DISTRICT COURT OF QUEENSLAND

1. [1]
   This is an application by the first and second defendants to set aside a default judgment obtained by the plaintiff on 30 July 2012. The application is made pursuant to r 290 of the Uniform Civil Procedure Rules 1999 (“UCPR”).

Background

2. [2]
   The plaintiff and defendants were family friends at one time. All parties are of Chinese descent. The defendants are husband and wife and both claim to have a very limited command of the English language. Their first language is Mandarin.

The Plaintiff’s claim

3. [3]
   The plaintiff’s claim was for the sum of $178,447.50, plus interest and costs. The plaintiff claims that this total sum was loaned to the defendants in various instalments from March 2009 until May 2010. The plaintiff deposes that the defendants were friends who asked to borrow money to expand their business.

4. [4]
   The claim is structured as four loans of various sums, each made by multiple separate payments. Deeds of Loan were entered into by the plaintiff and the second defendant for the first loan, and by the plaintiff and both defendants for the second loan.

The First Loan

5. [5]
   The plaintiff claims the first loan was for the sum of $50,000 lent to the first defendant, provided as the sum of $40,000 on 22 June 2009 and a further sum of $10,000 on 25 September 2009. On 5 November 2009, a deed of loan was entered into between the plaintiff and the second defendant for this principal sum of $50,000. A security in the form of a mortgage over property at 51 Glade Drive Gaven was given. The deed was signed by the second defendant on 5 November 2011.^[1]

The Second Loan

6. [6]
   The plaintiff claims that the second loan was for the sum of $100,000, lent to both the defendants. The money was provided over four dates: $30,000 on 2 March 2009; $10,000 on 3 March 2009; $40,000 on 19 May 2009; and $20,000 on 28 October 2009. A deed of loan was signed by the plaintiff and both defendants on 12 February 2012 for this principal sum of $100,000. On this date, the mortgage over the Gaven property was executed. The “secured moneys” for the mortgage were moneys owing by the mortgagor under an oral or written agreement, or owing or payable by the mortgagor on any account.^[2]

The Third Loan

7. [7]
   The plaintiff claims the third loan was to the second defendant for $16,800 paid in some 10 sums between March 2010 and July 2010. There is a handwritten agreement entered into 14 May 2011 where the second defendant agreed that they borrowed $16,000 from the plaintiff.^[3]The plaintiff claims $800 was waived as a requirement for the written acknowledgement.

The Fourth Loan

8. [8]
   The plaintiff claims she advanced to the defendants further sums of $12,447.50 with such advance repayable upon demand by the plaintiff.

Payment

9. [9]
   In an affidavit sworn 3 September 2012, the plaintiff deposes that on various dates between 2 March 2009 and 28 May 2010 she handed over sums of cash to the second defendant or the defendants. The plaintiff has annexed copies of some relevant bank statements to the affidavit.^[4]

10. [10]
    The plaintiff’s daughter Yin Ling Lam deposes that she was present on occasions in March 2009, in early 2010 and on or about 28 September 2009 where she witnessed the plaintiff hand cash over to the defendants.^[5]

Repayment

11. [11]
    The plaintiff claims she has made demands of the repayment of the whole of the loan monies, but that the defendants have not made any repayment.

Chronology of events relating to Court Proceedings

12. [12]
    The current claim was commenced in the District Court at Southport. A chronology of events leading up to the bringing of the current application is summarized in the following table.

Default judgment

13. [13]
    Rule 290 UCPR provides that: “The court may set aside or amend a judgment by default under this division, and any enforcement on it, on terms, including terms about costs and the giving of security, as the court considers appropriate”.

14. [14]
    Where a default judgment is irregularly obtained, the Court has no discretion but to set aside an irregular judgment.

15. [15]
    Here it is apparent that judgment was regularly obtained by the plaintiff.

16. [16]
    It has been said that the relevant considerations in such circumstances are whether the defendant has given a satisfactory explanation of the failure to appear at an appropriate time, any delay in making the application, and whether the applicant has a prima facie defence on the merits: Aboyne Pty Ltd v Dixon Homes Pty Ltd [1980] Qd R 142.  In National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441 McPherson J at p 449 said:

“It may be said that it is the last of these considerations that is the most cogent.  It is not often that the defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy interval of time had elapsed provided that no irreparable prejudice is therefore done to the plaintiff.”

17. [17]
    That has been the approach which has been subsequently adopted.^[11]

Delay

18. [18]
    The plaintiff concedes that there was no undue delay in the defendants making this application to set aside the default judgement. The application was filed only 3 days after the judgment was entered, and 5 days after the period in which the applicants had to file and serve their Notice of Intention to Defend and Defence.

