Hirvonen v White[2009] QDC 103

DISTRICT COURT OF QUEENSLAND

1. [1]
   In Mr White’s absence, Mr Hirvonen obtained summary judgment against him on a loan agreement. Mr White has now applied to the court for the judgment to be set aside, relying on rule 667(2)(a) of the Uniform Civil Procedure Rules (UCPR).^[1] The parties agree what factors the court must consider in making its decision.  They differ on whether the application should be granted.

2. [2]
   The court’s discretion is unfettered.^[2] The factors which arise for consideration include:^[3]

1. (a)
   the defendant’s conduct in the action before and after judgment;

2. (b)
   the defendant’s good faith;

3. (c)
   whether the defendant shows a case on the merits;

4. (d)
   whether if the applicant be let back in, irreparable wrong will be done to the party who has obtained judgment.

The defendant’s conduct in the action and good faith

3. [3]
   It is convenient to deal with the first two factors together as, in the circumstances of this case, neither factor adds anything to the other. A curious feature common to the parties is that each says they sent material to the other and each says they did not receive what the other said they were sent.

4. [4]
   Mr White was in Thailand when judgment was obtained against him. That is not disputed. Initially, he represented himself and drafted his defence. Before he left for Thailand, he wrote to Mr Hirvonen’s solicitors and informed them of his travel plans and inquired whether the claim would proceed given his defence. He heard nothing back before he left the country. The application for judgment was filed and determined and steps taken to commence its execution while he was in Thailand.

5. [5]
   When he returned, he says he became aware of steps to execute the judgment against him when he spoke to a bailiff who had left a business card and copy of the warrant of execution on his door. For reasons unknown to him, he did not receive any court documents sent to him at his residential address while he was away. He suggested this might be because there is no dedicated mailbox for his unit and that his postal address is a post office box. When he filed his defence he gave the street address of his high rise apartment block as his address for service, because he understood he could not use his post office box for that purpose.

6. [6]
   Mr Hirvonen’s solicitor said he did not receive Mr White’s letter. He applied for summary judgment, served Mr White in accordance with the rules and did not know Mr White was outside Australia at that time, until Mr White’s solicitors made contact prior to this application being filed.

7. [7]
   I have no basis for questioning the uncontested evidence of either Mr White or Mr Hirvonen’s solicitor. Neither was cross-examined on their affidavit and, viewed objectively, each acted consistently with their assertions. Mr Hirvonen’s solicitor repeatedly served court documents at the address for service. I note Mr White has not argued the material was not sent to him; simply that he did not receive it. All of it was posted to him while he was in Thailand. While it appears none was returned to sender, Mr White’s evidence that he has not received it remains unchallenged.

8. [8]
   Mr White engaged solicitors shortly after returning from Thailand and took prompt action to set aside the judgement once he was aware of steps taken to enforce it. Even if I assumed, contrary to Mr White’s evidence, that he had notice of the judgment before the bailiff’s visit, he engaged solicitors about a month after his return. That delay would not, of itself, prevent the court exercising its discretion in his favour.^[4]

9. [9]
   In these circumstances, this decision does not rest on a finding about conduct or good faith. I see nothing in Mr White’s conduct to count against granting the relief he seeks. He filed a defence raising, in broad terms, the issues between the parties. Throughout, he has acted in accord with his intention to defend the claim. Importantly, there is no allegation that he has misled Mr Hirvonen, intentionally or otherwise, about his attitude to the claim.

Has the applicant made out a prima facie defence?

10. [10]
    It was common ground the most cogent of the factors the court must consider is whether the applicant has made out a prima facie defence. Mr White drafted his defence without the assistance of a lawyer. While he broadly raised the factual issues, the defence he now proposes to file, if he succeeds in this application, clarifies his position and raises further defences. In these reasons, references to the defence are to the proposed defence. That is in substantially different form to the defence considered by the learned judge who entered judgment and, of course, his decision was made without the benefit of argument for Mr White.

11. [11]
    A number of issues were traversed before me. It is not necessary to canvass them all. Suffice it to say I am persuaded there is a prima facie defence on the merits. While some aspects of the defence may be capable of summary determination, the outcome of others depends upon facts in contest.

