ACN 057 690 034 Pty Limited v Wykrota [2020] NSWSC 1430

Catchwords: LEGAL PROFESSION – duty of candour – undefended hearing – principles at [ 83 ], [ 91 ] – no breach of duty – trial judge not misled. SET ASIDE JUDGMENT – building contract –problems getting occupation certificate – damages sought from builder including loss of rent – first defendant appeared in person on occasion – 12 directions hearings – no appearance at final hearing – aware of hearing – unsatisfactory medical certificate – inadequate explanation – experienced litigant – access to legal advice – writ of execution registered against first defendant’s property – property sold and judgment sum paid into court – application to set aside judgment, being 18 months after judgment . JUDGMENT IRREGULARLY OBTAINED – r 36.15 UCPR – principles at [ 3 ]-[ 7 ] – whether admissions arising from failure to file defence provided basis for judgment – imperfect pleading against multiple defendants – admissions by first defendant founded judgment against him – whether damages awarded outside pleaded case – damages sought notified to first defendant in schedule of damages – no misconduct or dishonourable conduct by plaintiff –failure to accord procedure fairness no basis to set aside judgment (nor such unfairness here) . JUDGMENT IN ABSENCE OF PARTY – r 36.16 UCPR – principles at [ 8 ]-[ 12 ] – inadequate explanation for failure to attend – significant delay in bringing application – inadequate explanation for delay – little proffered to reduce hardship of judgment creditor – second defendant now deregistered – plaintiff took large discount in its claim before trial judge in order to finalise proceedings and only the judgment amount secured – offers in respect of plaintiff’s legal costs parsimonious – arguable defence – not unjust to let judgment stand. Supreme Court New South Wales Medium Neutral Citation: ACN 057 690 034 Pty Limited v Wykrota [2020] NSWSC 1430 Hearing dates: 7 October 2020 Date of orders: 16 October 2020 Decision date: 16 October 2020 Jurisdiction: Equity Before: Rees J Decision: Dismiss m otion to set aside judgment as made irregularly, against good faith or in the absence of the first defendant , with costs. Catchwords: LEGAL PROFESSION – duty of candour – undefended hearing – principles at [ 83 ], [ 91 ] – no breach of duty – trial judge not misled. SET ASIDE JUDGMENT – building contract –problems getting occupation certificate – damages sought from builder including loss of rent – first defendant appeared in person on occasion – 12 directions hearings – no appearance at final hearing – aware of hearing – unsatisfactory medical certificate – inadequate explanation – experienced litigant – access to legal advice – writ of execution registered against first defendant’s property – property sold and judgment sum paid into court – application to set aside judgment, being 18 months after judgment . JUDGMENT IRREGULARLY OBTAINED – r 36.15 UCPR – principles at [ 3 ]-[ 7 ] – whether admissions arising from failure to file defence provided basis for judgment – imperfect pleading against multiple defendants – admissions by first defendant founded judgment against him – whether damages awarded outside pleaded case – damages sought notified to first defendant in schedule of damages – no misconduct or dishonourable conduct by plaintiff –failure to accord procedure fairness no basis to set aside judgment (nor such unfairness here) . JUDGMENT IN ABSENCE OF PARTY – r 36.16 UCPR – principles at [ 8 ]-[ 12 ] – inadequate explanation for failure to attend – significant delay in bringing application – inadequate explanation for delay – little proffered to reduce hardship of judgment creditor – second defendant now deregistered – plaintiff took large discount in its claim before trial judge in order to finalise proceedings and only the judgment amount secured – offers in respect of plaintiff’s legal costs parsimonious – arguable defence – not unjust to let judgment stand. Legislation Cited: Civil Procedure Act 2005 (NSW) , ss 91(2),101 Uniform Civil Procedure Rules 2005 (NSW) , rr 36.15 , 36.16 , 36.16(2)(b) Cases Cited: Acclaim Holdings Pty Ltd v Vlado [1989] 1 WAR 128 ACN 057 690 034 Pty Limited v Wykrota [2019] NSWSC 197 ACN 076 676 438 Pty Ltd (in liq) v A-Comms Teledata Pty Ltd [2000] WASC 214 Alexander v Ajax Insurance Co Ltd [1956] VLR 436 Anlaby v Praetorius (1888) 20 QBD 764 BH Australia Constructions Pty Ltd v Kapeller (2019) 100 NSWLR 367; (2019) 375 ALR 159; [2019] NSWSC 1086 Burrell v R (2008) 238 CLR 218; [2008] HCA 34 Coles v Burke (1987) 10 NSWLR 429 Collie v Merlaw Nominees Pty Limited [2003] VSC 424 Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245 D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12 Daly v Silley [1960] VR 353 Day v Sternhell [2020] NSWSC 513 Deputy Commissioner of Taxation v Tabuso (2013) 94 ATR 343; [2013] NSWSC 688 DJL v Central Authority (2000) 201 CLR 226 Fenato v Chief Commissioner of State Revenue (2010) 78 NSWLR 20; [2010] NSWCA 80 Kavia Holdings Pty Ltd v Werncog Pty Ltd [1999] NSWSC 839 Kendell v Carnegie (2006) 68 NSWLR 193; [2006] NSWCA 302 Leichhardt Council v Geitonia Pty Ltd (No 7) [2015] NSWLEC 79 Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 Miltonbrook Pty Limited v Westbury Holdings Kiama Pty Limited (2008) 71 NSWLR 262; [2008] NSWCA 38 Northey v Bega Valley Shire Council [2012] NSWCA 28 Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No 2) (2009) 78 NSWLR 190; [2009] NSWCA 387 Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 Pham v Gall [2020] NSWCA 116 Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR NSW 239 White v Weston [1968] 2 QB 647 Zakaria v Dr Noyce [2012] NSWSC 981 Texts Cited: G E Dal Pont, Lawyers’ Professional Responsibility (6th ed, 2017, Law Book Company) Category: Principal judgment Parties: ACN 057 690 034 Pty Limited (Plaintiff) Mick Wykrota (First Defendant) Arrowfab Pty Limited (Second Defendant) Arrowcon Construction Pty Limited (Third Defendant) Representation: Counsel: Mr EC Muston SC / Mr S Jayasuriya (Plaintiff) Mr JM Ireland, Solicitor (First Defendant) Solicitors: Swaab Attorneys (Plaintiff) Hall & Wilcox (First Defendant) File Number(s): 2017/337742 Judgment HER HONOUR: This is an application to set aside a judgment given some 18 months ago as either made irregularly , against good faith or in the absence of a part y . By motion filed on 4 August 2020, the first defendant, Mick Wykrota , seeks an order pursuant to rule 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) ( UCPR ) or, alternatively, rule 36.16, that judgment entered against him in favour of the plaintiff, ACN 057 690 034 Pty Limited , on 28 February 2019 by Emmett A J A be set aside, together with an order for the costs of the motion. Other p arties to the proceedings, but not the motion, were second defendant, Arrowfab Pty Limited (now deregistered) , and third defendant, Arrowcon Construction Pty Limited. Mr Wykrota is the sole director and shareholder of Arrowcon Construction. Sadly, this judgment is far longer than that of Emmett A J A , being ACN 057 690 034 Pty Limited v Wykrota [2019] NSWSC 197. Reference need also be made to a judgment of Darke J in related proceedings Day v Sternhell [2020] NSWSC 513. It should be noted immediately that this is not an appeal from the judgment of Emmett AJA, albeit the submissions on occasion had something of that flavour. The question is whether Mr Wykrota has established that he is entitled to an order under either rule of the UCPR and whether , in the circumstances of this case, the Court ’ s discretion should be exercised to make the orders sought . Setting aside judgment irregularly obtained Rule 36.15(1) of the UCPR provides: 36.15 General power to set aside judgment or order (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. What this rule envisages was described in Coles v Burke (1987) 10 NSWLR 429 by Kirby P (with whom Samuels and McHugh JJA agreed) at 437: The genus which is involved in the phrase “irregularly, illegally or against good faith” appears to me to be misconduct or dishonourable conduct of the person who procured the judgment which it is suggested undermines the authority of that judgment warranting the exceptional course for which [the rule] provides. This description was adopted in Kendell v Carnegie (2006) 68 NSWLR 193; [2006] NSWCA 302 by Bryson JA (with whom Hodgson and McColl JJA agreed) at [44] and [54]. Further, Bryson JA added that “ against good faith" is an expression which requires the impeachment of the intention or behaviour of the person whose good faith is impugned: at [60]. As Davies J also observed in Zakaria v Dr Noyce [2012] NSWSC 981 at [22]: The significant matter is that for a judgment to be set aside as having been entered against good faith there must be misconduct or dishonourable conduct by the person who procured the judgment. The matter is directed, not to the Court or the Judge who entered the judgment, but to the party who was responsible for bringing it about. Thus, in that case, failure to accord procedural fairness to a party did not form a basis to set aside the judgment under the rule, which was directed to the conduct of the judgment creditor. Where a judgment has been entered irregularly for an y of these reasons, the Court is not obliged to enquire whether or not there is a good defence on the merits : ACN 076 676 438 Pty Ltd (in liq ) v A- Comms Teledata Pty Ltd [2000] WASC 214 per Parker J at [17], citing Anlaby v Praetorius (1888) 20 QBD 764; Alexander v Ajax Insurance Co Ltd [1956] VLR 436; White v Weston [1968] 2 QB 647; Daly v Silley [1960] VR 353 ; Acclaim Holdings Pty Ltd v Vlado [1989] 1 WAR 128. However, the rule also requires “ sufficient cause being shown ” before a judgment will be set aside, recognising the need for finality by protecting judgments from being set aside for slight or uncertain causes ( Kendell v Carnegie at [45]) and the fundamental principle of the general finality of judgments ( Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No 2) (2009) 78 NSWLR 190; [2009] NSWCA 387 at [32]-[33] and [45]). As the High Court made plain in Burrell v R (2008) 238 CLR 218; [2008] HCA 34 at [15] (per Gummow ACJ , Hayne, Heydon , Crennan and Kiefel JJ ) : As was said in D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17 [34]; [2005] HCA 