Smith v Western Metals Copper Ltd
[2003] QDC 6
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- Unreported Judgment
- Smith v Western Metals Copper Ltd[2003] QDC 6
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Smith v Western Metals Copper Ltd[2003] QDC 6
Smith v Western Metals Copper Ltd[2003] QDC 6
DISTRICT COURT OF QUEENSLAND[2003] QDC 006
PARTIES: | PAUL RAYMOND SMITH (plaintiff) -and- WESTERN METALS COPPER LIMITED (A.C.N. 004 664 108) (first defendant) -and- CALTON HILLS PTY LTD (A.C.N. 066 708 727) (second defendant) -and- MOUNT ISA CITY COUNCIL (third defendant) |
FILE NO/S: | (D) 27 of 2000 |
DIVISION: | District Court |
DELIVERED ON: | 12 February 2003 |
DELIVERED AT: | Mt. Isa |
HEARING DATE: | 4 February 2003 |
JUDGE: | Forde D.C.J. |
ORDER: |
|
CATCHWORDS: | Setting aside judgment in default of appearance — Rule 290 Uniform Civil Procedure Rules — defence on the merits Aboyne Pty Ltd v. Dixon Homes Pty Ltd (1980) Qd. R. 142; National Mutual Life Association of Australasia Limited v. Oasis Developments Pty Ltd (1983) 2 Qd. R. 441; Troiani v Alfost Properties Pty Ltd Court of Appeal No. 9560 of 2001 judgment dated 2 August 2002. |
APPEARANCES: | Mr L.A. Evans for Applicant/Third Defendant Mr D. Moffatt of V.R. Moffatt & Associates for Respondent/Plaintiff |
Introduction
- [1]The present application by the Third Defendant, Mt. Isa City Council (the “Applicant”) seeks to set aside a default judgment entered in this Court on 10 December 2001. The application was filed on 23 December 2002, over twelve (12) months later. It is made pursuant to rule 290 of the Uniform Civil Procedure Rules (“UCPR”). It is accepted that the judgment was regularly obtained. The judgment was obtained in default of appearance by the applicant. The action was commenced on 17 August 2000. Defences were filed by the First and Second Defendants on 29 August 2001 and 4 March 2002 respectively. The Applicant was served with the proceedings on 17 July 2001.
- [2]The Respondent/Plaintiff, Paul Raymond Smith, was injured on 20 August 1997, when the vehicle which he was driving ran into a ditch and he suffered personal injuries. He sues the First and Second Defendants as the lessees and occupiers of Gunpowder Road, near Mt. Isa. He alleges that the ditch was unguarded and no warning was given of its presence. It is not clear in the pleading as against the Applicant what its connection to the road is. Similar allegations of negligence are made against all defendants. However, in the draft defence (Exhibit AI 7), it is suggested that:
“7.…The Third Defendant states that:
- …
- the Third Defendant has over 1000 kilometres of rural roads under its control, and it does not have sufficient resources to carry out inspections of all roads;
- the Third Defendant had an agreement with the First Defendant that the First Defendant would be responsible for day to day maintenance of the road and the Third Defendant would maintain signage on the Gunpowder Road;”
- [3]It is implicit in the proposed defence and it was common ground on the application that the Applicant has primary care of the Gunpowder Road but it then alleged that it had assigned responsibility for its upkeep (cross examination of Mr. Ahnfeldt p. 7 line 14). Mr. Ahnfeldt occupies the position of Risk Management and Facilities Administrator with the Applicant. Therefore, on the material before the Court on this application, a prima facie case of negligence has been pleaded against the defendants. The First and Second Defendants may have some overlapping duty in relation to the road (cross examination of Mr. Ahnfeldt p. 6 line 49). It is not necessary nor appropriate to make any particular findings against the First and Second Defendants on the present application.
