Cafarella v Decklite Australia Pty Ltd [2024] QDC 177

DISTRICT COURT OF QUEENSLAND CITATION: Cafarella v Decklite Australia Pty Ltd [2024] QDC 177 PARTIES: BOB BARTOLO CAFARELLA (plaintiff/respondent) v DECKLITE AUSTRALIA PTY LTD (ACN 162 584 330) (defendant/applicant) FILE NO: D15/2024 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Maroochydore Registry DELIVERED ON: 17 October 2024 DELIVERED AT: Maroochydore HEARING DATE: 16 August 2024 (reserved to be determined on the papers subject to the further submissions of the defendant, filed 24 September 2024) JUDGE: Long SC, DCJ ORDER: (a) The default judgement entered against the defendant on 11 April 2024 and any enforcement of it, be set aside. (b) The defendant is to file a Notice of Intention to Defend the Claim filed on 13 February 2024, on or before 15 November 2024. CATCHWORDS: CIVIL PROCEDURE – Application – Default judgment – Whether it is appropriate to set aside the default judgement given on 11 April 2024 against the defendant company pursuant to UCPR r 290 – Where the default judgment was irregularly entered LEGISLATION: Uniform Civil Procedure Rules 1999 rr 283, 290 CASES: Browning v Australia and New Zealand Banking Group Ltd [2014] QCA 43 Cook v DA Manufacturing Co Pty Ltd [2004] QCA 52 Cusack v De Angelis [2008] 1 Qd R 344 -- 1 of 7 -- 2 Introduction [1] The issue in this matter is as to whether it is appropriate to set aside the judgment given on 11 April 2024 against the defendant company, in terms that the defendant pay the plaintiff the sum of $610,807.33 (including $174,516.38 interest and $2,572.45 costs). That judgment was given in default of the filing of any defence to the claim filed by the plaintiff on 13 February 2024, for “$436,290.95 for monies due and owing pursuant to an agreement”. [2] These are the reasons for allowance of the application filed by the plaintiff on 30 May 2024, seeking that the default judgment be set aside pursuant to r 290 of the Uniform Civil Procedure Rules 1999 (“UCPR”). Discussion [3] Although it is the defendant’s position that a reason for the failure to file a defence is that the claim did not come to the attention of the guiding mind of the defendant (its directors, David William and Gabrielle Elizabeth Heaney), despite the evidence of the posting of the Claim and Statement of Claim to the registered office of the company; 1 such being sufficient for service pursuant to UCPR 107 and s 109X of the Corporations Act 2001, that is only explained in terms of some difficulty in respect of the emails sent to the company secretary (Gabrielle Elizabeth Heaney) in advice of this service, remaining unread as being directed to a junk mailbox.2 [4] In the absence of ability to demonstrate any irregularity in the obtaining of the judgment, the defendant’s application is for an exercise of discretion by the court pursuant to UCPR 290.3 It is recognised that upon such an application, the court will generally consider whether or not: 1. the defendant has given an explanation for its failure to appear, in default of the filing of any defence, a satisfactory explanation for its failure to appear; 1 Affidavit of PH Cooke filed 03/04/2024, [5]-[6]. 2 It is to be noted that this application has been pursued by the defendant through its directors acting without legal assistance. 3 Cook v DA Manufacturing Co Pty Ltd [2004] QCA 52 at [18]. -- 2 of 7 -- 2 2. there has been any delay in making the application; and 3. the defendant has any prima facie defence on the merits to the claim on which the judgment is founded.4 It has also been noted that, as is the case in this instance, the more particular concern will be with the third consideration,5 even if it were accepted that the assertion here as to the reason for absence of actual knowledge of the claim, was a satisfactory explanation and that this application has not been made with any relevant delay. [5] The effect, where a default judgment has been regularly entered, is that the application to set it aside is in seeking an indulgence, with the necessity of demonstration that there is some issue in respect of the claim upon which the judgment is based, which warrants that course. Otherwise, it is well recognised that demonstration of irregularity in the obtaining of the judgment will establish a right to have it set aside.6 These remain the applicable principles even if, as the defendant points out here, the party with the benefit of the judgment does not appear to defend that advantage.7 [6] A particular focus of the material provided by the defendant in support of its application, has been in respect of the ongoing difficulties it has encountered in Brunei since 2019, in its endeavours to market a patented modular “semi-ridged working at heights system” in the oil and gas industry. A particular issue raised is as to the prospect of some “offsetting claim” being made or resolved in Brunei, such as to satisfy the repayment of what is otherwise acknowledged to be the debt arising from the loan agreement made with the plaintiff in September 2017 in order to assist in funding the activities of the company in Brunei. [7] Such contentions are evidently directed at the prospect of execution of the judgment, rather than in disclosing any issue in respect of the claim upon which it is based. That 4 See: Cook v DA Manufacturing Co Pty Ltd at [15], Embrey v Smart [2014] QCA 75 at [42] and Kumar v Ernst [2021] QCA 260 at [13]. 