12: “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.” That tenet finds reflection in rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud [citing DJL v Central Authority (2000) 201 CLR 226 at 244–245 [36]–[37]] and in the doctrines of res judicata and issue estoppel. The principal qualification to the general principle of finality is provided by the appellate system. But in courts other than the court of final resort, the tenet also finds reflection in the restrictions upon reopening of final orders after they have been formally recorded. Thus, it will not be appropriate to set aside a judgment under this rule where the irregularity is inconsequential or causally unrelated to the making of the judgment or order: Deputy Commissioner of Taxation v Tabuso (2013) 94 ATR 343; [2013] NSWSC 688 at [18] per Harrison J; Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245 ; A- Comms Teledata Pty Ltd at [18]. As Nettle J observed in Collie v Merlaw Nominees Pty Limited [2003] VSC 424 at [38], “ Plainly, the Court may disregard irregularities of a kind that are insignificant. Technical defects are an obvious example of the kind ” . The example cited by Nettle J was Commonwealth Bank v Buffett, where default judgment was entered on a summons which contained errors, including as to when an appearance was to be filed. Chief Justice Morling (sitting on the Supreme Court of Norfolk Island) considered that the errors did not cause any injustice to the defendant, lead him to change his position nor cause him any prejudice ; the defendant would not have filed an appearance in any event and did not intend to defend the proceedings: at 251. Setting aside judgment regularly obtained Rule 36.16(2)(b) of the UCPR provides: 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 … As Barrett JA succinctly explained in Northey v Bega Valley Shire Council [2012] NSWCA 28, an applicant for an order under this rule must still contend with the proposition that great value attaches to certainty in the outcome of litigation: at [14]. 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) 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. Similarly, Hodgson JA described the task before an applicant in Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 at [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 appears 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. Both statements of principle were recently endorsed by the Court of Appeal in Pham v Gall [2020] NSWCA 116 (Payne JA with whom Leeming and McCallum JJA agreed). As Payne JA summarised the position at [110]: 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 … necessarily involves the Court in making a broad evaluative judgment. … [I] t 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. Further, Payne JA noted an “ important qualification ” , being, “ The more egregious the delay in seeking to set aside an undefended judgment, the greater the burden of persuasion that will be required ” : at [98], [109], [ 112]. Leeming JA similarly observed that it was necessary for the Court to have regard to the positive defence sought to be raised by the applicant, the explanation for non-appearance and delay in bringing the application, and what is proffered to reduce the prejudice to the judgment creditor: at [57]. FACTS The plaintiff owned property in Lansvale and obtained development approval from Fairfield City Council to undertake building work. In Ju ne 2010, the plaintiff put the building work out to tender. According to Mr Wykrota , the project engineer, Angelo D ’ Ambrosio , introduced him to Tony Le, a director of the plaintiff , and suggested that Mr Wykrota submit a tender. On 2 November 2010, Mr Wykrota sent an email from a personal Yahoo email account bearing his name rather than any corporate or business name , stating: We have great pleasure to submit our lump sum price to carry out and complete the above works … Mick Wykrota Arrowfab Pty Limited Mr Wykrota relies on the reference in the email to “We” and the email signature referring to Arrowfab as supporting the existence of a contract between the plaintiff and Arrowfab rather than himself, whilst the plaintiff notes the personal nature of the email address and the direct personal dealings between Mr Wykrota and Mr Le. Either way, Mr Wykrota says that Mr Le accepted the price and, in December 2010, demolition work commenced. Mr Wykrota submitted the first progress claim on 31 January 2011, requesting Mr Le to pay the progress claim to “Arrowbab (sic) Pty Limited”. In February 2011, Mr Wykrota transferred his shares in Arrowfab to a colleague . On 22 February 2011, Arrowcon Construction was incorporated and Mr Wykrota says work on the project was then undertaken by this company. On 15 April 2011, Mr Wykrota submitted a progress claim to Mr Le, asking that the payment be made to Arrowcon Construction. Mr Le replied : Hi Mick no problems we will pay you asap!!!! Mick have you signed building contract yet? I need to have a copy please!!! A building contract was drafted between the plaintiff and Arrowcon C onstruction but not signed, nor was there any evidence on this application that the document was ever provided to the plaintiff. S ubsequent progress payments were made by Arrowcon Construction, although the final progress payment was made to J & E Excavations & Plant Hire Pty Ltd. By February 2012, according to Mr Wykrota , the contract works had been completed. By November 2012 , the plaintiff was endeavouring to obtain an occupation certificate and Mr Wykrota ’ s assistance was sought in this regard, apparently with mixed success. On 23 May 2014, the plaintiff commenced proceedings in the NSW Civil and Administrative Tribunal ( NCAT ) against “ a rrow con c onstructions ” . The application was prepared by Mr Le . Some $30,000 was claimed in order to repair electrical works, carpentry and glazing under warranty and to obtain a final occupation certificate. The application form called for “ A greement Details ” , which were supplied by Mr Le as follows: “ a lot of building works need to be fixed under builder warranty and certificates needed for final occupation certificates but builder does not want to answer phone calls, emails, trying to avoid us ” . However, on 5 September 2014, the following orders were made in the NCAT proceedings: 1. The application is dismissed as the Tribunal has no jurisdiction to determine the application, as the premises are commercial premises. 2. The respondent’s name ARROWCON CONSTRUCTIONS, is amended to ARROWCON CONSTRUCTIONS Pty Ltd. NOTE: The applicant is to obtain legal advice in relation to his claim and the correct jurisdiction to lodge a claim. Mr Wykrota relies on the fact that the proceedings were commenced by the plaintiff against Arrowcon Construction as consistent with an understanding on the plaintiff’s part that the building contract was with that company rather than with Mr Wykrota . Such an inference can certainly be drawn from these events, although it appears that Mr Le did not have the benefit of any legal advice at the time and, at least from the tribunal’s point of view, should get some. It appears that Mr Le heeded the t ribunal ’ s suggestion and retained solicitors. In October 2016 and December 2016, the plaintiff ’ s solicitor sent letters of demand to Arrowcon Construction (again, consistent with an apprehension by the plaintiff that the building contract was with Arrowcon Construction) . F rom June to August 2017, Mr Wykrota ’ s assistance was again sought to obtain a final occupation certificate. In August 2017, Mr Le threatened to sue Mr Wykrota , having become aware from the plaintiff ’ s solicitors searches that Mr Wykrota owned several properties and thus, presumably, was worth suing. These proceedings On 8 November 2017, the plaintiff commenced these proceedings by filing a statement of claim. T he plaintiff sued Mr Wykrota , Arrowfab and Arrowcon Construction , seeking specific performance , damages and costs. The claim for specific performance concerned procuring production of the necessary certifications to obtain an occupation certificate. As to damages, particulars were given of damage said to flow from the lack of an occupation certificate, being an inability to lease, occupy, resell or re-zone the premises. No particulars of damages were given of building defects. As to the contract said to found the claims for relief , it was pleaded, (emphasis added) In about November 2010 the plaintiff and the first defendant agreed that the first defendant would carry out building work comprising alterations and additions to the premises at … Lansvale … (“the building contract”). Particulars of the building contract were supplied , including that Mr Wykrota was obliged to supply all certificates and documents to the certifier to enable an occupation certificate to issue. The pleading then bec a me less clear. It was pleaded that the contract was partly oral and partly in writing comprising the tender documents, the email “ from the first defendant ” referred to at [ 13 ] and “ various conversations between Tony Le on behalf of the plaintiff and the first defendant on behalf of the second and third defendants ” . It was then pleaded that Mr Wykrota represented that Arrowfab and then Arrowcon C onstruction would be performing part or all of the contract “ on behalf of the first defendant ” . Further, it was said to be a term of the building contract “ that the defendants would upon completion of the building work and as part of the work do all things necessary to obtain a Certificate of Occupation so that the plaintiff s [there being only one plaintiff] could occupy the premises ” . It was then said that the plaintiff performed the building contract by making the payments required “ to the second and third defendants when directed to do so by the first defendant ” . It wa s then pleaded that “ the defendant ” represented orally that the plaintiff could move back into the property and an occupation certificate would issue but since then the plaintiff ha d, variously , requested “ the defendants ” or “ the defendant ” to provide the necessary documents to the certifier so that an occupation certificate could be obtained but , “ The defendants have failed to perform the building contract ” and, “ In breach of the building contract the