Failure to appear at the appropriate time

19. [19]
    It appears that the defendants’ failure to appear at the appropriate time resulted from confusion and miscommunication over the deposit of $2,000 into their solicitors’ trust account before work could commence on their defence. The defendants’ son Tony Lin, who acted as interpreter in the second defendant’s initial consultation with Mark Donnelly of Hannay Lawyers, had a debt owing to Hannay Lawyers for work previously undertaken on his behalf by the firm. When Tony Lin appeared at the firm with the $2,000 required, Christopher Hannay believed this was for the Hannay Lawyers General Account in reduction of his debt. However, it appears this payment by Tony Lin was not made until “on or about” 28 July 2012, the day after the request for default judgment was filed.

Prima Facie Defence

20. [20]
    The defendants’ draft defence is annexed to the affidavit of the second defendant sworn 30 August 2012. The crux of the defence is that the defendants deny that any sums were advanced to the defendants under the first loan, second loan or third loan. In relation to the fourth loan, they admit that the plaintiff paid accounting ($2000) and travel expenses ($1,268) as alleged, but deny that the cost of these payments is repayable by the defendants.

21. [21]
    In her affidavit sworn 30 August 2012, the second defendant deposes that the plaintiff was a former family friend and that the plaintiff’s daughter Yan Ling was director of a company named Lin’s National Ceiling Pty Ltd, of which the second defendant and her son Tony were also directors.

22. [22]
    She deposes that although her signatures appear on the First Loan Deed, the Second Loan Deed and the mortgage, she was not able to read the contents of these documents as they were in English and she did not understand these documents.

23. [23]
    The second defendant deposes that she signed these documents as she hoped the plaintiff would lend money to Lin’s National Ceiling, but that the plaintiff did not lend her or Lin’s National Ceiling any money under these loan deeds.

24. [24]
    In relation the third loan, the second defendant deposes that the $16,000 was not lent to either her or Lin’s National Ceiling, but does not depose further as to the signing of the acknowledgment of loan dated 14 May 2011. In relation to the fourth loan, the second defendant deposes that the plaintiff did pay for some accounting and travel expenses, but that these were for Lin’s National Ceiling and that she did not agree to be responsible for paying these.

25. [25]
    A similar affidavit was also sworn by the first defendant on 30 August 2012. In this the first defendant admits that his signature appeared on the Second Loan Deed and the mortgage but again deposes that he was not able to read the contents of these documents because of his limited command of English, he did not understand the documents and that no money was loaned to him by the plaintiff. Both defendants deposed they were pressured by the plaintiff to sign each of the documents.

26. [26]
    Bank records of the defendants from 5 December 2008 to 3 September 2010 are annexed to the affidavit of the second defendant, but these do not necessarily assist the defendants except to show that these sums were not deposited into their bank accounts.

Alternative pleading

27. [27]
    While the defence denies that any monies were advanced, it also contained an alternative pleading that in the event any loan monies were advanced, it would be unconscionable for the plaintiff to rely upon the execution of the loan deeds by the defendants. This alternative pleading is inconsistent with the defence that no monies were advanced. In both their affidavits the defendants did swear that their son Viktor Lin read out the defence in Mandarin that the facts alleged in this defence were true. During oral submissions at the hearing of the application, Mr Donnelly, solicitor for the defendants stated this alternative pleading was a drafting error for which he took responsibility. It appears he included the alternative pleading at paragraphs 3(c), 6(c) and 6 (d) without obtaining instructions from the defendants to do so. He took oral instructions at the hearing and sought to have paragraphs 3(c) and 6(c) and (d) struck out in the draft defence to be filed.

Analysis

28. [28]
    The defendants have raised a prima facie defence on the affidavit material and in the draft defence to the effect that the plaintiff did not lend them any of the money the subject of the default judgment. The plaintiff submits that this defence flies in the face of the mortgage document and other ‘loan’ documents signed by the second defendant, and the other affidavit material before the court. The existence of these documents and the admissions by both defendants that they signed each of those documents certainly is of some concern and supports the plaintiff’s claim.

29. [29]
    However, the defendants have sworn that they never received any of those amounts of money. They have sworn that they were not able to read or understand the contents of the documents which they signed and that they were pressured by the plaintiff to sign the documents.

30. [30]
    The defendants have now raised a prima facie defence which can only be resolved by findings of credit which requires a trial.

31. [31]
    Having regard to all these matters, the judgment is set aside. I order the defendants pay the costs of and incidental to the application to be agreed or assessed on the standard basis.

32. [32]
    I order the defendants file their notice of intention to defend and defence within 7 days.