12. [12]
    In brief, Mr White’s defence rests upon the roles of people involved in the transaction, the purpose for the loan and Mr Hirvonen’s knowledge of and consent to the arrangements pleaded. Mr White says he is a borrower in name only, having acceded to his name being used for a loan which was, in fact, from Mr Hirvonen, a money lender and real estate agent, to Mr Andella, who acted as his broker and agent. Mr Andella told Mr White that Mr Hirvonen owed him commission not yet payable. In the meantime he was experiencing difficulty meeting his personal expenses and needed money to tide him over. Mr Andella told Mr White that Mr Hirvonen would lend the money to Mr White and accept repayment of the loan from the commission owed to Mr Andella. All dealings between Mr Hirvonen and Mr White were conducted through Mr Andella.

13. [13]
    Based on those dealings, Mr White asserts certain express or implied terms which prevent Mr Hirvonen enforcing the loan against Mr White. Mr White intends to include further defences of collateral contract and misleading and deceptive conduct. Each demands determination of the relationship between Mr Hirvonen and Mr Andella, as well as findings as to the circumstances in which the documents were signed and Mr Hirvonen’s knowledge of or acquiescence in Mr Andella’s conduct. The court is not in a position to reach the necessary conclusions before trial.

14. [14]
    Mr White also seeks relief under the Consumer Credit Code.^[5] He argues the loan was for personal not business purposes. There is a signed Declaration as to Purpose which characterises the loan as being for business purposes.  However, the circumstances in which it and other loan documents were signed are contested. There is evidence that a solicitor’s certificate, relating to that declaration amongst other documents, was forged. Mr White alleged Mr Andella’s purpose was personal. Mr Hirvonen’s knowledge about that is in issue. Determining whether the Consumer Credit Code applies, therefore, involves a factual dispute.

15. [15]
    Further, while judgment was sought for the principal sum only, the defence raises issues which go beyond the interest which is recoverable. The relief claimed includes orders under the Code to set the loan aside.

16. [16]
    I am satisfied a trial is required to resolve the issues between the parties.

Will the respondent suffer an irreparable wrong if the applicant is let back in?

17. [17]
    If Mr White is unsuccessful on this application, his property will be sold by auction. The bailiff’s actions to enforce the judgment are stayed pending further order. If Mr White succeeds on this application the judgment will be set aside and the warrant also will fall. The matter will then proceed to trial and will be determined on the merits. The only harm Mr Hirvonen will suffer in that event is that he may not be able to recover his costs of obtaining and seeking to execute the summary judgment and of dealing with this application. That harm can be ameliorated by costs orders. It does not justify holding out a defendant who has raised a prima facie defence.

18. [18]
    Mr White has succeeded in his application but these costs, and those earlier reserved, should not necessarily flow to him. There is some force in the submission that Mr White could have done more to protect his interests. He could have pursued the matter when he received no reply to his letter. He could have made arrangements for someone to collect and notify him of any mail sent to his service address in his absence.

19. [19]
    Neither can I see a basis for awarding costs to Mr Hirvonen on an indemnity basis, as requested. Mr White was not cross examined about the letter he says he sent to Mr Hirvonen’s solicitors or the circumstances in which he says he learned of the judgment. Both are important considerations in exercising discretion as to costs on this application. In my view the appropriate order is to reserve to the trial judge the question of the costs of this application, and those incurred by Mr Hirvonen in obtaining and seeking to enforce judgment.

20. [20]
    Given the history of this matter, it is appropriate that directions are made to expedite its further disposition. I invite the parties to confer with a view to settling agreed directions for the conduct of these proceedings. I adjourn the application to that extent to allow that to happen. If agreement is not reached, the court will make directions.

Orders

21. [21]
    The orders are:

1. The Judgment obtained against the Applicant/Defendant on 7 January 2009 is set aside.

2. The costs of and incidental to this application and the Respondent/Plaintiff’s costs of and incidental to obtaining and seeking to enforce that judgment are reserved.

3. The parties are to confer with a view to agree upon direction for the further conduct of the proceedings.

4. The application is adjourned to a date to be fixed to be brought on by either party on giving the other two clear days notice.