defendants have, since 2012 failed to provide the Certificates …” . Thus, it can be seen that the plaintiff joined as defendants all parties who were, or may have been, parties to the building contract , obliged to perform it and failed to do so . It was tolerably clear that the plaintiff ’ s primary position was that the building contract was with Mr Wykrota , although the pleading proceeded to ‘ cover all bases ’ , albeit in a manner that was not entirely consistent or clearly delineated . Such pleading imperfections may, of course, be clarified in the ordinary course of legal proceedings by queries raised by defendants in correspondence , requests for further particulars or defence s and addressed, including by amending pleadings to clarify the plaintiff ’ s case. But t hat is not how these proceedings unfolded. The matter was first listed for directions on 12 December 2017 when Mr Wykrota appeared in person . As the plaintiff ’ s counsel, Elizabeth Cohen, reported to her instructing solicitors , Mr Wykrota appeared “ to advise the Court he had not been properly served, but that he knew about the matter because the companies had been served. ” Mr Wykrota required that the statement of claim be personally served upon him and asked that the proceedings be adjourned until 13 February 2018 , a request to which the register acceded . The R egistrar “ also requested that we both go outside and he could tell me how to serve him. ” Ms Cohen so enquired , “ but he refused to tell me. ” On 28 December 2017, the statement of claim was personally served on Mr Wykrota , although he does not recall it . Whether Mr Wykrota recalls it or not, according to an affidavit of service duly filed and relied upon by the plaintiff at the hearing before Emmett AJA , he was so served . On 11 January 2018, the plaintiff ’ s solicitor wrote to Mr Wykrota noting that the matter was next before the Court on 13 February 2018 and enquir ed as to the name and contact details of his solicitor. According to Mr Wykrota , in February 2018, he met with Mr Le and Mr D ’ Ambrosio and offered to organise for various certificates to be re-issued in respect of insulation, hot water, lighting and waterproofing if Mr Le would tell his solicitor to withdraw the proceedings. It is said that Mr Le agreed. Mr Wykrota set about obtaining the certificates. He supplied two certificates. On 13 February 2018, Ms Cohen appeared at the directions hearing before the Registrar and mentioned the matter by consent for the defendants. The matter was relisted on 4 April 2018. However, on that occasion, there was no appearance for the defendants. The Registrar made orders for any defences to be filed by 2 May 2018 and stood the matter over to 9 May 2018. The plaintiff ’ s solicitors notified Mr Wykrota of the orders, advising: We also hereby formally notify you that if no defence is filed, we will on 9 May 2018 have the matter listed for hearing as an undefended matter On 9 May 2018, there was again no appearance for the defendants and the Registrar made orders that the plaintiff serve its evidence in respect of damages by 15 June 2018 and stood the matter over to 20 June 2018. The plaintiff ’ s solicitors wrote to Mr Wykrota informing him of these orders, including that the matter was listed on 20 June 2018 “ for the purposes of obtaining a hearing date for an undefended hearing ” . On 20 June 2018, the Registrar extended the time for the plaintiff to serve its evidence and relisted the matter on 8 August 2018 for the purposes of obtaining a hearing date for an undefended hearing. The plaintiff ’ s solicitors wrote to Mr Wykrota advising of these orders. On 30 July 2018, the plaintiff ’ s solicitor wrote to Mr Wykrota advising that the plaintiff intended to seek an extension of time to put on its evidence and to re- list the matter on 5 September 2018 for the purposes of obtaining a hearing date. Mr Wykrota says that, at the time he received this letter, he believed that Mr Le had agreed to withdraw the proceedings on the basis of the agreement reached in February 2018 , which he says he had then fulfilled. Consistently with this, on 6 August 2018, Mr Wykrota sent an email to Mr Le, Mr D ’ Ambrosio and the certifier referring to the meeting: We have had meeting at Angelo office some time ago, we agree that I will cooperate and help to obtain water proof certificate and insulation certificate ALL BOTH.. done, Angelo was witness …You inform me that You will instract [sic] Your solicitor to withdraw Supreme Court papers,,, if You change Your mind PLEASE let me Know ASAP The email was sent from the email address referred to at [ 13 ]. Mr Wykrota does not recall receiving a response to this email, nor receiving any other notices , and presumed that Mr Le was not proceeding with the court action. Whether Mr Wykrota recalls it or not, it is likely that he continued to receive emails and letters from the plaintiff ’ s solicitor on a regular basis. The very next day, on 7 August 2018, the plaintiff ’ s solicitor sent an email to the R egistrar , copied to Mr Wykrota , requesting an extension of time to file the plaintiff ’ s evidence. The R egistrar made the orders sought and, also on 7 August 2018, emailed the parties including Mr Wykrota , informing the parties of the orders made, including that the matter was now listed on 5 September 2018 “ for the purposes of obtaining a hearing date for an undefended hearing ” . Both emails were sent to the email address referred to at [ 13 ] , from which Mr Wykrota had sent an email the previous day . The plaintiff ’ s solicitor also sent a letter to Mr Wykrota notifying him of the orders. On 5 September 2018, there was no appearance for the defendants. The matter was relisted on 7 November 2018 and the plaintiff ’ s solicitor wrote to Mr Wykrota advising him of the orders made. O n 30 October 2018, an occupation certificate was obtained. The plaintiff ’ s claim for specific performance thus became otiose. On 3 November 2018, two affidavits were sworn for the plaintiff, one by Mr Le and another by an expert valuer a ssessing the market rent al for the property. On 6 November 2018, these affidavits were served on Mr Wykrota . An affidavit of service was duly filed. For completeness, a second affidavit of the valuer was sworn on 26 November 2018 and, according to a “ successful service report ” , was served that day. Mr Le ’ s affidavit set out in some detail – over 91 paragraphs and 190 pages of exhibits – the contractual arrangements, correspondence concerning the inability to obtain an occupation certificate, efforts to obtain the relevant certifications and expenses incurred along the way. As to the contractual arrangements, Mr Wykrota relied particularly on the following passage of Mr Le ’ s affidavit : (emphasis added) The building work was put out to tender … and the second defendant won that tender. After the Tender was accepted I did all negotiations with the second defendant on behalf on the plaintiff and I dealt with a Mick Wykrota on behalf of the first defendant and later the second defendant. In about September 2010, … the plaintiff and the first defendant agreed that the first defendant would carry out building work … (“the building contract”). As I read this passage, Mr Le describes initially dealing with Arrowfab in respect of the tender and associated negotiations but ultimately entered into a contract with Mr Wykrota . Mr Le also deposed that the plaintiff had commenced action in NCAT against Arrowcon Construction. The documents to which Mr Wykrota points as supporting a meritorious defence of these proceedings were referred to in the body of Mr Le ’ s affidavit and exhibited to it. On 7 November 2018, there was no appearance for the defendants. The Registrar listed the matter for hearing on 28 February 2019 before Emmett AJA. The plaintiff ’ s solicitor wrote to Mr Wykrota informing him of the se orders. Pre-trial directions hearings before Emmett AJA On 20 November 2018, the associate to Emmett AJA sent an email to the parties , listing the matter for directions on 28 November 2018. On 27 November 2018, Mr Wykrota replied , “ T hanks ” , using the email address referred to at [ 13 ] . W hilst Mr Wykrota said that he only became aware that the matter was listed before Emmett AJA on 28 November 2018 because he was already at Court that day in relation to other proceedings, this is not consistent with the contemporaneous documents which indicate that Mr Wykrota was informed of the listing by Emmett AJA ’ s A ssociate on 20 November 2018 , and acknowledged receipt of the email on 27 November 2018, the day before the directions hearing . On 28 November 2018, Mr Wykrota appeared in person before Emmett AJA . Mr Wykrota informed his Honour that, given the meeting in February 2018 described at [ 25 ] , he had not thought it necessary to defend the proceedings nor instruct a lawyer. Further: I did the work for Mr Lee Tuan which company is listed there. I completed work in 20[0]9. I obtained an interim occupation certificate because he didn’t pay certain amounts of money. I said, well, it was not my responsibility to obtain final construction certificate because I only supply the certificates for the work which I did and I supervised. The plaintiff observed that, at no time during the directions hearing, did Mr Wykrota suggest that the building contract was with anyone other than him. His Honour enquired of the plaintiff ’ s counsel as the relief sought. Ms Cohen advised that, although specific performance had been sought, the plaintiff was now claiming damages as it had achieved the issue of a n occupation certificate through the use of consultants . Damages was also sought for loss of rent. His Honour enquired whether the statement of claim needed to be amended or whether the damages now sought were adequately particularised. Ms Cohen explained that particulars of the damages w ere now to be found in the affidavit s, but was unclear as to the total amount sought. His Honour asked whether Mr Wykrota now understood the claim against him and asked what his answer to it was. Mr Wykrota again relied upon the agreement said to have been reached at the February 2018 meeting . Given the apparent ly substantial amount of damages sought, his Honour suggested in strong terms that Mr Wykrota obtain legal representation. Mr