Principles to be applied
- [4]The relevant principles to be applied are:
- Whether or not the Applicant has given a satisfactory explanation for the failure to file a Notice of Intention to Defend and Defence;
- Whether there has been any delay in making the application;
- Whether the Applicant has a prima facie defence on the merits of the claim. (Aboyne Pty Ltd v Dixon Homes Pty Ltd (1980) Qd. R 142)
- [5]It is not often that if a defendant can show that it has an apparently good ground of defence, it should be refused the opportunity of defending, even though a lengthy interval of time had elapsed in making the application provided that no irreparable prejudice is thereby done to the plaintiff: N.M.L.A. v Oasis Developments (1983) 2 Qd. R. 441 per McPherson J. at 449.
Explanation relating to failure to file Defence
- [6]Mr. Ahnfeldt swore an affidavit in these proceedings and also gave evidence. He deposed that on or about 17 July 2001 the Applicant was served with these proceedings. He stated that on 18 July he forwarded by facsimile a copy of the Claim and Statement of Claim to the insurer of the Applicant LGM. He exhibited the coversheet. He was not able to provide proof that the facsimile was sent. In fact, Ms. Inglis a solicitor acting for the insurer deposes that LGM never received the said facsimile enclosing the proceedings. She relied upon information provided by Ms. Dooley who is an employee of the insurer. The insurer was told by another defendant of the proceedings.
- [7]Mr. Ahnfeldt was of the belief that the originating process was sent to the insurer. In the absence of any evidence of same and the non-receipt of any proceedings, one can infer that it was not sent. It is perhaps the belief of Mr. Ahnfeldt that is of importance in the case. Mr. Ahnfeldt did not follow up his facsimile. I find that failure of some significance given that he is employed by the Applicant as a Risk Management officer. A similar oversight occurred in Aboyne Pty. Ltd. (ibid 143). A solicitor was unaware of the return date of the summary judgment as the letter advising of same was placed under another letter. Mr. Ahnfeldt was not cross examined about his oversight. He could have been asked whether a receipt document was printed at the time that the facsimile was sent. In that event, it might have been inferred that its non-existence was consistent with the facsimile not being sent. The notice of claim stipulates that the defence should be lodged within twenty-eight (28) days. No follow up was undertaken by Mr. Ahnfeldt. Nearly twelve (12) months expired before Mr. Ahnfeldt was notified of the default judgment. How could the insurer have lodged a defence without the co-operation of the employees of the Applicant?
- [8]The failure of Mr. Ahnfeldt to note his file and follow up is somewhat reprehensible. It is unlikely that the insurer would have resolved the claim without obtaining information from the Applicant as its insured. The Plaintiff could have withdrawn its claim, in which case no information would have been sought from the Applicant. In order to determine whether the Applicant’s risk was covered, Mr. Ahnfeldt should have made an inquiry of the insurer before the effluxion of some twelve (12) months. Even if he had waited four (4) months before making his inquiry, the default judgment could have been avoided. It is common ground that the Applicant did not receive any notice of the default judgment. It was suggested by the solicitor appearing for the Plaintiff that this was a matter of tactics. However, given that the Applicant has a right to seek contribution or indemnity from the other defendants, the subtlety of this tactic eludes me. Given that Mr. Ahnfeldt’s position with the Applicant is monitoring any legal proceedings which are taken against it, the failure to act, I find, places a question over the explanation. By itself, if there is a defence on the merits, such a failure may not be fatal.
- [9]The position can be compared to cases such as Troiani and Anor. v. Alfost Properties Pty Ltd. Court of Appeal 9560 of 2001. In that case, the applicant defendants asserted that the delay for not filing the defence and setting aside the judgment was caused by the failure of the plaintiff to provide them with a document and also their former solicitor failed to follow their instructions and advise them of any communications from the solicitors for the plaintiff or the plaintiff itself. There was some doubt as to whether the chamber judge had found that there was or was not a satisfactory explanation for the delay. However, as McPherson AJ stated (p. 7), “much less significance is now ascribed to delay than may have been the case at some times of the past.” In that case, the time between when the defendants were served with the claim and the date on which the application to set aside the judgment was some seventeen (17) months. There is no suggestion of “irreparable mischief” or prejudice suffered by the Plaintiff in the present case as a result of the delay which could not be compensated by an award for costs: Attwood v Chichester (1878) 3 QBD 722 at 723; Troiani ibid.p. 7-8.
