Green v Tri-Barfen Pty Ltd[2006] QDC 160

DISTRICT COURT OF QUEENSLAND

1. [1]
   The defendant applies to set aside a judgment entered against it by the plaintiff on the basis the judgment was irregularly entered; or, in the alternative, that the court’s discretion to set it aside should be exercised. The issues are several; whether the claim, for which judgment was entered, was liquidated or unliquidated; whether or not service was effective; whether or not apparent non-compliance with the UCPR
   r 150(3) rendered the judgment defective; and, lastly, whether or not the discretion is called up.

2. [2]
   The dispute arises from the sale, by the defendant, of a steel shed to the plaintiff. The statement of claim alleges the contract was one to which the Sale of Goods Act 1896 (Qld) applies; that the shed was not, however, fit for its purpose or of merchantable quality, and the defendant also failed to provide proper plans and other equipment.  These statutory warranties were, it is alleged, breached and the statement of claim seeks specific performance or “... further or alternatively $20,020 in damages for breach of contract”.  The sum claimed allegedly coincides with the amount paid by the plaintiff to the defendant under the contract.

3. [3]
   The defendant denied it was ever served with the originating proceedings. The parties signified they would seek leave to call deponents who had filed affidavits about service but did not press their applications. A process server, a Mr Mayfield, swore that he served one of the defendant’s directors, Mr Glen Sharkey, by delivering the claim and statement of claim to him personally at 48 McIvor Court, Ormeau in the early morning on 14 May 2005.  Mr Sharkey swore he had never been served and says that the Ormeau property can only be entered via an easement and through a gate which requires the use of a remote control key; and, without that remote key, it is not possible to obtain entrance to the property.  His wife, also a director, says she was at home with him at 7.10 a.m. on 14 May 2005 (when Mr Mayfield swears service occurred) and denies there was any visit from a process server or any attempt at access to the property, through the locked gate, by any person.

4. [4]
   On 5 December 2005 the plaintiff requested a default judgment for $20,020 “... as a liquidated demand with interest”.  The Registrar signed a judgment under UCPR r 283 in that sum, plus interest on 12 April 2005.  The defendant mounts several attacks against that judgment: first, that the amount claimed was not in truth a liquidated demand; second, that the statement of claim failed to include informative notices required, if the claim is for a liquidated demand, under UCPR r 150(3); and, in the result, the wrong procedure was adopted for entry of the judgment which is, therefore, irregular.

5. [5]
   The statement of claim lacks the requisite notice under r 150(3) and, although the parties were unable to find any Queensland authorities, I was referred to the decision of Blackburn CJ in Rossco Developments Pty Ltd v O'Halloran (1980) 29 ACTR 1 at 4 which suggested, unsurprisingly, that the notice required under the rules is important, and mandatory.

6. [6]
   That question aside, however, I am persuaded the judgment was irregular because the plaintiff’s claim is not, in truth, a liquidated demand. The usual test is whether or not the claim can be calculated or ascertained by a formula^[1].  Under the Sale of Goods Act 1896, the particular warranties relied upon by the plaintiff are set out in
   s 17, and the remedies for breach of them in s 54.  Under s 54(2):

54(2) The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.

7. [7]
   That loss is, prima facie, the difference between the value of the goods at the time of delivery and the value they would have had if they had answered to the warranty. Certainly, in the absence of other evidence as to value the goods would have had if they had answered to the warranty, such as the market price if there is an available market, the contract price is sometimes taken as that value^[2], but the correct measure remains the value at the time of delivery to the buyer and that value should be taken if it differs from the contract price^[3].

8. [8]
   As the learned authors of The Laws of Australia say:

So far as the value of the defective goods are concerned, this is measured by their marketable value as such or in the absence of any market the cost of making good the defects and the time taken to do it plus any loss incurred for failure to perform as warranted^[4].

9. [9]
   In contract, liquidated damages are usually awarded only in those cases where the contract itself contains a clause providing for them, of the usual kind intended to avoid litigation about the sum to be awarded in the event of default. Nothing of that kind is suggested here. The parties did not refer me to an earlier judgment of this court, Day v Bell [2000] QDC 014 in which a contrary view was reached with which however, with respect, I have the misfortune to disagree.

10. [10]
    It follows that the plaintiff’s judgment under r 283 was irregular. He might have applied for unliquidated damages, to be assessed under r 284 but did not do so. Default judgments, regular or irregular, may be set aside under r 290 but different tests apply. When, as here, the judgment is irregular, even a technical breach of the rules may lead to it being set aside^[5].  Here, the combination of a failure to give the requisite notice under r 150(3) and, more significantly, the procurement of a default judgment for liquidated damages when the claim was not, in truth, one of that kind, suffice to determine the defendant’s application in its favour.

11. [11]
    Even if the judgment was not irregular I would, in any event, be prepared to exercise the discretion which arises under r 290 in the defendant’s favour. The question of service is unresolved, but doubt must arise when two directors swear service did not occur; delay is not in issue; and, Mr Sharkey swore an affidavit containing allegations which, if accepted, would constitute a good defence (or, at least, affect the quantum of damages).

12. [12]
    The defendant’s application succeeds. I will hear further submissions about the appropriate order, costs, and any other directions the parties require.