Wykrota said he would . His Honour indicated he would bring the matter back for directions before the end of the year to give Mr Wykrota time to do so . In addition, Emmett AJA directed the plaintiff to provide a detailed schedule of the claim for damages to be served on anybody who filed an appearance. The matter was stood over for further directions on 13 December 2018. On 29 November 2018, Emmett AJA ’ s A ssociate sent an email to the parties confirming the orders which had been made. On 6 December 2018, the plaintiff filed a schedule of damages, which was served on Mr Wykrota on 7 December 2018. The schedule listed 20 items. In respect of each item, a description was given together with the date when the loss was said to have been incurred, a reference to Mr Le ’ s affidavit where evidence in support of the item could be found , the amount claimed and the payee, where applicable. The bulk of the items were expenses incurred in 2018, apparently in the course of obtaining the necessary certificat ions to support the issue of an occupation certificate. The largest item was lost rent of some $171,375. On 7 December 2018, Mr Wykrota filed a notice of appearance “ for defendant ” . On 13 December 2018, Mr Wykrota appeared in person before Emmett AJA for directions. Ms Cohen confirmed that the schedule of damages had been filed . The following exchange ensued between Emmett AJA and Mr Wykrota : HIS HONOUR: You've seen the claim? DEFENDANT: Yes, your Honour. I had a [n] advice from my solicitor and they couldn't take the case, and for that case I have to spend $25,000 …. This is bogus claim. I had an agreement. There is no further damage occurring to the plaintiff because he obtained an occupation certificate. If I have to I will ask for postponement on the hearing and lodge the defence, but I'm hoping that they will get some sense and will drop the case. Sorry for being-- HIS HONOUR: Well-- DEFENDANT: --stressed, but that's the case … HIS HONOUR: Well, why-- DEFENDANT: --if you give us to January, because the - my solicitor who is going to represent me is involved in case to 29 January. HIS HONOUR: The case is fixed for 28 February, I think. DEFENDANT: I understand that, but we'll ask for - we'll make the application for postponement if I can-- HIS HONOUR: Well-- DEFENDANT: Need, need the time with my solicitor. HIS HONOUR: It's fixed for hearing at the moment and-- DEFENDANT: I understand, I understand. I apologise for, for the chaotic approach, but I don't believe that this is a genuine case … … I would like - I would like to ask you to give me till early February, like, the - to organise myself and-- HIS HONOUR: Well, I gave you until today and-- DEFENDANT: Yes, I, I, I spoke to my solicitor … I'm not lying, I'm just trying to organise myself, that stressing situation, because I don't have a - money to spend on this, I lost a lot of money on this project and these people are really very unreasonable. They obtained a [n] occupation certificate by now with my cooperation and everybody, it was not my responsibility to give them occupation certificate in first place because when I took the job they didn't have a construction certificate … … the person who is pivotally in this everything is Mr Angelo [D’Ambrosio], who is the engineer who asked me to do this job, I did it for the small quote … On this application, the plaintiff again observed that at no time did Mr Wykrota suggest that the building contract was with anyone other than him. His Honour indicated that he would list the matter for directions on 6 February 2019 and advised Mr Wykrota that an y application to vacate the hearing would have to be dealt with then . Mr Wykrota advised that his lawyer was in another case from 29 January 2019 but, “ I ’ ll talk to him and try to lodge the application to postpone the case as soon as I can ” . On 6 February 2019, there was no appearance by Mr Wykrota before Emmett AJA . His Honour confirmed the hearing o n 28 February 2019. Pre-trial communications with the Associate On 27 February 2019, Emmett AJA ’ s A ssociate sent an email to the parties confirming the hearing on 28 February 2019. Mr Wykrota replied, P lease be inform that i am very sick and not able to be in Court tomorrow. Later that day, Mr Wykrota sent a further email to Emmett AJA ’ s A ssociate attaching a medical certificate and advised: I am very sorry but i can not be in Court tomorrow pleaswe pas my apologies to Justice Emmett Attached was a certificate of incapacity for work issued by a medical doctor that day in respect of Mr Wykrota , declaring him unfit for work from 28 February 2019 until 15 March 2019 by reason of “ acute viral illness ” . Emmett AJA later observed, “ The certificate made no reference to any incapacity to attend Court ” : ACN 057 690 034 Pty Limited v Wykrota at [8] . On this application, Mr Wykrota ’ s solicitor accepted that the medical certificate was unsatisfactory. That concession was rightly made. His Honour ’ s A ssociate replied by email shortly afterwards, I t should not be assumed that the hearing will not proceed. The hearing On 28 February 2019 , there was no appearance for Mr Wykrota . Ms Cohen informed his Honour that it had come to her attention that an application for voluntary deregistration of Arrowfab had been filed on 1 July 2018 and the fee had been paid on 27 February 2019 but, “ in any event, the plaintiff is seeking a judgment against Mr Wykrota because that was the person he always dealt with. He received invoices from the second defendant but paid most of the money to the third defendant by way of progress payments ” . The following exchange followed: (emphasis added) HIS HONOUR: Are you proceeding just against Mr Wykrota or against the second and third defendants, or what? COHEN: Well, we're happy to proceed against Mr Wykrota rather than the second and third. HIS HONOUR: Well, it's a matter for you. COHEN: It's not disputed by the defendant that it was he that entered into the building contract. HIS HONOUR: Well, I have the statement of claim, but first of all, what steps do I need to satisfy myself that Mr Wykrota was aware of the hearing today? … Whilst Mr Wykrota was the first defendant, he was referred to in the transcript by both Ms Cohen and his Honour as simply “the defendant”. Mr Wykrota relied heavily on the italicised portion as an assurance by the plaintiff ’ s counsel on the basis of which Emmett AJA proceeded thereafter and was misled . T he plaintiff says there is nothing misleading about what Ms Cohen informed his Honour given that no defence had been filed and , also, Mr Wykrota ’ s remarks to the Court on 28 November 2018 and 13 December 2018 set out at [ 36 ] and [ 40 ]. Sometime was then spent by Emmett AJA and Ms Cohen examining evidence of service of the statement of claim , affidavits and schedule of damages on Mr Wykrota . The affidavits of Mr Le and the expert valuer were then read. His Honour was then taken to the schedule of damages, which totalled $260,296.85. It is clear from the transcript that his Honour proceeded to check each of the evidentiary references in the schedule to see whether the head of damage claimed was supported by the evidence. His Honour was not prepared to allow Item 10, which sought an estimated amount of $15,000 for opportunity costs for loss of time taken in 2018 to obtain outstanding certificates and other requirements necessary to obtain the issue of an occupation certificate. His Honour also queried Items 13 and 16 (building inspection report in 2014 and un b locking toilets due to defective work) . Particular difficulties were encountered with Item 20 – lost rent – as Emmett AJA was concerned whether there was evidence to support the claim. His Honour observed: HIS HONOUR: I mean, the fact that Mr Wykrota hasn't chosen to come is one thing, but if I proceed in his absence and make a judgment, he's entitled to come and ask for the judgment to be set aside. COHEN: Yes. HIS HONOUR: But whether it would be is a different matter, but it seems to me it would be in everybody's interest, if there is proper evidence of these things, for me to be able to do that, rather than have Mr Wykrota come back next week or some other time and say, "I now want to have another go, and there was no real evidence to support these claims". COHEN: Yes. HIS HONOUR: It's in the plaintiff's interest to make sure we can tie it up, if we can. After his Honour raised a number of evidentiary and legal issues in respect of the claim for lost rent , Ms Cohen asked Emmett AJA to stand the matter down to enable her to consider the evidentiary and legal problems raised . His Honour adjourned the hearing until 2.15 pm to enable counsel to do so . At 2.15 pm, Ms Cohen made further submissions in respect of the evidence and applicable legislation in respect of the claim for lost rent . Ms Cohen advised that she was trying to get an affidavit from a real estate agent to address concerns expressed by Emmett AJA as to the demand for rental properties at the time. His Honour observed that the claim for lost rent appeared to be in the nature of a loss of opportunity case but , unless the plaintiff could show that there was actually a tenant who would have been able to move in , the claim would need to be discount ed by some 25% to 30%. The transcript records: HIS HONOUR: That's why it seems to me I have to put a very substantial discount on it unless you want - as I say, I'm not inviting you to adjourn the matter. COHEN: Yes, I'll get some instructions. … COHEN: My client's happy for you to put a discount on it on that basis. It then became apparent that the figure claimed in the schedule of damages for lost rent was incorrect and should have been $339,992.52, not $171, 375 . His Honour noted that the highe r figure had not been provided to Mr Wykrota . HIS HONOUR: … One course that I could adopt would be to say, well, that clearly represents a discount, and therefore, that's an appropriate figure to give you. COHEN: That's a very big discount. HIS HONOUR: It is. COHEN: Obviously. A search was then made of the transcript of the directions hearing on 28 November 2018 to see whether Ms Cohen had informed the Court, and thus Mr Wykrota , on that occasion that the damages claimed exceeded the amount subsequently particularised in the schedule of damages. In the absence of a ny clear