Delay in making the application to set aside the default judgment
- [10]Ms. Dooley told Ms. Inglis that when she contacted Mr. Ahnfeldt about the proceedings in July 2002, he recalled that the Applicant had been served and that there was a Freedom of Information Act application. That application was dated 8 March 2002. Mr. Ahnfeldt deposed that there was no cross referencing of proceedings against the Applicant and FOI applications, yet he informed Ms. Dooley of both when she rang him (para. 2 of affidavit of Ms. Inglis). After he sent the proceedings to the insurer, his next involvement was when Ms. Dooley rang him on 10 July 2002. He subsequently undertook searches on behalf of the solicitors for the insurer. The relevant material was sent to the solicitors by 22 August 2002. By 11 September, the solicitors for the insurer had advised the Applicant that the insurer would indemnify it.
- [11]Some explanation for the delay between say September and December is necessary. In Troiani (p. 5-6), reference was made to the difficulty in obtaining documents when a company is being run by a receiver. In the present case there was some correspondence between the parties. By letter dated 24 October 2002, the solicitors for the Applicant provided some basis for setting aside the judgment. The Plaintiff’s solicitors in reply on 30 October suggested that an application be made to the court. After preparing the material to apply to set aside the judgment, the solicitors for the Applicant asked the Plaintiff’s solicitors whether they would consent to setting aside the judgment. This letter is dated 29 November 2002, some three (3) months after the Applicant’s solicitors had received all of the relevant material. On 3 December 2002, the Plaintiff’s solicitors stated that they would seek their client’s instructions. The application was filed on 3 December 2002. The Plaintiff’s solicitors replied in the negative on 29 January 2003. An attempt has been made to explain the delay of some four (4) months between August and December when the application was filed. The explanation is somewhat thin in parts. It shows a tardy approach to the urgent nature of such an application. I have regard to the principles in the cases so far referred to concerning delay and particularly Troiani (ibid. at p. 8):
“It should always be borne in mind in matters of this kind that a refusal to set aside a judgment has a consequence that a plaintiff succeeds in obtaining and retaining a judgment, sometimes for a substantial sum of money, in an action in which the defendants may, as in this case , have been found to have a plausible defence on the merits which is never tried. That is an unusually heavy sanction for delay and one that, in the context of the finding here that there is a defence on the merits, should not be imposed in the present case.”
Is there a defence on the merits?
- [12]The two defences raised are referred to above in paragraph 2. As deposed to by the solicitor for the Applicant the First and Second Defendant used the Gunpowder Road. She deposes that officers of the Council informed her that their financial and physical resources did not stretch to maintenance of the road which was unsurfaced. She referred to the fact that there was “substantial evidence that the First and Second Defendants may have adopted responsibility for grading the road”. She conceded that her information was incomplete. She confirmed the defence that the Applicant had some one thousand (1000) kilometres of rural roads to look after. The details concerning the arrangements for the maintenance of the road by the First and Second Defendants had not been obtained. A Mr. Mason who is a former employee of the Council told her that the Applicant could not afford to keep up the maintenance of the road given that the First Defendant, which was a mining company had its trucks using it on a continuous basis. Mr. Mason told her “that an agreement was struck whereby the Council would maintain responsibility for the signage but not the road itself, which the First Defendant agreed to keep trafficable by grading”.
- [13]There are some observations to be made about this material. Firstly, it is on information and belief only. Secondly, Mr. Mason is no longer employed by the Applicant. Thirdly, there was ample time for the solicitors for the Applicant to obtain the necessary information or documents prior to this hearing. Also, that information must be read in light of the affidavit and cross examination of Mr. Ahnfeldt. In his affidavit, Mr. Ahnfeldt refers to correspondence between the defendants and confusion over who owned the road. Resolutions were passed by the Applicant in 1990 permitting the First Defendant to maintain the road (para. 7 of his affidavit). He deposes that the Applicant did not maintain the road. Even though it was a dedicated road. He deposes that the First and Second Defendants were the main users and that the Applicant did not have the funds to maintain a remote unsealed road of this nature. Mr. Ahnfeldt stated: “I believe it is likely to be proved by agreement that the First Defendant had responsibility for grading the road…”.
