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  • Unreported Judgment

Orchid Avenue Pty Ltd v Parniczky

 

[2015] QSC 207

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Orchid Avenue Pty Ltd v Parniczky & Anor [2015] QSC 207

PARTIES:

ORCHID AVENUE PTY LTD ACN 118 752 346

(plaintiff)

v
PATRICIA KAYE PARNICZKY ATF THE PARNICZKY FAMILY TRUST
(first defendant)
and
PATRICIA KAYE PARNICZKY
(second defendant)

FILE NO:

4610 of 2012

DIVISION:

Trial

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

23 July 2015

DELIVERED AT:

Brisbane

HEARING DATE:

22 July 2015

JUDGE:

Burns J

ORDER:

  1. The defendants are ordered to pay to the plaintiff the sum of $1,244,490.31
  2. The counterclaim is dismissed
  3. The defendants are ordered to pay the plaintiff’s costs of and incidental to the proceeding, including any reserved costs, to be assessed on the standard basis

CATCHWORDS:

CONVEYANCING – BREACH OF CONTRACT FOR SALE AND REMEDIES – VENDOR’S REMEDIES –DAMAGES – where the parties entered into a contract for the sale of an apartment “off the plan” – where the second defendant personally guaranteed the payment of all money and the performance of all obligations of the first defendant and indemnified the plaintiff for loss and costs incurred in consequence of any breach where settlement was agreed to occur after registration of the relevant plan and creation of the separate title for the apartment – where the plan was registered and settlement became due – where the first defendant refused to complete the contract – where the plaintiff claims damages for non-performance of the contract – where the defendants filed a defence and counterclaim alleging various matters including that the contract was induced by misrepresentations

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND  –  PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – TRIAL – OTHER MATTERS – where a trial commenced – where the defendants did not appear when the trial started – where the plaintiff’s solicitors made repeated efforts to contact the defendants – where the plaintiff sought to proceed pursuant to r 476 of the Uniform Civil Procedure Rules 1999 (Qld) – whether the defendants had received notice of the trial where it was directed that the plaintiff be at liberty to establish an entitlement to judgment by affidavit pursuant to r 390 of the Uniform Civil Procedure Rules 1999 (Qld) – whether the court should have high regard to the contents of the defence – where notices to admit facts under r 189(1) of the Uniform Civil Procedure Rules 1999 (Qld) were not responded to – whether the court should dismiss the defendants’ counterclaim whether the plaintiff has established an entitlement to judgment

Uniform Civil Procedure Rules 1999 (Qld), r 189, r 390, r 476

Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, considered

Barclay v English [2009] QSC 258, cited

Gedala Pty Ltd & Anor v Gusdote Pty Ltd [2010] QSC 482, cited

Linprint Pty Ltd v Hexham Textile Pty Ltd (1991) 23 NSWLR 508, cited

Stone v Smith (1887) 35 Ch D 188, cited

COUNSEL:

G Handran for the plaintiff

No appearance for the defendants

SOLICITORS:

Hickey Lawyers for the plaintiff

No appearance for the defendants

  1. By a contract in writing dated 16 April 2008, Orchid Avenue Pty Ltd agreed to sell an apartment “off the plan” in a development at Surfers Paradise to Patricia Parniczky as trustee for the Parniczky Family Trust. Under the contract, the purchase price was $1,560,000 and settlement was agreed to occur after registration of the relevant plan and the creation of a separate title for the apartment. Additionally, in her personal capacity, Ms Parniczky guaranteed the payment of the purchase price as well as the performance by the purchaser of its other obligations under the contract and, further, indemnified Orchid Avenue for any loss occasioned or costs incurred in consequence of any breach.
  2. On execution of the contract, a deposit in the amount of $156,000 was paid by Ms Parniczky to a stakeholder to be held in trust. On 8 July 2011, a plan was registered and, with that, a separate title for the apartment came into existence. By operation of the contract, settlement thereby became due on 15 September 2011 but Ms Parniczky refused to complete the contract.
  3. On 22 September 2011, Orchid Avenue terminated the contract and the deposit held by the stakeholder was released to it on 23 September 2011. On 10 April 2013, Orchid Avenue resold the apartment for a price of $796,000.[1] The expenses associated with that resale[2] totalled $72,432.82.
  4. In this proceeding, Orchid Avenue claims damages for non-performance of the contract against Ms Parniczky in her capacity as trustee of the Parniczky Family Trust and in her own right. Relevantly, pleadings (including amended versions) were exchanged and a trial listing was eventually obtained for two days commencing on 22 July 2015.
  5. When the trial started, there was no appearance for or on behalf of Ms Parniczky or the Parniczky Family Trust. Counsel for Orchid Avenue then sought to proceed pursuant to r 476 of the Uniform Civil Procedure Rules 1999. 