communication of the quantum sought on that occasion, the following exchange followed: HIS HONOUR: On that basis I'd find it difficult to … go beyond the figure that's served. COHEN: I'll just get some instructions. HIS HONOUR: Yes. COHEN: My client's prepared to accept that. The judgment His Honour then delivered an ex tempore judgment. His Honour observed at [1]: The plaintiff seeks damages from the first defendant, Mr Mick Wykrota, alleging that Mr Wykrota committed breaches of a building contract entered into between the plaintiff and Mr Wykrota. There are two other defendants, each of which is a limited liability company associated with Mr Wykrota. However, the plaintiff does not seek to proceed further against the second and third defendants. That is, Emmett AJA did not ignore the fact that the plaintiff had pleaded a cause of action against each of the defendants, but noted that the plaintiff had chosen to press only its primary claim against Mr Wykrota. His Honour ’ s judgment then addressed the question of service and Mr Wykrota ’ s knowledge that the matter was listed for hearing today , concluding at [9]: …It is clear that Mr Wykrota was aware of the hearing fixed for today but has elected not to attend. In the circumstances, I consider that it is appropriate to proceed with the hearing in his absence. He will no doubt have a right under the rules to apply to have any order set aside that was made in his absence. That will be a matter for him if he is so advised. If he wishes to have any order that I make set aside, he will be required to indicate precisely why he was not in attendance today when the matter was called on for hearing. His Honour then reproduced the pertinent paragraphs of the statement of claim and noted that no defence had been filed. At [11]: …It follows in effect that the allegations made in the statement of claim are admitted. Nevertheless, having regard to the amounts claimed and the absence of Mr Wykrota , I have given some attention to the quantum of the plaintiff's claim for damages. In respect of the claim for damages, Emmett AJA was , “ satisfied from that evidence that the expenses referred to in the Schedule of Damages have in fact been incurred by the plaintiff as a consequence of breach of the building contract by Mr Wykrota ” : at [12] . Nonetheless, h is Honour disallowed Items 10, 13 and 16. As to Item 20 , Emmett AJA set out the difficulties with th e claim for lost rent , including that Mr Wykrota was informed that the claim was for $171, 375 , “ and has had no forewarning that the claim would be for $339, 994 ” . His Honour considered that th e head of damage should be assess ed on the basis of a loss of opportunity and, given that the amount claimed in the schedule of damages was “ certainly a substantial discount from the full amount of the claim, I consider that that is an appropriate measure of the loss of opportunity in the present circumstances ” : at [18]. Further, his Honour was satisfied that Mr Wykrota had breached his obligation to produce an occupation certificate and that there was a causal connection between that breach and the los t opportunity to let the premises: at [20]. Thus, his Honour was prepared to enter judgment against Mr Wykrota in the amounts claimed in the schedule of damages sa ve for Items 10, 13 and 16. The transcript then records the following exchange: HIS HONOUR: Now, what about the other defendants, Ms Cohen? COHEN: They've never appeared. One doesn't exist. HIS HONOUR: Do you want [to] proceed, or should I simply otherwise dismiss the proceedings? COHEN: Otherwise dismiss the proceedings. His Honour completed his ex tempore judgment accordingly, at [22]. Ms Cohen then sought to rely on a further affidavit (which I apprehend was the affidavit awaited from the real estate agent) , but his Honour was not prepared to have regard to the further affidavit as it had not been served on Mr Wykrota . Final orders were thus made as follows : 1. I direct the entry of judgment for the sum of $244,896.85 against Mr Wykrota. 2. I order Mr Wykrota to pay the plaintiff's costs in the proceedings. 3. I order that the proceedings be dismissed as against the second and third defendants. The second defendant has been deregistered. According to the records of the Australian Securities and Investments Commission, the de-registration took effect on 12 December 2018. Explanation for absence and delay Mr Wykrota says that, although he was aware of the hearing before Emmett AJA, he did not appear as he had shingles and was in great pain. Further, Mr Wykrota said that since about November 2014, he had been involved in a dispute with a former joint venture partner in relation to a property development at Wh eeler Heights. In 2017, proceedings were commenced by purchasers of L ot 3 in the proposed sub-division against his joint venture partner and Mr Wykrota was joined as a cross-defendant. In addition, s ince 2017 , Mr Wykrota had been involved in various proceedings concerning the Polish Club . O ne of those proceedings was heard at the Court on 29 to 31 January 2019, 1, 6, 22 and 26 to 28 February 2019, thus overlapping with the hearing in this matter on 28 February 2019. In addition, Mr Wykrota says that the effect of “ all of this litigation ” had taken a toll on his mental and physical health and he had not been able to properly focus on any one thing and was being treated for depression. It is not clear whether Mr Wykrota was affected by depression at the time of the hearing before Emmett AJA or subsequently . In addition, Mr Wykrota sa id , “ I did not find out about the judgment made against me … until June or July 2019 … ” . Enforcement action On 9 July 2019, the plaintiff sought to enforce the judgment by filing a motion seeking the issue of a writ for the levy of property against Mr Wykrota . A writ was issued by the Court on 10 July 2019. The writ was recorded against properties owned by Mr Wykrota in Dural, North Narrabeen and Wheeler Heights. Efforts to record the writ on a property in Willoughby failed due to other caveats lodged on title. On 10 July 2019, the Office of the Sheriff of NSW sent a letter to Mr Wykrota advising of pending enforcement action on the judgment. At the time that the writ was issued, Mr Wykrota had already exchanged contracts to sell Lot 3 in the Wheeler Heights subdivision . The purchasers had lodged a caveat on title in respect of their interest under the contract of sale. On 18 July 2019, Mr Wykrota consented to an order for specific performance of th e contract: Day v Sternhell [2020] NSWSC 513 at [7]. On 23 August 2019, Sheriff O fficers attended at Mr Wykrota ’ s address. The Sheriff later reported in a Notice of Non-Levy: Sheriff’s officers attended the given address and made enquiries with the occupant who identified himself as “Matt” and was very evasive. Officers were then able to identify the occupant as the judgement debtor. The judgement debtor argued with officers that there is a dispute with regard to the debt. … While in attendance, Office rs made an assessment and concluded that it would be unlikely that a seizure of the available goods and chattels would justify their removal, storage and sale in order to satisfy the judgement debt. The Office of the Sheriff of NSW issued a Notice of Non-Levy. On 19 December 2019, a notice of appointment of solicitor was filed on behalf of Mr Wykrota in these proceedings. Mr Wykrota says that he had instructed a solicitor to apply to set aside the judgment but was unable to place the solicitor in funds as he was awaiting completion of sale of Lot 3 of the Wheeler Heights property. On 20 December 2019, a lapsing notice was served on the purchasers of Lot 3 at the request of the plaintiff. The purchasers file d a motion on 23 December 2019 seeking an order to extend the caveat , which was extended by consent : Day v Sternhell at [16] . On 13 January 2020, Mr Wykrota ’ s solicitor contacted the plaintiff ’ s solicitor, request ing the urgent removal of the plaintiff ’ s application to record a writ over the Wheeler Heights property so that sale of Lot 3 could be completed . On 11 February 2020, Mr Wykrota ’ s solicitor enquired of the plaintiff ’ s solicitor , “ C ould you please tell me what you believe your client is owed pursuant to the Judg e ment [sic] , calculated to date? ” . This information was duly provided. In addition to the judgment debt and post-judgment interest, the plaintiff sought payment of its costs of the proceedings together with legal costs incurred in seeking to enforce the judgment which, together with the judgment and interest , amounted to some $346,000. The plaintiff ’ s solicitor sought payment in full from the proceeds of sale although, if the costs were not accepted, noted that the plaintiff ’ s costs could be submitted for assessment. On 6 March 2020, consent orders were made in respect of the Wheeler Heights property to withdraw caveats and writs in order to permit registrat ion of a plan of sub division for the property. On 10 March 2020, sale of Lot 3 was completed . The net proceeds of sale were paid to the registered mortgagee. Thus, Mr Wykrota says he did not receive funds from which to pay his solicitor to apply to set aside the judgment. The plaintiff lodge d a writ over the remaining two lots in the Wheeler Heights property. Mr Wykrota also says that , shortly after the completion of the sale of Lot 3, the COVID -19 pandemic hit, although it is not clear how this affected his ability to bring an application to set aside his Honour ’ s judgment. On 30 April 2020, Mr Wykrota exchanged contracts to sell Lot 1 in the Wheeler Heights sub-division for $2.1 million . The registered mortgage e was owed some $1.35 million, which Mr Wykrota intended to pay from the proceeds of sale. Thus, Mr Wykrota could expect to receive some $750,000 on completion of the sale of this property. Mr Wykrota says that in June and July 2020 he was involved in other proceedings in this Court. On 22 June 2020, Mr Wykrota ’ s current solicitors sent a letter to the plaintiff advising that they intended to bring this application and, on 30 June 2020 wrote again proposing to pay $250,000 from settlement of the sale of Lot 1 into court pending the resolution of these proceedings. Obviously, without reaching some agreement with the plaintiff such that the