to be fatal, despite what was also observed, for example in Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331, as to the need for a defendant in his position to provide some evidence of facts which show a defence on the merits, with mere opinions that a defence and cross-claim have merit or are valid, being insufficient.
Also necessary to take into account is that Mr Micevski has not even yet finally formulated the defence and cross-claim which he wishes to advance, despite the access which he has had to the documents Toyota produced in answer to his subpoena. Nor has he or anyone else with knowledge of the facts on which the defence and cross-claim he wishes to pursue, sworn an affidavit. Even Ms Pratt's opinions, formed as they were on the basis of instructions and largely unidentified documents, were not even supported by the tender of documents produced by Toyota which are undoubtedly in Mr Micevski's hands.
Nor was there any explanation as to why he had not sworn an affidavit to establish the facts he wishes to rely on, or to explain why documents relevant to his application were not tendered, despite clearly having had not only ample opportunity to put on such evidence, but having actually filed an affidavit on which he then did not rely at the hearing.
In all of those circumstances, I am satisfied that justice does not permit of the conclusion that Mr Micevski has established that he has any defence on the merits to Toyota's claims.

The proposed defence and cross-claim

Further, like in Dai, in this case the proposed pleadings must be also reformulated, before the leave Mr Micevski seeks could be entertained. Important aspects of Mr Micevski's case remain obscure and his current proposed pleadings do not yet comply with applicable requirements of the Rules, let alone clearly articulate his defence or the claims he wishes to advance.
Such pleadings must contain a summary of the material facts on which Mr Micevski relies: Rule 14.7; the effect of documents or spoken words referred to must, so far as material, be stated: Rule 14.9; any matter that, if not pleaded specifically, may take Toyota by surprise, must be pleaded: Rule 14.14; such particulars of Mr Micevski's cross-claim and defence necessary to enable Toyota to identify the case that the pleading requires it to meet, must also be pleaded: Rule 15; and particulars of misrepresentation must also be given: Rule 15.3.
None of these requirements have yet been adequately met.
In the result, the dictates of justice do not permit what was finally pressed for Mr Micevski, yet a further period in which to replead his proposed defence and cross-claim, in circumstances where there has been neither an explanation for the failure to defend the pleadings which resulted in a default judgment being regularly entered in favour of Toyota, nor an arguable defence on the merits established.

Costs

The usual order as to costs is that they follow the event, which in this case would be an order that Mr Micevski pay Toyota's costs of the motion, as agreed or assessed. Unless the parties approach to be heard within 14 days, that will be the Court's order.

Orders

For these reasons, I order that: 1. The notice of motion is dismissed 2. Unless the parties approach to be heard within 14 days Mr Micevski is to pay Toyota's costs of the motion, as agreed or assessed.

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: 14 February 2019

Australian Consumer Law Civil Procedure Act 2005(NSW)

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