DISTRICT COURT OF QUEENSLAND

2. [2]
   This application filed on 8^th September 2003 is for an order to set aside judgment by default entered on 23^rd February 2001.    In a statement of claim filed on 4^th of October 2000 the plaintiff sought declarations that the defendant held his right title and interest in real and personal property on trust for the plaintiff and an Order that the defendant convey his title and interest in that property to the plaintiff.  No defence was filed and the default judgment ensued. 

3. [3]
   The applicant swears that prior to the action solicitors acting for him had forwarded two letters to solicitors for the plaintiff concerning the sale of the jointly owned home. There was no response to that correspondence and the defendant says that he expected any further action concerning the matter to occur as between the solicitors. He received the respondent’s claim and statement of claim on 3^rd of November 2000.  The documents were “thrown” at him and he did not sign for them.  The only previous court proceedings he had experienced were applications by each of the parties for restraining orders against the other.  The respondent’s application then was served on the applicant by a police officer and he considered the delivery of documents in the manner it was performed lacked the formality he expected of service of official court documents.  He had limited knowledge of court processes and limited ability to read and write.

4. [4]
   On about 29^th May 2001 he was served with what he now realises were a letter from the respondent’s solicitors, a copy of the default judgment and transfer documents relating to the subject real property. 

5. [5]
   He saw what he thought was an offer of $1 as the sale price of his interest in that property. He considered that offer was not worthy of a response and did nothing about those documents. In particular, he sought no-one’s assistance to explain them, nor did he seek his solicitor’s advice. On 18^th June 2002 he was assisted by a friend, a real estate agent, to write a letter to the respondent suggesting a sale of the property and division of proceeds.  That letter prompted a reply from the respondent’s solicitor dated 22^nd July 2002 in which he was informed that the property had been transferred to the respondent in the previous year and that he owed the respondent a sum in excess of $4,000.  That response caused him to consult his former solicitors who advised him of the effect of the documents served on him.  About one month later he gave instructions to his solicitors to bring this application.

6. [6]
   However, it has taken him 12 months to save sufficient money from his income to pay his solicitor’s costs. He was unable to borrow money because he had a poor credit rating, caused or at least contributed to by his outstanding debt owed to the mortgagee of the subject property. His complaint is that while the legal interest in the property was conveyed to the respondent with the assistance of the signature of the Registrar (consequent upon an order by Wilson SC DCJ), his personal covenants in the mortgage continued to expose him to liability for repayments to the mortgagee bank.

7. [7]
   The material before me shows the appellant and respondent had maintained a de facto relationship for about nine years and he swore that he made financial contributions to the subject real property and made substantial structural and aesthetic improvements to the property both during the relationship and following its cessation, when he remained in occupation. During the period of the relationship he had paid mortgage instalments up until October 2000 when he was obliged to vacate the property. He says that he also applied substantial personal funds to the relationship including approximately $40,000 he received as an inheritance.

8. [8]
   The defence and counterclaim proposed to be filed if this application succeeds raises a prima facie case for division of property between the parties.  He denies there was ever any agreement or understanding that the respondent would be entitled to retain all the property in the event of a breakdown of the relationship, as is pleaded in the statement of claim.

9. [9]
   The claims of the applicant are denied by the respondent who suggests that this application is brought out of spite and to inconvenience her. I shall not set out the details of her rebuttal of his claim because most of the material supplied by the respondent is relevant to the issues in the action and not to this application. Suffice it to say that there are real issues to be tried between them. The respondent also denies the applicant’s claim of defects in his literacy and his comprehension skills but there is evidentiary support for his claim in the affidavit of Jennifer Le Neveu.

10. [10]
    This application is brought pursuant to r 290 of the UCPR and is made on two alternative bases: (1) The judgment was irregularly obtained in that the plaintiff failed to disclose to Judge Newton DCJ that the defendant’s liability under the personal covenants of the mortgage would continue notwithstanding the divesting of his interest in the subject property; (2) The judgment was regularly entered and I should set it aside in the exercise of my discretion.

11. [11]
    The primary argument is based on the well-established principle that an applicant for ex parte relief has an obligation uberrimae fidei to inform the court of all relevant facts (see re South Downs Packers (1984) 2 Qd R 559 at 565 per Connolly J).