plaintiff withdrew the writ, Mr Wykrota would not be able to complete the sale of the property. On 3 July 2020, a bankruptcy notice was issued to Mr Wykrota on the application of the plaintiff, claiming $268,382.41, being the amount of the judgment debt together wi th interest under section 101 of the Civil Procedure Act 2005 (NSW). On 9 July 2020, Mr Wykrota ’ s solicitors proposed to deposit $270,000 into Court if the writ lodged by the plaintiff over Lot 1 was removed pending determination of the motion to have the judgment set aside. The plaintiff did not consent to this course. On 4 August 2020, the motion to set aside the judgment was filed. On 6 August 2020, on the undertaking of Mr Wykrota to pay $270,000 from the proceeds of sale of Lot 1 into Court , Kunc J removed the writ of execution over the property. The sale of Lot 1 was completed on 11 September 2020 and the money paid into Court. Was judgment irregularly obtained ? Mr Wykrota contends that the judgment was given “ irregularly ” as deemed admissions arising from failure to file a defence did not support the judgment, relying on Fenato v Chief Commissioner of State Revenue (2010) 78 NSWLR 20; [2010] NSWCA 80 where the statement of claim failed to plead a material fact that was a condition precedent to the orders made. Mr Wykrota submitted that the plaintiff ’ s claim as pleaded was obscurely and confusingly formulated , in particular, in identifying the contracting parties and their obligations. Given the problems with the pleading, the admissions which resulted from Mr Wykrota ’ s failure to file a defence were said not to support the judgment and orders. The plaintiff ’ s counsel ’ s statement that, “ It ’s not disputed by the defendant that it was he who entered into the building contract ” , was not justified in the circumstances and t he Court was thereby misled . It was submitted that the Court was entitled to greater frankness from the p laintiff in the course of an ex parte hearing . It was submitted that the judge was, in effect, side tracked, misled or distracted by an assumption, inaccurately made, that there was no question “ because when it said there was no issue that is really telling the Judge it is agreed in some way ” . It was submitted that Emmett AJA did not, in his judgment, consider or evaluate the question of the identity of the contracting parties but treated the allegations in the statement of claim as admitted in the absence of a defence. Further, the Court was asked to award damages but the statement of claim did not plead any case of defective work under the building contract. The statement of claim did not refer to the unsigned building contract (described at [ 14 ]) including the warranties in clause 1.A.24 or the obligation to rectify defects in clause 1.A.25. The allegations of breach were said to be broad and meaningless, alleging not facts but an unvarnished conclusion of law. Thus, it was submitted that any admissions which flowed from a failure to file a defence were of limited significance. Further, by allowing parts of the damages claim outside the parameters of the pleading, the plaintiff submitted that Emmett AJA failed to afford procedural fairness to Mr Wykrota , being a fundamental irregularity entitling the person aggrieved to have the judgment set aside: Miltonbrook Pty Limited v Westbury Holdings Kiama Pty Limited (2008) 71 NSWLR 262; [2008] NSWCA 38 at [85]. It was said that damages were awarded without his Honour having it drawn to his attention that there was nothing in the statement of claim to support such a claim. His Honour gave damages for items in the s chedule of damages which were unrelated to the pleaded terms of the contract. Such damages ought not to have been awarded and the judgment was said to be irretrievably infected by th is error, said to have been induced by the p laintiff ’ s conduct at the ex parte hearing. This alone was said to entitle and require the Court to set aside the judgment. I t was submitted that the damages " cannot now become supportable or legitimised by an ex post facto attempt to re-assign them as costs of obtaining an Occupation Certificate ” . Further, Mr Wykrota contend ed that the judgment was given “ against good faith ” by reason of a failure by the plaintiff ’ s counsel to specifically draw his Honour ’ s attention to documents or portions of Mr Le ’ s affidavit which may support a conclusion that the building contract was not with Mr Wykrota but another defendant. Although Mr Le ’ s affidavit was read , it was said to be “ not enough ” that his Honour was not taken to the passage set out at [ 32 ] by the plaintiff ’ s counsel. The fact that the plaintiff ’ s counsel did not specifically take his Honour to the email set out at [ 13 ] , nor the application filed in NCAT , nor point out the ambiguous nature of the quotation or the admission which might be thought to arise from commencing the NCAT proceedings against Arrowcon Construction , was said to have had the result of misleading Emmett AJA as these documents indicated that there was an issue in respect of the identity of the defendant with whom the plaintiff had a contract. Whilst Mr Wykrota ’ s solicitor accepted that Emmett AJA would have read the whole of the affidavit in any event, it was said to be wrong to conclude that his Honour ignored the assurance given by Ms Cohen that there was no issue in the case about the identity of the contracting parties. The plaintiff submitted that the judgment was not given against good faith. Counsel ’ s statement that “ It’s not disputed by the defendant that it was he who entered into the building contract ” was accurate: the defendants had not filed a defence. Emmett AJA recognised as much in his Honour ’ s j udgment . Further, although Mr Wykrota indicated during the directions hearings on 28 November 2018 and 13 December 2018 that he may defend himself, he never suggested that he was not a party to the contract. The plaintiff submitted that the pleadings were broad enough to encompass the damages awarded, including damages for building work not properly performed. The statement of claim pleaded that there was a contract between the plaintiff and Mr Wykrota whereby Mr Wykrota would carry out building work; Mr Wykrota failed to perform the contract and the plaintiff suffered damage as a result. The essential elements of a cause of action for breach of contract were pleaded. The particular damages suffered were set out in the s chedule of d amages. The damages awarded by Emmett AJA were based squarely on Mr Wykrota ’ s breach of contract and the loss particularised in the s chedule, which had been provided to Mr Wykrota before the hearing. Nor could there said to be any procedural unfairness. Conclusion Having in mind the principles described at [ 3 ]-[ 7 ], the question is whether the judgment of Emmett AJA was procured by the plaintiff ’ s misconduct or dishonourable conduct and the suggested irregularity is not inconsequential or causally unrelated to the making of the judgment and orders. Mr Wykrota relie d on matters of pleading and evidence , combined with the contention that the plaintiff ’ s counsel breached her duty of candour. I note, of course, that the hearing before Emmett AJA was not an ex parte hearing in the sense that Mr Wykrota was not informed of the hearing but rather that Mr Wykrota , having been informed, did not attend. While the duty of candour applies with especial stringency to ex parte applications, its scope extends to any application, contested or not, where evidence is presented to the court in support of an application: Kavia Holdings Pty Ltd v Werncog Pty Ltd [1999] NSWSC 839 per Santow J at [1]. Turning to the pleading point, b y failing to file a defence, Mr Wykrota was deemed to have admitted the allegations made against him in the statement of claim, which included the primary allegation that the building contract was with him; that he was obliged to supply certificates and documents to the certifier to enable an occupation certificate to issue; and that he failed to do so. The fact that the plaintiff also contended that the second and third defendants had obligations which they failed to perform did not detract from the fact that Mr Wykrota admitted that he had failed to perform an obligation which he owed. T he fact that, after being informed by Ms Cohen that it was “ not disputed ” that Mr Wykrota entered into the building contract, Emmett AJA replied, “ Well, I have the statement of claim …” indicates an appreciation by his Honour that Ms Cohen ’ s assertion was referable to the failure to file a defence, but also an indication that his Honour had the pleading against which to check whether Mr Wykrota could be taken to have made such an admission. This is confirmed by the ex tempore judgment, in which Emmett AJA reproduced the relevant paragraphs of the statement of claim, noting that no defence had been filed. Importantly, his Honour summarised not only the paragraph of the statement of claim setting out the plaintiff ’ s primary case against Mr Wykrota but other portions of the statement of claim which referred to the second and third defendants, “ the defendants ” and “ the defendant ” . The plaintiff ’ s claim, in all its forms, did not escape Emmett AJA ’ s notice. His Honour then observed, “ I t follows in effect that the allegations made in the statement of claim are admitted ” : at [11]. It is thus clear that, whatever assurance was made by the plaintiff ’ s counsel in the opening moments of the hearing, Emmett AJA carefully checked what admissions had in fact been made by reason of Mr Wykrota ’ s failure to file a defence and whether the admissions were sufficient to support judgment against him for breach of the building contract. Further, having reviewed the 26 pages of transcript of the hearing, one thing is clear: whatever the plaintiff ’ s counsel submitted to Emmett AJA, his Honour was in no way misled. Emmett AJA carefully checked each and every proposition put inter alia because Mr Wykrota had not appeared. As to the damages claim , it was not incumbent on the plaintiff to plead that the building contract comprised the unsigned document prepared by Mr Wykrota . That was not the plaintiff ’ s case. In circumstances where there was no evidence on this application that the unsigned document