Biddle v Formosa [2000] QCA 366

SUPREME COURT OF QUEENSLAND CITATION: Biddle v Formosa [2000] QCA 366 PARTIES: ANNE SHIRLEY BIDDLE (plaintiff/respondent) v KATRINA JULIETTE FORMOSA (defendant/applicant) FILE NO/S: Appeal No 6208 of 2000 DC No 154 of 1991 DIVISION: Court of Appeal PROCEEDING: Application for leave s 118 DCA (Civil) ORIGINATING COURT: District Court at Maroochydore DELIVERED ON: 12 September 2000 DELIVERED AT: Brisbane HEARING DATE: 1 September 2000 JUDGES: McPherson and Thomas JJA, Atkinson J Separate reasons for judgment of each member of the Court, each concurring as to the order made ORDER: Application refused with costs CATCHWORDS: PROCEDURE – INFERIOR COURTS – QUEENSLAND – DISTRICT COURTS – CIVIL JURISDICTION – PRACTICE – PROCEDURE BEFORE TRIAL – DISPOSITION WITHOUT TRIAL - application for leave to appeal from dismissal of application to set aside a judgment in default of appearance –– whether plaintiff would suffer irreparable prejudice – whether defendant responsible for the delay and/or the prejudice suffered by the plaintiff – whether satisfactory explanation for delay District Court Rules (Qld), r 229 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, referred to Evans v Bartlam [1937] AC 473, considered National Mutual Life Association of Australasia Limited v Oasis Developments Pty Ltd [1983] 2 Qd R 441, considered COUNSEL: G D Garrick for the applicant D A Kelly for the respondent SOLICITORS: Boyce Garrick for the applicant -- 1 of 6 -- 2 Sykes Pearson & Miller for the respondent [1] McPHERSON JA: I agree with the reasons of Thomas JA, which I have had the advantage of reading. [2] The application should for those reasons be refused with costs. [3] THOMAS JA: The applicant was the defendant in proceedings instituted in the District Court in 1991. Judgment was given against her on 23 February 1995 when she failed to appear at the hearing after the matter had been set down for trial. On 31 March 2000 she filed an application to set aside that judgment, and her application was dismissed on 21 June 2000. She now applies to this court for leave to appeal against that order. It will be convenient to refer to the respondent as the plaintiff and to the applicant as the defendant. [4] The claim made in the action related to dealings between the plaintiff and the defendant between April 1990 and June 1991 during which the defendant managed the plaintiff's jewellery shop at Noosa. The claim was for alleged failure of the defendant to account in respect of certain jewellery which comprised part of the stock managed by her. The relevant events therefore occurred nine or 10 years ago. [5] The action progressed fairly normally through stages of pleading and discovery until April 1993. The matter then seems to have lost some impetus. In the meantime, in November 1992 the defendant had left Australia and returned to England where it seems, apart from some travelling including trips to Australia in October 1997 and February 1999, she has resided ever since. [6] On 22 October 1993 the defendant's legal aid was terminated. Her own solicitor thereafter seems to have found it virtually impossible to obtain instructions from her. He wrote a number of letters to her at the English address she had given, but they were in some cases returned unclaimed and in others returned to sender containing endorsements including "Gone away. Return to sender" and "Gone away touring Europe. Return to sender" and others. In November 1994 the defendant's solicitors advised the plaintiff's solicitors that they would be seeking removal of their name from the record as her solicitors and on 5 December 1994 obtained a court order permitting this to happen. They advised the plaintiff's solicitors of the English address and suggested that they should correspond with her at that address. [7] A letter and enclosures sent by the plaintiff's solicitors to the defendant at her English address, containing an application to strike out her defence and counterclaim was returned to those solicitors on 25 January 1995 with the notation "Gone away. Return to sender". When the matter was set down for trial those solicitors again wrote to the applicant (on 31 January 1995) advising of the trial date. The evidence suggests that that letter was not returned, and it is open to be inferred that it was received at the address to which it was sent. The defendant's former solicitors also sent her a letter containing similar information and inter alia advised her to file a new Notice of Address for Service. No new address for service was ever filed by or on behalf of the defendant. -- 2 of 6 -- 3 [8] The defendant however, on the present application, swore that she never read any of those letters, and that her first knowledge that the action had in fact proceeded was the demand she received on 15 February 2000 for payment of the judgment. That refers to a demand for payment of the judgment sum, which including interest and costs came to approximately $73,000, accompanied by a demand that in default a bankruptcy petition could be presented. She called evidence from her 76 year old grandmother (Mrs Scott), whose attention was drawn to the envelopes with the endorsements previously described. Mrs Scott recognised it as containing her handwriting and deposed that she sent it back in the honest belief that it was from the defendant's ex-boyfriend who was harassing her. She says, "At no time did I ever return anything except correspondence which I truly believed to be from the former boyfriend". Mrs Scott's evidence is rather general, and it is to be noted that a number of such letters clearly contained the names of the plaintiff's solicitors stamped on the outside of the envelope that was returned. It was confirmed that the defendant did generally reside at that address with her grandmother over the relevant period. [9] When the action was called on in the District Court on 23 February 1995 