Default of attendance at trial

  1. Rule 476 is in these terms:

Default of attendance

(1)If a defendant does not appear when the trial starts, the plaintiff may call evidence to establish an entitlement to judgment against the defendant, in the way the court directs.

(2)If the plaintiff does not appear when the trial starts, the defendant is entitled to dismissal of the plaintiff’s claim and the defendant may call evidence necessary to establish an entitlement to judgment under a counterclaim against the plaintiff, in the way the court directs.

(3)Despite subrule (2), the defendant may submit to judgment if the plaintiff does not appear when the trial starts.

(4)The court may set aside or vary any judgment or order obtained because of subrule (1) on terms the court considers appropriate.”

  1. It should be immediately noticed that, although r 476(1) permits the plaintiff to adduce evidence to establish an entitlement to judgment if the defendant does not appear when the trial starts, that may only occur “in the way the court directs”. It should therefore not be thought that a plaintiff has an automatic right to establish an entitlement to judgment under that rule. Thus, in a case where it appears to the court that a defendant has not received notice of the trial, the appropriate course would be to adjourn the trial to enable such notice to be given to the defendant, and the same observation may be made in connection with r 476(2) in the case of a plaintiff who fails to appear. It follows that, before giving directions permitting a plaintiff to call evidence to establish an entitlement to judgment in the absence of the defendant, the court must first be satisfied that such a course is, in all of the circumstances, appropriate. At the minimum, the court should direct the bailiff to leave the courtroom to call out the name of the absent defendant three times and, if there is still no appearance, it may then be necessary for evidence to be received as to the manner in which notice of trial was provided to the defendant or other relevant information including any enquiries which have been made as to the defendant’s whereabouts.
  2. If, however, the court is satisfied that it is appropriate to proceed under r 476(1), the pleadings set the limits of what may be proved against an absent defendant to establish an entitlement to judgment. For that reason, a plaintiff proceeding under this rule can go no further in proof of the claim than to call evidence to support the allegations which are already contained in the statement of claim.[3] But, as to that, allegations which are admitted in the pleadings, either expressly or by operation of the UCPR, will of course not need to be proved; it is only that part of the pleaded case which is in issue on the pleadings which needs to be established by evidence. That may be achieved in the usual way through oral and documentary evidence[4] or, if the court considers it expedient, a direction may be made pursuant to r 390 that evidence be received by affidavit.[5]
  3. It is important to keep in mind when proceeding in accordance with r 476(1) that the contents of any filed defence cannot be ignored despite the feature that the defendant has failed to appear at the trial. As Brennan J (as his Honour then was) explained in Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd,[6] the whole object of pleadings is to bring the parties to an issue and, when that occurs, the court’s function is to determine that issue.[7] As such, the defence must be considered alongside the statement of claim and any reply in order to determine the issues to be tried in the defendant’s absence. Once identified in that way, the issues will then be determined by the court in accordance with such evidence as may be called by the plaintiff. That, of course, does not mean that the plaintiff will or must succeed on all such issues, but it will mean that an absent defendant will likely fail on any issue in relation to which he, she or it has a burden of proof. For example, a defendant who sets up a defence by which it is alleged that a contractual bargain was induced by a fraudulent misrepresentation would need to support such an allegation with evidence.  If no such evidence is adduced, that issue – alive as it may have been on the pleadings – must necessarily be decided in the plaintiff’s favour.
  4. Where, as here, a counterclaim is advanced on the pleadings and the defendant does not appear, the position is a little different. A defendant advancing a counterclaim is really in the position of a plaintiff for the purposes of that claim and, as such, r 476(2) may be apt to confer an entitlement on the plaintiff in the principal claim to dismissal of the counterclaim. Even if that is not so, it cannot be doubted that the court has inherent power to dismiss a counterclaim where a defendant fails to appear to prosecute it.[8] This is for the obvious reason that such a defendant should be taken as having passed up the opportunity to support that claim.
  5. It only remains to be noted that the court retains a discretion to set aside or vary any judgment or order obtained by a plaintiff pursuant to r 476(1).[9] However, there is nothing which is provisional in character about a judgment entered in that way; it operates as a final judgment of the court.