had been provided to the plaintiff, it was not incumbent on the plaintiff ’ s counsel to draw his Honour ’ s attention to the possibility that, if the matter was defended, then Mr Wykrota might rely on such a document. Nor is there any substance to the contention that the plaintiff ’ s counsel failed to draw to his Honour ’ s attention to the fact that the damages sought at trial fell outside the particulars in the statement of claim. That subject had been canvassed at length, in the presence of Mr Wykrota , at the pre-trial directions hearings on 28 November 2018 and 13 December 2018, with orders made, and complied with, for the preparation and service of a schedule of damages. As described at [ 49 ]-[ 53 ], Emmett AJA did not enter judgment simply on the basis of Mr Wykrota ’ s admission that, by reason of his failure to perform his obligations under the building contract, the plaintiff had suffered damage. His Honour was careful to ensure that each item of damage of which notice had been given to Mr Wykrota was established by the evidence on which the plaintiff relied. Given his Honour ’ s finding that the items in the schedule of damages “ have in fact been incurred by the plaintiff as a consequence of breach of the building contract by Mr Wykrota ” , the plaintiff ’ s submission that the damages were unrelated to the pleaded terms of the contract cannot succeed. As the plaintiff submitted, the fact that some of the items claimed in the schedule of damages might relate to rectification of defective building work does not assist Mr Wykrota as, s elf-evidently , rectification work may have been required to obtain an o ccupation c ertificate. This was a question of fact to be determined on the evidence , as it was . To the extent that Mr Wykrota relied on any failure by Emmett AJA to afford procedural fairness, any such failure does not assist Mr Wykrota as, on an application to set aside a judgment, the Court is concerned with whether the judgment creditor was responsible for bringing about the judgment by engag ing in misconduct or dishonourable conduct: Zakaria v Dr Noyce at [22]. In any event, I accept the plaintiff ’ s submissions on this subject. Emmett AJA was explicitly mindful to ensure that Mr Wykrota had forewarning of the damages sought. Emmett AJA held the plaintiff to the quantum sought in the schedule of damages in relation to lost rent, even though that figure understated the correct amount of the plaintiff ’ s claim, as Mr Wykrota had only been informed of the lower claim set out in the schedule and had no forewarning of the higher amount. Mr Wykrota knew precisely the case against him . He had the opportunity to file a defence, serve evidence refuting the plaintiff ’ s claim and appear at the hearing . H e chose not to. T he consequences of this choice were not the product of any denial of procedural fairness. As to the suggested lack of candour of the plaintiff ’ s counsel in respect of the evidence relied upon by the plaintiff, the plaintiff ’ s counsel read the affidavit of Mr Le which, in the body of the affidavit and in the annexed documents, contained the email described at [ 13 ], Mr Le ’ s description of his pre-contractual dealings with Mr Wykrota set out [ 32 ], the fact that proceedings were initially commenced in NCAT against Arrowcon Constructions and the orders made by NCAT set out [ 16 ]. Where Mr Wykrota had, effectively, admitted that he was liable to the plaintiff for failure to perform the building contract, it was not strictly necessary for the plaintiff ’ s counsel to read these portions of Mr Le ’ s affidavit, nor tender the exhibited documents, at all. The affidavit evidence, quotation and NCAT orders did not have such adverse connotations for the plaintiff ’ s primary claim against Mr Wykrota that failure to specifically bring this material to his Honour ’ s attention misled the Court or had the result that judgment was entered on the basis of facts which were false or on the basis of a misapprehension: G E Dal Pont, Lawyers’ Professional Responsibility (6 th ed, 2017, Law Book Company) at [17.95]. There was no misconduct or dishonourable conduct on the part of the plaintiff in proceeding in the manner in which it did. Thus, I conclude that the judgment and orders of Emmett AJA were not given or entered irregularly or against good faith. Should judgment otherwise be set aside? Alternatively, Mr Wykrota submitted that an order should be made under rule 36.16 UCPR in circumstances where he has a defence on the merits. There was an explanation for his failure to attend the hearing as he was ill, unrepresented and caught up in other litigation at the time. The delay in moving the Court for an order setting aside the judgement of 28 February 2019 was significant, but not decisive. It was submitted that Mr Wykrota learned of the entry of judgment against him in June or July 2019. He had since been heavily preoccupied with other litigation and also suffered health and financial difficulties . The plaintiff submitted that the discretion to set aside the judgment under rule 36.16(2 )( b) UCPR should not be exercised in this case . Great value attaches to certainty in the outcome of litigation and the more egregious the delay in seeking to set aside an undefended judgment, the greater the burden of persuasion of the strength of its case that will be required: Northey v Bega Valley Shire Council at [16] per Barrett JA; Pham v Gall at [110] per Payne JA. The procedural background readily suggested that Mr Wykrota took the view that engagement with the proceedings was optional. He did not file or serve any documents in the proceedings apart from a Notice of Appearance. He attended some, but not all, of the numerous direction hearings. Nevertheless, he was kept informed of the progress of the case and the orders made by the Court. Mr Wykrota ’ s explanation for his failure to attend the hearing before Emmett AJA was said to be inadequate. Mr Wykrota ’ s explanation for his delay in seeking to set aside the judgment was also said to be unconvincing, being an important and potentially decisive factor: Pham v Gall at [57], [144] . Mr Wykrota ’ s asserted health and financial difficulties did not stand in the way of him participating in proceedings against a former joint venture partner, being involved in “ various proceedings ” concerning the Polish Club (two of which were heard in the Supreme Court between January and March 2019) and another unspecified proceeding in the Supreme Court. The plaintiff submitted that a factor to be taken into account was whether the proposed defence was strong: Magnate Projects v Youma Constructions (No 2 ) at [52] per Hodgson JA; Pham v Gall at [98]. Identification of the parties to a contract must be made in accordance with the objective theory of contract , including considering post-contractual conduct: Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 at [54]; BH Australia Constructions Pty Ltd v Kapeller (2019) 100 NSWLR 367; (2019) 375 ALR 159; [2019] NSWSC 1086 at [91] per Leeming JA . It was submitted that there was persuasive evidence that the contract was between the plaintiff and Mr Wykrota . Mr Le gave evidence that in about September 2010, the plaintiff and Mr Wykrota agreed that Mr Wykrota would carry out the contract. When Mr Wykrota was introduced to Mr Le, he appears to have been introduced in his personal capacity; there was no evidence that he was introduced as an agent of Arrowfab . Mr Le also reported that Mr Wykrota told him, “ My company Arrowfab will be doing the building work for me ” . The implication of this statement was said to be that, although Mr Wykrota was the contracting party, Arrowfab would be doing the building work on his behalf. The email set out at [ 13 ] was sent from an email address that was plainly a personal address. Although Mr Wykrota ’ s email contained the words “ Arrowfab Pty Limited ” under his name, there was no evidence that Mr Wykrota had explained anything about this company to Mr Le. Mr Wykrota unilaterally determined the corporate entity to which the plaintiff ’ s payment was to be directed at any point in time. Mr Wykrota ’ s directions came from his personal email address. Mr Wykrota unilaterally determined which corporate entity would undertake the contract work at any point in time. Such conduct was said to be consistent with Mr Wykrota being the contracting party rather than the corporate defendants. He alone determined how the works would be performed and did so in his personal capacity. Contrary to the pleading in the proposed defence, the plaintiff submitted that there was no evidence that the parties agreed that Arrowcon Construction would take over the contract from Arrowfab . A reasonable observer considering the matter objectively would not come to such a conclusion in circumstances where there is no evidence Mr Le knew anything about Arrowcon Construction, much less that it was properly licensed and insured and therefore a suitable contracting party for building work. The fact that, long after the event, the plaintiff commenced NCAT proceedings naming Arrowcon Construction as defendant was said to add little to the question of who the contracting parties were. It was submitted that Mr Wykrota would face serious difficulties in making out the proposed defence. Whilst the case was not unarguable, it did not satisfy the greater degree of persuasion required from Mr Wykrota in the circumstances. The plaintiff submitted that it would be p rejudice d if the judgment was set aside, in the form of the costs incurred in obtaining the judgment in the first place, together with the costs of seeking to enforce the judgment during which time Mr Wykrota stood by in a manner inconsistent with his currently stated intention to contest the proceedings. P rejudice naturally arose from the passage of time. The contract was formed in November 2010 and breached in 2012. The memory of the relevant witnesses was naturally receding, as was the plaintiff ’ s ability to locate any further relevant documents. Further, the plaintiff submitted that t he proposed d efence denie d that Mr Wykrota was a party to the c ontract and plead ed that the s tatement of c laim did not disclose a cause of action against him. If that d efence had been file d on or before 2 May 2018, the p laintiff could have met