the requirements of r 229 of the District Court Rules were met, and judgment was entered for the plaintiff. The defendant was non-suited on her counterclaim. [10] It is common ground that the judgment was regularly obtained. It is also common ground that the plaintiff's solicitors did everything reasonably possible to advise the defendant of the hearing date. [11] The learned trial judge referred to the defendant's assertion that she had not heard anything from her solicitors after writing to them at the end of 1993 and also to her grandmother's evidence which if accepted showed that at least some of the various solicitors' letters were returned without the defendant's knowledge. It is noteworthy however that in the course of an extensive and careful resume of the evidence his Honour at no point expressly accepted the defendant's assertion of ignorance of the fact that the action proceeded. This I think was quite deliberate and appropriate in the circumstances. At the same time his Honour concluded that there was no evidence proving that the defendant was advised of the existence of the judgment before February 2000 but observed that that was by no means the end of the matter. His Honour's reasons continue: "The defendant may have had valid personal reasons to leave Australia and return to the UK. She was aware of the plaintiff's action and must have provided instructions for her counterclaim/set off. After her departure, on her account, the only attempt she made to keep herself informed about what, on any view of it, was an important matter regarding her legal liability to the plaintiff and the plaintiff's legal liability to her was her letter of November 1993 to her solicitors. She made no further attempt by any available means to contact her solicitors. She acted promptly when served with the statutory demand. It is now nine years since the events the proceedings concern. It is five years since the judgment. Recollection will be affected. According to the plaintiff she no longer has journals containing -- 3 of 6 -- 4 relevant stock details. She says she will be prejudiced in attempting to now prove her claim. I accept that will be so. The fact that judgment went by default was due to fault of the defendant. Even if it be accepted that her grandmother intercepted all letters to her and returned them, and there are a significant number of letters which solicitors have no record of being returned, the defendant took no step other than writing the letter in November 1993 to keep abreast of what was, on any view of it, an important legal matter with potentially serious consequences for both her and the plaintiff." [12] His Honour proceeded to dismiss the application. The defendant has in the present proceedings sworn a lengthy affidavit recounting her dealings with the plaintiff. It tells a story of her being left in charge of the jewellery shop without any satisfactory supervision or system. She described an alteration in procedure in April 1991 when the plaintiff required her to keep books in a confusing way which would permit the plaintiff to delay in paying certain stockists who had imposed a requirement of payment in cash. Although descriptions were kept of items coming into the store she pointed out that "with a lot of repeated stock it is very difficult to differentiate between which individual ring or bracelet may have been sold". She kept details of sales on foolscap sheets of paper which she placed into a binder. She did not forward any documents to the plaintiff for April, May or June 1991 because the journals had not been written up. However, she left the sheets of paper behind when she was dismissed. It is not necessary to discuss the affidavit in greater detail. It raises disputes and a degree of confusion into what stock was missing and there is a further issue of her own jewellery which apparently had been mixed in the store with jewellery she was selling for the plaintiff. The defendant says that she collected such jewellery after she was dismissed, that it was put in a separate bag and placed in the safe, and that she had not got it back. It is enough to say that the affidavit raises a defence on the merits, even if the precise legal articulation of it is difficult. The original defence was structured around an unparticularised allegation of waiver, and a set-off based on the counterclaim. The defendant agreed that she was prepared to abandon her counterclaim when she went to England, stating that "I was working in England, I didn't think I'd be able to get Legal Aid". [13] Before this court, counsel for the defendant, in seeking leave to appeal against that decision, attacked his Honour's findings in relation to prejudice in a number of ways. Firstly he submitted that substantial discovery had taken place before the defendant's departure, and that the solicitors for the respective parties still had possession of such documents or copies. Whilst that may reduce the prejudice, it does not overcome the prejudice from loss of the plaintiff's original journals for the business which contained relevant stock details and other matters which would probably be considerable aids if not substitutes for memory. [14] Counsel for the defendant submitted that the learned District Court judge erred in treating the defendant as responsible for the delay and as responsible for the prejudice. In his submission the plaintiff was responsible for some of the delay before judgment and all of the delay since. The above reasons however suggest that the plaintiff was not responsible in any blameworthy way for these delays. As well he submitted that the plaintiff was responsible for the loss of the journals. It cannot -- 4 of 6 -- 5 be held however that the plaintiff, having obtained a judgment, was guilty of any fault in failing to retain the journals after obtaining judgment or in failing to make greater efforts to trace the whereabouts of the defendant or