5 National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441, 449-50, Cook v DA Manufacturing Co Pty Ltd [2004] QCA 52, [19], Embrey v Smart [2014] QCA 75 at [42] and Kumar v Ernst [2021] QCA 260, [13]. 6 Cusack v De Angelis [2008] 1 Qd R 344, [36], Browning v Australia and New Zealand Banking Group Ltd [2014] QCA 43, [26]. 7 This application was adjourned on the first return date, on 19/07/2024, to allow for service of the plaintiff at his address for service (a firm of solicitors at Springwood, Queensland and which had acted for the plaintiff in securing the default judgment). On 16/08/2024, email correspondence with that firm was tendered for the defendant and marked as Exhibits 1 and 2, with the effective response being that the firm was “not instructed to appear upon the hearing of the application”. -- 3 of 7 -- 3 concern is also particularly reflected in the most recently filed material for the defendant, which makes express reference to UCPR 819 and 907.8 Not only would any separate application to stay execution of the judgement be premature, at this stage there is no such application before the Court. [8] It is necessary to understand that this additional material was filed with the leave of the Court given in conjunction with the direction on 16 August 2024 that the application be determined on the papers.9 That occurred in circumstances that despite what may be observed as to some aspects of the formulation of the earlier material in support of the defendant’s application, the Court was informed that the directors had never had a copy of the Statement of Claim, in order to identify their particular response to it. The purpose of the adjournment was to allow for this to occur, in the context of the discussion of the principles which have been noted. Despite an acknowledgement that in accordance with the direction of the Court to do so, the further order and materials have been served on the plaintiff,10 nothing has been raised with the Court by the plaintiff. [9] The material filed up to 16 August 2024, save in one relatively minor respect, contained little particularly responsive to the claim for debt underpinning the default judgment. However, and with the advantage of the further material there are some identifiably relevant issues. [10] Leaving aside assertions and contentions directed at avoidance of execution of a judgment against the defendant and some related contentions as to the impecuniosity of the defendant (subject to the purported resolution of issues in Brunei) the only issues touched upon in respect of the claim which is the subject of the judgment are that: (a) the defendant “has no agreement, knowledge of the situation of fact” specified in the Statement of Claim in respect of the consent orders made on 6 July 2021 in the Federal Circuit Court of Australia, at Melbourne, and pleaded as 8 Defendant’s submissions filed 24/09/2024, p3. 9 It should be noted that in conformity with the orders made on 16/08/2024, the defendant also filed the 3rd affidavit of David William Heaney, but those orders did not permit the further filing of any additional application. In any event, the document in such form (included as pp. 1-2 of the bundle filed on 24/09/2024 adds to the application before the Court (as filed on 30/05/2024)) only the words “stayed and/or” after “default”. 10 Defendant’s submissions filed 24/09/2024, p 5. -- 4 of 7 -- 4 authorising the plaintiff’s unilateral pursuit of the debt relating to the agreement of he and his estranged wife, to advance monies to the defendant and which constitute the unpaid debt to them pursuant to that agreement; (b) the principal component of the loan is miscalculated as $436,290.95, by the allowance of only a sum of $54,609.05 by way of repayments. It is contended that the amount repaid was $55,205.05, by way of averment by David William Heaney in two affidavits. 11 The difference of $600 may be discerned to be the defendant’s contention of an additional repayment of $600 on 23 March 2018; and (c) more generally, the assertion of genuine dispute in respect of the amount of the debt to which the judgment relates, including the interest component. [11] As pleaded in the Statement of Claim, the claim upon which the default judgment is premised is based upon a written loan agreement between the defendant, on the one hand, and the plaintiff and his wife, on the other, made in 2017 in allowance of the advancement of funds, to a limit of $200,000, and subsequent variation to allow for further advancements in the sum of $290,000, up to 27 August 2018, or at least the fact of such further advancements. Notably and save in respect of the additional repayment of the sum of $600, no specific issue is raised as to that initial agreement or the advancements to the total amount of $490,000. [12] The complications as to the unilateral pursuit of the debt by the plaintiff arising from the orders made under the Family Law Act 1975, in respect of the adjustment of property interests of the plaintiff and his wife, may be put aside for present purposes. This is because, even if it be assumed that the plaintiff is entitled to unilaterally pursue this debt (subject to any obligations arising under the order made pursuant to the Family Law Act 1975), the evidence before the Court does suffice to establish two aspects of irregularity in respect of the entry of judgment. While each of them may have been amenable to the power on this application, pursuant to UCPR 290, to amend that default judgment,12 that option is effectively foreclosed by the absence of engagement of the plaintiff in respect of this application. 11 Affidavit of DW Heaney filed 30/05/2024, at [3(a)] and Annexure DECK03, Affidavit of DW Heaney, filed 19/07/2024, at [10] and cf: the Statement of Claim, filed 13/02/2024, at [10]. 12 Particularly in the context of the overriding philosophy of the UCPR, stated in r 5(1), of facilitation of the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. -- 5 of 7 -- 5 [13] First and although it may be noted that it goes no further then assertion by Mr Heaney and not, for instance, supported by any record of the payment, nevertheless there is uncontested evidence of the additional repayment of $600. As noted in Cusack v De Angelis,13 subject to the power of a court to amend the judgment, there are many cases supporting the proposition that a defendant is entitled to have a judgment entered for an excessive amount, set aside as an irregularity and therefore as a matter of right. An explanation lies in the notation that: “The cases in which default judgments have been held to be irregular are ones in which there was either some deficiency in the steps prerequisite to the entering of default judgment or an abuse of process or something akin to it resulting from the plaintiff’s obtaining a judgment to which the plaintiff knew or ought reasonably have known he or she was not entitled.”14 [14] Secondly, that reasoning is applicable to the further understanding that in light of the general issue raised as to the total sum of the judgment and the interest component of it, there is a discernible absence of compliance with UCPR 283(9) which provides that: “(9) If the period for which interest is to be awarded is not specified in the statement of claim, interest is recoverable only from the date of the issue of the claim.” [15] The interest component of the judgement has been allowed in accordance with the following statement in the plaintiff’s request for default judgement:15 “The amount of interest claimed, calculated in accordance with the particulars in the Statement of Claim, is in the sum of $174,516.38 being interest calculated at the rate of 20% per annum on the principal sum for a period of two (2) years.” [16] However, the Statement of Claim does not specify any such period or indeed any basis upon which the interest claimed, at the rate of 20% per annum in accordance with the initial written agreement, was to be calculated. Relevantly, the Statement of Claim pleaded only that: 13 [2007] QCA 313, [30]-[43]. 14 Ibid at [43]. 15 Filed 11/04/2024. -- 6 of 7 -- 6 “9. To the extent he is able, the Plaintiff says that:- (a) The term with respect to time being of the essence was either deleted or varied in some other way of which the Plaintiff is not aware; (b) The date for final repayment was extended to a date of which he is not precisely aware but, at least, to a date which was reasonable in the circumstances and which date has expired. … 11. In the premises, the Defendant owes the Plaintiff the sum of $436,290.95 plus interest. 12. Interest is running and continues to run on the amount outstanding pursuant to the Agreement at the rate of 20% per annum which is to be calculated daily, as to which see Terms 6 and 7 of the Agreement.” Conclusion [17] Therefore, the appropriate determination is that the material which has been placed before the Court warrants the conclusion that the defendant is entitled to an order setting aside the default judgement. But the defendant will still need to address the Claim and Statement of Claim which remains. That will necessitate an ancillary order effectively extending the time period allowed, pursuant to UCPR 157, for the filing of a defence, which will necessitate relevant compliance with the requirements of Chapter 6 of the UCPR and particularly rules 149, 150 and 165 to 168. There will be no order as to the costs of this application. [18] Accordingly, the orders are that: (a) The default judgement entered against the defendant on 11 April 2024 and any enforcement of it, be set aside. (b) The defendant is to file a Notice of Intention to Defend the claim filed on 13 February 2024, on or before 15 November 2024. It is further directed that the Registrar send a copy of these orders and these reasons, by email to each of the respectively recorded email addresses of the plaintiff and defendant. -- 7 of 7 --