Notice of the trial

  1. The affidavit material relied on by the plaintiff establishes that, until 20 March this year, the Parniczky Family Trust and Ms Parniczky were legally represented.  On that date, a Notice that Party Acting in Person was filed and served by Ms Parniczky.[10] Three days later, Daubney J ordered that the defendants’ signature on the Request for Trial Date be dispensed with and, on 16 April 2015, the Request for Trial Date was filed.
  2. On 20 April 2015, Orchid Avenue was notified that the matter was listed for a two day trial to commence on 22 July 2015. On 22 April 2015, its solicitors forwarded an email to the address specified in the Notice that Party Acting in Person to confirm the same thing. Subsequently, numerous attempts have been made by Orchid Avenue’s solicitors to bring notice of the trial to the defendants’ attention. This has included posted and emailed correspondence, text messages and telephone calls.  None of those communications have been responded to by, or on behalf of, the Parniczky Family Trust or Ms Parniczky.  Indeed, an email from the civil list manager forwarded to the defendants on 7 July 2015 in which the trial dates were specified also went unanswered.[11]
  3. Although Ms Parniczky has not responded to any of these communications, I have no doubt that she was well aware the trial was set down to commence yesterday. Although some of the correspondence forwarded to Ms Parniczky was “returned to sender”, that correspondence was contained in envelopes on which the name of Orchid Avenue’s solicitors was printed. In all other cases, “nondescript” envelopes were used, and that correspondence was not returned.
  4. On the whole of the material, I was (and remain) satisfied that the Parniczky Family Trust and Ms Parniczky were aware, prior to 22 July 2015, that the trial was due to commence on that date.  Given my satisfaction in that regard, I allowed Orchid Avenue to proceed under r 476 and, further, directed that it be at liberty to attempt to establish an entitlement to judgment based on affidavit evidence.[12]

Is the plaintiff entitled to judgment?

  1. By the Amended Defence and Counterclaim filed on 15 July 2013, a number of the allegations contained in the Amended Statement of Claim were admitted, but positive allegations were also made by way of defence. They were: that the contract was “void and unenforceable” because it had been induced by a number of oral misrepresentations regarding the availability of finance; that Ms Parniczky was not authorised to enter into the contract on behalf of the Parniczky Family Trust; that the plaintiff failed to mitigate its loss; and that the interest rate on unpaid money and expenses under the contract was a penalty and unenforceable. As for the counterclaim, the allegations made in the defence were essentially repeated and, then, relief was sought in the form of declarations together with a claim for an unspecified sum for damages pursuant to s 236 of the Competition and Consumer Act 2010 (Cth). By the Further Amended Reply and Answer filed on 3 June 2015, the allegations contained in the Amended Defence and Counterclaim, as well as the claim to relief, were effectively put in issue.
  2. In May and June this year, two separate Notices to Admit Facts were served on the Parniczky Family Trust and Ms Parniczky by the solicitors for Orchid Avenue pursuant to r 189 UCPR. The affidavit material on which Orchid Avenue proceeded establishes that they were not responded to within the 14 day period prescribed in r 189(2), or at all. In consequence, the Parniczky Family Trust and Ms Parniczky are taken to have admitted the facts set forth in the two notices.
  3. When the admissions made in the Amended Defence are read with the facts set forth in the Notices to Admit Facts which have not been responded to, each of the facts on which this claim is advanced is made out.[13] Further, not only have the allegations made by way of defence not been supported by any evidence, those allegations fly in the face of the facts which the Parniczky Family Trust and Ms Parniczky are taken to have admitted under the Notices to Admit Facts. For example, the facts which are thereby taken to be admitted establish that none of the oral representations pleaded in the Amended Defence were made and, further, that Ms Parniczky was authorised to enter into the contract on behalf of the Parniczky Family Trust. There is otherwise no substance in the allegation that Orchid Avenue failed to mitigate its damages and certainly no evidence to support such a complaint.
  4. The only issue pleaded in the Amended Defence which troubled me was the assertion that the contractual provision entitling Orchid Avenue to interest on unpaid money and expenses was a penalty and, for that reason, unenforceable. The relevant provision of the contract – clause 15.6 – provided for the payment of interest at a rate of 15% per annum “on the amount outstanding from the due date until the date of actual payment” and at the same rate on “the amount of any judgment (obtained by Orchid Avenue against the Parniczky Family Trust) from the date of judgment until the date of actual payment”. That is clearly a high rate of interest for these times but, on the other hand, it was the rate agreed to by the parties to a contract for the conveyance of an investment property. In this regard, it is also relevant to note that it was alleged (and taken to be admitted) that Ms Parniczky was a “sophisticated and experienced purchaser of property” with at least ten separate properties in her name in New South Wales and Western Australia.
  5. Support for concluding in favour of Orchid Avenue on this issue was also submitted by its counsel to be found in paragraph 11 of the May 2015 Notice to Admit Facts. That paragraph sought this admission:

“Pursuant to clause 15.6 of the Unit Contract the plaintiff is entitled to recover interest at 15% per annum.”

In particular, it was submitted that I should take this “fact” as admitted. The difficulty with that submission is that what was there sought was an admission with respect to a proposition of law, that is, as to what Orchid Avenue is entitled to under the contract. Rule 189 UCPR was not designed to facilitate the making (or deeming) of admissions with respect to matters of law; it is only concerned with facts and documents.

  1. In the end though, had the Parniczky Family Trust and Ms Parniczky wished to maintain that clause 15.6 was unenforceable, they needed to support that argument by reference to evidence about, amongst other things, the commerciality or otherwise of the specified rate in agreements such as the contract. In other words, this was an issue in relation to which they bore an onus and, by failing to appear, they have not attempted to discharge that onus.
  2. I am therefore satisfied that the issues raised in the Amended Defence are to be resolved in favour of Orchid Avenue and that the counterclaim ought be dismissed. Orchid Avenue has made out its case for damages for non-performance of the contract.
  3. As to the assessment of those damages, the purchase price ($1,560,000) less the amounts obtained by way of deposit ($156,000) and resale ($796,000) plus the expenses associated with the resale ($72,432.82) total $680,432.82. Interest on that sum shall be allowed at the rate of 15% to 22 July 2015 – $564,057.49.
  4. I shall give judgment on the claim in the sum of $1,244,490.31. Although Orchid Avenue seeks a judgment in terms that would continue to attract interest at the rate of 15% until the judgment is paid, and despite the feature that clause 15.6 so provides, I do not consider that such an approach would constitute a proper exercise of my discretion. If the judgment remains unpaid, it will attract interest at the prescribed rates.

Footnotes

[1] The sale price under the resale contract was $825,000, but that price included a furniture package worth $29,000.

[2] Commission, marketing costs and legal fees.

[3] Stone v Smith (1887) 35 Ch D 188.

[4] As in Barclay v English [2009] QSC 258.

[5] As in Gedala Pty Ltd & Anor v Gusdote Pty Ltd [2010] QSC 482.

[6] (1990) 169 CLR 279.

[7] Banque Commerciale, at 287-288.

[8] Linprint Pty Ltd v Hexham Textile Pty Ltd (1991) 23 NSWLR 508, 525 per Clarke JA (with whom Samuels JA agreed).  And see Gedala Pty Ltd & Anor v Gusdote Pty Ltd [2010] QSC 482 (where Margaret Wilson J dismissed a counterclaim in circumstances where the defendant failed to appear at trial).

[9] Seymour v Holm [1961] Qd R 214; Surfers Paradise International Convention Centre Pty Ltd v National Mutual Life Association of Australasia Ltd [1984] 2 Qd R 447; Dawson v Jewiss; Thompson v Jewiss [2004] QCA 374.

[10] See Exhibit 2.

[11] See Exhibit 3.

[12] Pursuant to UCPR r 390.

[13] Counsel for the plaintiff prepared an analysis in schedule form to demonstrate this proposition. This schedule is in evidence: Exhibit 4.

Close

Editorial Notes

  • Published Case Name:

    Orchid Avenue Pty Ltd v Parniczky & Anor

  • Shortened Case Name:

    Orchid Avenue Pty Ltd v Parniczky

  • MNC:

    [2015] QSC 207

  • Court:

    QSC

  • Judge(s):

    Burns J

  • Date:

    23 Jul 2015

Litigation History

No Litigation History

Appeal Status

No Status