expedite the service upon her of notice that a judgment had been obtained. The plaintiff swore an affidavit stating that "Since obtaining judgment against the defendant I have been anxious to enforce the judgment but have been unable to do so because I could not locate the defendant (until February 2000)". Although there was cross-examination of various deponents during the procedure before the learned District Court judge, no request was made to cross-examine the plaintiff on this or any other part of her affidavit. It is true that the plaintiff did not go into detail as to the steps that she took or authorised to be taken to locate the defendant, but it seems to me that if it was desired to submit that the plaintiff should be blamed for the delay or criticised for not doing more than she did in this respect, it was incumbent upon the defendant or her advisers to put that suggestion to the plaintiff. As the evidence stands the natural inference is that the plaintiff believed that the defendant could not be found and was discouraged from further pursuit at that time which may well have been thought difficult or expensive. It seems inescapable that the lack of communication and subsequent delay before a demand for payment was served is primarily a product of the defendant's own making. [15] The essence of the matter is that knowing she was being sued and that the action had progressed a considerable distance, the applicant left this country and took no steps to find out what was happening in the action, to pursue her defence or the counterclaim or to make proper arrangements to be contactable. A considerable number of relevant documents went to the address where she was living. She was also, it appears, in Australia on two occasions after the judgment was entered, namely in October 1997 and February 1999, but made no enquiry from any person (including her former solicitors) in relation to the action. [16] The prejudice that would be suffered by the plaintiff if the matter were now to be tried is not confined to the loss of documents. The defendant also swore that she is unable to find the present whereabouts of other employees who worked at the shop in the relevant period. She had, since being served with the present material, attempted to contact two named witnesses but had been unable to find them. They were no longer living at Eumundi (where they formerly lived) and the telephone number at which she had formerly been able to contact them was no longer their number. The issues in the action concerned multiple individual items of jewellery sent to the shop, procedures to be followed at the time and also included some critical conversations between the parties. The plaintiff further deposed "My recollection of events would not now be as good as what it would have been if the matter had come on for trial in 1995 and I believe I will be disadvantaged in establishing my claim and resisting the counterclaim". Such a statement is quite reasonable and acceptable. It is certainly consistent with what McHugh J observed in Brisbane South Regional Health Authority v Taylor1. [17] The principles to be applied in applications of this kind are not in doubt. Since Evans v Bartlam2 the need for a defendant to show an "affidavit of merits" is recognised as necessary in order to set aside a judgment that has been regularly 1 (1996) 186 CLR 541 at 556. 2 [1937] AC 473. -- 5 of 6 -- 6 obtained. But that will not suffice to have the judgment set aside if the delay or other conduct of the defendant in permitting the judgment to be obtained will produce material prejudice to the plaintiff in the event that the judgment is subsequently set aside.3 In the Oasis Developments case McPherson J (as he then was) stated: "It is not often that a defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy interval of time had elapsed provided that no irreparable prejudice is thereby done to the plaintiff". [18] The prejudice to the plaintiff through the lost time between 1993 and now has already been described and the defendant must be held responsible for that loss. This prejudice could fairly be described as irreparable. As well, the defendant's explanation for the delay could hardly be described as satisfactory. That is of itself only a minor matter in the overall balancing exercise that the court has to perform in these matters, but I do not understand McPherson J in the Oasis Developments case to suggest that such a matter is completely irrelevant. In Evans v Bartlam Lord Atkin dismissed the suggestion that there was a rule that an applicant must satisfy the court that there was a reasonable explanation why the judgment was allowed to go by default, but went on to observe: "I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the court will have regard in exercising its discretion."4 [19] No error has been shown in the approach taken to this matter by the learned District Court judge. The parties have presented full argument in this court as if on appeal, and the applicant has failed to satisfy me that there are good grounds for disturbing the judgment. The order in question is in form interlocutory, but is one which is in a practical sense final. The question arises whether leave to appeal should be granted followed by an order that the appeal be dismissed, or whether leave to appeal should simply be refused. As leave is necessary under s 118 of the District Court Act, and it cannot be granted as a matter of routine, I propose to refuse leave on the ground that there is no reason to think that the judgment appealed from was wrong. [20] The application should be refused with costs. [21] ATKINSON J: I agree with the reasons of Thomas JA and the order that he proposes. 3 National Mutual Life Association of Australasia Limited v Oasis Developments Pty Ltd [1983] 2 Qd R 441, 449; National Australia Bank Limited v Singh [1995] 1 Qd R 377, 380. 4 Evans v Bartlam above at p 480. -- 6 of 6 --