12. [12]
    The transcript of the application before judgment by default indicates that his Honour Newton DCJ had called for the statement of claim before granting the application. That document would have apprised him of the fact that a mortgage in the joint names of the parties had been entered into. Moreover, the affidavit of the applicant plaintiff exhibited a search extract relating to the subject property, clearly indicating the existence as at the date of that search of a mortgage.

13. [13]
    Consequently I could not find that the plaintiff had failed to disclose the joint mortgage or that his Honour would have declined to allow judgment if he had been informed that the personal mortgage covenants would continue to operate to the disadvantage of the defendant. At best he might have made provision in his order for some relief in the form of an indemnity in favour of the defendant. It follows that the judgment must be held to have been regularly entered.

14. [14]
    It is clear on the material that the plaintiff’s solicitor acted improperly in respect of the application for judgment by default. She had engaged in correspondence on behalf of the plaintiff with solicitors acting for the defendant . Yet she gave no indication to the solicitors who had acted previously for the defendant of her intention to apply for judgment. That impropriety does not provide a ground for setting aside the judgment but it is a breach of etiquette to which I am obliged to draw the solicitor’s attention.

15. [15]
    The principles relating to setting aside a regularly entered judgment are well established. They are conveniently collected in National Mutual Life Association of Australasia v Oasis Developments Pty Ltd (1983) 2 Qd R 441 at 449 as follows:

1. (i)
   There is a satisfactory explanation for failure to appear;

2. (ii)
   Whether or not there has been any delay in making the application;

3. (iii)
   Whether or not the defendant has a prima facie defence to the claim.

16. [16]
    The mere of delay is not fatal to application provided the respondent has suffered no irreparable prejudice. Relative to that, the previously jointly-owned property is still in the plaintiff’s hands and is rented, producing an income and the defendant makes no allegation that she will be irreparably prejudiced in any way by reason of the defendant’s prolonged inactivity. The material filed on behalf of the application gave reasons for the delay but if it were a critical consideration I could not describe that explanation as satisfactory. However, the evidence shows that the applicant has a prima facie case for a more equitable division of property than was effected by the default judgment.

17. [17]
    In Yuruga Nursery Proprietary Limited v Australian Tea Tree Management Limited (2000) QSC 297, Jones J, after referring to National Mutual Life  Association of Australasia Limited v Oasis Developments Pty Ltd (supra) said:

“In Aboyne Pty Ltd v Dixon Homes Pty Ltd (1980) Qd R 142, Kelly J regarded an application to set aside a judgment, when regularly entered, as requiring the court to consider whether the defendant had given a satisfactory explanation of its failure to appear; any delay in making the application; and whether the applicant/defendant had a prima facie defence on the merits.  Speaking generally, it may be said that it is the last of these considerations that it [sic] is the most cogent.  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 has lapsed provided that no irreparable prejudice is thereby done to the plaintiff: Atwood v Chichester (1878) 3 QBD 722; Rosing v Ben Shemesh (1960) VR 173.”

18. [18]
    As I have mentioned, there is no evidence of any irreparable prejudice done or likely to be done to the plaintiff should the application succeed. I therefore order that the judgment by default of defence made on 23^rd February 2001 be set aside and that the defendant have leave to file a defence and counterclaim within 28 days of this date.

19. [19]
    As to costs, the normal order is that the plaintiff recover the costs thrown away by reason of the setting aside of the regularly entered judgment. The breach of etiquette on the part of the plaintiff’s solicitor detailed above could deprive the plaintiff of those costs. However, I cannot be satisfied that the judgment would not have been breached if the rule of etiquette had been followed.

20. [20]
    I make the usual order that the defendant pay the plaintiff’s costs thrown away as a result of the judgment being set aside and of this application to be assessed.

21. [21]
    Mr English for the respondent applied for an order that the defendant gives security for costs in order that the plaintiff’s interests may be protected in the event that she succeeds on the hearing of the action. That does not appear to me to be appropriate in the circumstances of this case. The major asset of the parties is the real property which is likely to be sold and apportionment be made between the parties according to their respective contributions. In such an event, provision can be made for the costs of either or both parties in the division of the proceeds of sale. In those circumstances security is not warranted.