it by simply amending its s tatement of c laim to plead, in the alternative, that Arrowcon Construction was a party to – and liable for the breach of – the contract. That course was no longer available to the p laintiff as the proceedings against Arrowfab and Arrowcon Construction were dismissed : section 91(2) of the Civil Procedure Act . Dismissal of the proceedings against Arrowfab and Arrowcon Construction was said to be an entirely reasonable course considering the c ontract was found to have been with Mr Wykrota and judgment had been given against him. Mr Wykrota accepted that the dismissal of the proceedings against Arrowcon Construction should also be set aside by consent, although it was not entirely clear how this could be done in circumstances where Arrowcon Construction was not a party to the motion. Mr Wykrota ’ s solicitor informed the Court that he was instructed on behalf of Arrowcon Construction to consent to such an order . After the hearing of this application, Mr Wykrota ’ s solicitors filed a Notice of Appearance for Arrowcon Construction . Finally, the plaintiff submitted that w hilst , if the judgment was not set aside, Mr Wykrota would remain obliged to satisfy a judgment which he now says should not have been entered against him, this outcome was less prejudicial than it appeared. Mr Wykrota ’ s proposed defence was that Arrowcon Construction was liable for any breach of the contract. As Mr Wykrota is the sole director and shareholder of Arrowcon Construction, in the event he succeed ed in his proposed defence and judgment was entered against that company, that loss would ultimately be suffered by him as the company ’ s sole shareholder. Thus, at a practical level, he would not avoid the consequence of any breach of that contract, relying on Leichhardt Council v Geitonia Pty Ltd (No 7) [2015] NSW L EC 79 at [51] by analogy. Consideration As will be apparent from the recitation of the procedural history at [ 23 ], [ 24 ], [ 29 ], [ 35 ], [ 45 ] , Mr Wykrota ’ s participation in the proceedings was intermittent . His evidence as to how the proceedings unfolded, and his knowledge of the proceedings, was not consistent with contemporaneous documents. I am satisfied that he became aware of the proceedings shortly after they were commenced and was regularly informed, both by the plaintiff ’ s solicitor and, on occasion, by the Court , over the course of a dozen directions hearing s , as to its progress towards a final hearing. His engagement with the proceedings was, however, selective. Mr Wykrota was involved in several pieces of litigation at the time and had solicitors, although not in these proceedings. Mr Wykrota was , however, able to, and did, consult his solicitor in relation to these proceedings. Mr Wykrota was able to appear in person, and did on occasion. He appears to have been an experienced litigant who deployed his legal resources where he saw fit. W hen Mr Wykrota appeared before Emmett AJA in November and December 2018 , it was apparent that his focus was to postpone the final hearing. It is also apparent that, when Mr Wykrota ’ s efforts to postpone the hearing proved futile, he chose not to appear. Mr Wykrota ’ s explanation for his failure to attend the hearing before Emmett AJA was inadequate. Mr Wykrota ’ s medical certificate referr ed to his unfitness for work, rather than any inability to attend Court. The medical certificate provided no explanation for Mr Wykrota ’ s failure to have filed a defence, adduce evidence or make any attempt to arrange for someone else to appear on his behalf at the hearing, as he indicated at earlier directions hearings that he would. Accepting that Mr Wykrota was involved in other pieces of litigation, some of which were being heard at the same time as the se proceedings, t here is obviously a tension between Mr Wykrota suggesting that he was unwell and thus unable to attend the hearing before Emmett AJA, on the one hand, and suggesting that he could not attend the hearing because he was busy participating in other legal proceedings, which he was presumably well enough to attend at the same time. Mr Wykrota ’ s explanation for his delay in seeking to set aside the judgment was also problematic. The suggestion that Mr Wykrota did not find out about the judgment until June or July 2019 is inconsistent with the contemporaneous documents and thus unlikely . On 6 March 2019, the A ssociate to Emmett AJA sent a copy of the ex tempore judgment by email to the parties, including to Mr Wykrota at the email address referred to at [ 13 ]. Further, on 13 March 2019, the plaintiff ’ s solicitor sent a letter to Mr Wykrota by Express Post informing him of the orders made by his Honour. According to the records of Australia Post, the letter was delivered on 14 March 2019. E ven if Mr Wykrota was previously unaware of his ability to seek to have the judgment set aside , Emmett AJA ’ s judgment expressly informed him of that right . The suggestion that , having filed a notice of appointment of solicitor in these proceedings in December 2019, Mr Wykrota was not able to place his solicitor in funds to apply to set aside the judgment is not consistent with the fact that, over the next few months, Mr Wykrota ’ s new solicitor did take steps on his behalf , described at [ 69 ] and following , albeit did not take any steps in these proceedings. As the plaintiff submitted, Mr Wykrota gave no evidence of his financial position apart from making bare assertions. His conduct as described in his affidavit told against his inability to fund an application to set aside the judgment. I consider that realising Lot 1, and a wish to preserve the net proc e eds of sale , is a more likely explanation for why Mr Wykrota has delayed acting until now. Turnin g to the hardship to the plaintiff, and what is proffered to reduce that hardship ( Pham v Gall per Leeming JA at [57]), three items stand out. First, Arrowfab is now deregistered. It is not entirely clear when Arrowfab was deregistered, although it appears to have been at or about the time of the hearing before Emmett AJA. Having obtained judgment and orders against Mr Wykrota , the proceedings against Arrowfab were dismissed. There was no suggestion by Mr Wykrota as to whether, or how, this company should be reinstated. If the judgment and orders are now to be un-done, it is unclear how this head of prejudice is to be ameliorated. Second , as described at [ 50 ]-[ 53 ], i n order to finalise the proceedings and its claims on 28 February 2019, the plaintiff accepted a substantial discount of $168,607.52, or 50%, of its claim for lost rent, being roughly double the discount which Emmett AJA had earlier indicated that he considered appropriate. Mr Wykrota has paid into Court $270,000, representing the judgment and orders made by Emmett AJA together with interest. But that amount does not reflect the additional $168,000 which the plaintiff forewent . If Mr Wykrota had appeared at the hearing, the plaintiff could have pressed for the full amount of lost rent as the evidence on which it relied had been served on Mr Wykrota . Even if His Honour had discounted the claim by 25% to 30%, the plaintiff would likely have be awarded damages in a greater sum than that ordered in Mr Wykrota ’ s absence . Third, the plaintiff has costs thrown away, both in obtaining judgment from Emmett AJA and seeking to enforce his Honour ’ s orders which Mr Wykrota now seeks to set aside. As best could be clarified during Mr Wykrota ’ s solicitor ’ s reply submissions, Mr Wykrota accepted that, in the event that the judgment was set aside, an order would properly be made that he pay the plaintiff ’ s costs thrown away, although Mr Wykrota did not accept that those costs equated to the plaintiff ’ s costs leading up to obtaining judgment from Emmett AJA , nor in any particular amount, but accepted such costs may be appropriate to be paid forthwith and, if the plaintiff put forward a suggested figure, then he would consider it. Mr Wykrota also ultimately accepted it may be appropriate to order that he pay the plaintiff ’ s costs of seeking to enforce his Honour ’ s judgment, but only as assessed. Whilst during oral submissions, Mr Wykrota ’ s solicitor said he could get some instructions about whether Mr Wykrota was able to give an undertaking to meet any costs orders made against the third defendant, in circumstances where there was no evidence as to whether the third defendant had any assets , no further instructions were forthcoming . Mr Wykrota ’ s willingness to redress any hardship which the plaintiff may suffer if his Honour ’ s judgment and orders are set aside was reluctant and ungenerous , particularly having regard to the fact that, on sale of Lot 1, Mr Wykrota appears to have received a substantial sum, even after paying $270,000 into Court, accepting of course that Mr Wykrota may have other creditors. As to whether Mr Wykrota ’ s defence suggests a clear case of merit, the proposed defence is arguable but not overwhelming. The defence faces a number of hurdles, not least of which is that Mr Wykrota contends that the building contract was with a company which did not exist at the time the contract was formed. The evidence on this application suggests a degree of informality and lack of attention to detail and proper paperwork, being a problem that ‘ cuts both ways ’ in terms of the plaintiff ’ s claim and the proposed defence. Having regard to the principles set out at [ 8 ]-[ 12 ], Mr Wykrota has not established that it is unjust to let the judgment and orders stand having regard to the circumstances in which the orders were made, the inadequate explanation for the subsequent 18 months ’ delay before bringing this application, the proposed defence and what is proffered to re duce the prejudice to the judgment creditor. I decline to make the orders sought. Orders For these reasons, I make the following orders: D ismiss the first defendant ’ s motion filed on 4 August 2020 . Order the first defendant to pay the plaintiff ’ s costs of the motion. Grant liberty to the parties to apply on two days ’ notice to seek any variation of the costs order, or any further orders in respect of the monies paid into Court by the first defendant on 14 September 2020. ********** 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: 16 October 2020