- [14]It has not been established to the requisite standard that an agreement existed at the time of the accident namely in August 1997. Mr. Ahnfeldt refers to his inquiries. The source is not referred to:
“My inquiries indicate that regular maintenance was performed by the First Defendant and the Third Defendant was responsible for the occasional signage on the road. My inquiries are still in an early state but I believe that there is some evidence that the proprietors of the Second Defendant would perform contract grading on behalf of the First Defendant”.
- [15]Mr. Ahnfeldt provided materials to the solicitors for the Applicant in August 2002. The attempts to establish an agreement are based on flimsy hearsay material. There is a concession by Mr. Ahnfeldt that an agreement “is likely to be proved”. For the purposes of this application, I am not satisfied that it has been shown that there was a prima facie agreement as alleged in paragraph 7 of the defence existing at the time of the accident. It was established in cross-examination of Mr. Ahnfeldt (p. 4 line 40) that he had confused the Second Defendant and the Calton Hills Station. His affidavit to that extent lacked weight. The Second Defendant did not come into existence until 1994. It was further established that the First Defendant became involved in the lease on 18 March 1999. Therefore, his searches concerning the alleged agreement referred to earlier leaseholders but not the First Defendant.
- [16]There is the further defence that the Applicant did not have the resources to properly maintain an unsurfaced road. In the absence of sufficient proof that the First and Second Defendants accepted that duty, this question assumes greater importance. There is now no distinction drawn between misfeasance and non-feasance in relation to roads and highways: Brodie and Anor. v. Singleton Shire Council and Ors. (2001) 206 CLR 512. The question of what practical measures could be taken to minimise the risk of the ditch causing an accident is a question of fact which cannot be determined on the present application. The Applicant is obliged to take reasonable care that their exercise of its powers as a local authority or its failure to exercise them does not create a foreseeable risk of harm to road users. If the risk is unknown to the authority and discoverable by inspection, to discharge its duty of care an authority having power to inspect is obliged to take reasonable steps to ascertain the existence of latent dangers which might reasonable by suspected to exist: Brodie ibid.p. 580.
- [17]The material does raise an issue which if established by evidence may allow the Applicant to avoid liability to the Plaintiff. The suggestion is that the Gunpowder Road was an isolated unsurfaced road (para. 10 of the affidavit of Ms. Inglis). On the other hand, Mr. Ahnfeldt deposes that the Applicant provided funds for maintenance of the road “but had been pressured by the First and Second Defendants to do so” (para. 7). He does not say when these funds were provided. The Applicant determined in 1990 what the permitted volume of traffic would be. It is admitted that the Applicant did not maintain the road “as it wasn’t a genuine public access road…”. It was accepted by Mr. Ahnfeldt that it was a dedicated road and as such “…it’s a road that council has some responsibility for, and its contained within the shire.”
- [18]The extent to which the Applicant as a council should be held liable for failing to minimise a risk caused by a ditch beside a culvert on an unsurfaced road near Mt. Isa is a question which has been raised as a defence. The evidence to date is somewhat flimsy but in my view a defence on the merits has been raised. There are questions of fact raised which if proved by evidence may allow the Applicant to avoid liability.
Costs
- [19]The issues discussed in these reasons justified the Plaintiff contesting this application. The aspects of delay and the nature of the defences raised deserved examination. The evidence has been found to be wanting in some respects. The solicitors for the Plaintiff have exposed some of the weaknesses in the submissions of the Applicant particularly relating to the alleged agreement which could only be resolved by a hearing. The question of the liability of the Applicant under the principle espoused by the High Court in Brodie requires further evidence. The Applicant was justified in testing that aspect also.
Orders
- It is ordered that the judgment entered by the Respondent/Plaintiff against the Applicant/Third Defendant on 10 December 2001 be set aside.
- It is further ordered that the Applicant/Third Defendant have leave to defend and that the defence be filed and served within twenty-one (21) days.
- It is further ordered that the Applicant/Third Defendant pay the costs of and incidental to this application to be assessed on the scale appropriate where the amount recovered is in excess of $50,000.00, including the costs thrown away by the default judgment.
- Liberty to apply.