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- Unreported Judgment
Nettle v Paino QDC 10
DISTRICT COURT OF QUEENSLAND
Robert John Nettle and Julie-Anne Margaret Tap as Trustees and Executors of the Estate of Gregory James Nettle (Deceased) v Paino and Anor  QDC 10
ROBERT JOHN NETTLE AND JULIE-ANNE MARGARET TAP AS TRUSTEES AND EXECUTORS OF THE ESTATE OF GREGORY JAMES NETTLE (DECEASED)
ANTHONY VINCENT PAINO
Application to set aside summary judgment
Southport District Court
14 February 2019
8 February 2019
PROCEDURE – APPLICATION TO SET ASIDE SUMMARY JUDGMENT AND WARRANTS OF EXECUTION – judgment obtained in absence of second defendant – Rule 302 Uniform Civil Procedure Rules – whether adequate explanation for failing to appear – whether the second defendant has an arguable defence – whether there was unreasonable delay – whether prejudice to either party – whether the second defendant ought to pay the amount of the Judgment into court together with the sum of $10,000 for the plaintiffs’ costs thrown away.
Uniform Civil Procedure Rules 1999 (Qld) r 188, r302, r 375, r 819
Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
GEL Custodians Pty Ltd v RQ Consultants Pty Ltd & Anor  QSC 181
General Credits Limited v Tawilla Pty Ltd (1984) 1 Qd R 388
Jones v Dunkel (1959) 101 CLR 298
National Mutual Life Association of Australasia Limited v Oasis Developments Pty Ltd  2 Qd R 441
The Reserve Vault Pty Ltd v Barrier Reef Arts Pty Ltd  QCA 35
S Blaxland for the Plaintiff
B Wacker for the Second Defendant
Arcuri Lawyers for the Plaintiff
Simon Taylor Solicitor for the Second Defendant
- The applicant, second defendant, Anthony Vincent Paino applies to this court for the following orders:
- (a)First, under the Uniform Civil Procedure Rules 1999 (Qld) r 302, that Judgment in the sum of $138,181.81 plus interest and costs entered against him summarily on 10 March 2017 be set aside;
- (b)Second, under UCPR r 819, that enforcement warrants issued on 14 September 2017 and 15 June 2018 in reliance on the Judgment be set aside; and
- (c)Third, upon the successful setting aside of the Judgment, and if necessary, leave to amend his further amended defence pursuant to UCPR r 375 or alternatively UCPR r 188.
- The plaintiffs, who are the trustees and executors of the estate of the late Gregory James Nettle, oppose the orders sought and have cross applied seeking an order that the second defendant’s application be dismissed or alternatively orders that the second defendant pay the amount of the Judgment into court together with the sum of $10,000 for the plaintiffs’ costs thrown away to date.
- Mr Nettle died on 24 February 2015. On 14 July 2016 the executors of his estate, the plaintiffs, commenced proceedings against the first defendant, Kristian Paino, and the second defendant claiming the sum of $160,000 as monies had and received by the defendants to the use of the plaintiffs alternatively the sum of $160,000 as monies paid to the defendants by Mr Nettle for a consideration which has wholly failed.
- The original court heading stated the second defendant to be “Anthony Vincent Paino as trustee for the Supa Dupa Cleaning Products Trust”. On 6 August 2016 the defendants filed a defence and on the 14 October 2016 they filed an amended defence. On 24 November 2016 the plaintiffs applied for summary judgment against the defendants.
- The summary application came before me on 30 January 2017. The defendants did not appear but I was not persuaded (on the basis of the case argued before me) that summary judgment ought to be granted in the plaintiffs favour. In particular, I did not accept the plaintiffs’ submission that what were described in the pleading as “particulars of the basis of denial” did not comply with the UCPR pleading rules and resulted in deemed admissions. I found that they were material facts and sufficiently pleaded a basis of denial.
- The application was adjourned until 10 March 2017 to enable the plaintiffs to file further submissions. On 10 March 2017 after further argument and consideration, I found that the plaintiffs had satisfied the evidentiary onus and had proved their claim for monies had and received. The onus shifted to the defendants who again did not appear or file any material in support of their defence. I then determined that there was no need for a trial and I made the order for Judgment [against both defendants] accordingly.
- On 14 September 2017 in reliance on the Judgment, the plaintiffs applied for a warrant of execution over a Property located at 12 Longueville Court jointly owned by the second defendant and his wife. The second defendant and his wife reside at the Property and it is their main asset. It is uncontroversial that initially the Registrar refused to register a writ over the Property due to the Judgment against the second defendant being under the name “Anthony Vincent Paino as trustee for the Supa Dupa Cleaning Products Trust” whereas the second defendant’s interest in the Property was held in his personal capacity.
- In May 2018, the plaintiffs applied to amend the Judgment by removing the words “as trustee for the Supa Dupa Cleaning Products Trust” in the court heading. This application came before Judge Kent QC in June 2018. On 31 May 2018, Judge Kent’s associate forwarded an email to the solicitors for the plaintiffs requesting written submissions and asking the plaintiffs to forward the Judges email to the defendants.
- It is uncontroversial that the plaintiffs had not formally served the application to amend the Judgment on the defendants but they forwarded the Judges email as requested. Unsurprisingly the [former] solicitor for the defendants, Mr Wright, responded on 1 June 2018 as follows:
“We have no idea what your application in the District Court is about. The last time we heard from Mrs Paino she was living in Melbourne”.
- On 4 June 2018 Judge Kent made an Order that the plaintiffs have “leave to amend the Court Heading in these proceeding by deleting the words “as trustee for the Supa Dupa Cleaning Products Trust” wherever they appeared after the name of the Second Defendant, Anthony Paino”. He also gave the plaintiffs leave to issue an enforcement warrant against the second defendant in the form and to the effect of a draft warrant tendered to the court on 1 June 2018. That draft warrant states the second defendant’s name as Anthony Vincent Paino, whilst the court order heading in the Order is Anthony Paino. Given that leave was granted to amend the court heading only by removing the “Supa Dupa Cleaning Products Trust”, I infer that the deletion of the second defendant’s middle name “Vincent” from the court heading on the Order was an error by the plaintiffs’ solicitors. It follows that the correct court heading for the second defendant is Anthony Vincent Paino.
- In his unchallenged affidavit evidence before me, the second defendant stated that he was not served or informed of the application on 1 June 2018, or of the Order. I accept the second defendant’s evidence on this point.
- In mid-October 2018, an enforcement officer left his card at the front door of the Property. Shortly afterwards, the second defendant received a telephone call from this officer and was told that an enforcement warrant had been issued by the court for the sale of his home. By his unchallenged affidavit evidence the second defendant states that this was the first time he became aware of the Judgment.
- In my view, this statement overstates the true position. On 27 January 2017, the second defendant accepts that he received an email from his then solicitor, Mr Wright, as follows:
“I have spoken with Arcuri Lawyers who have since spoken with the estate executors. Their instructions are to proceed to obtain judgment against the estate in question.
I explained that the trust has no assets; that Khristian [sic] is an invalid pensioner. He has no assets. I explained that the Pontiac would be sold and further money paid to the estate. That fell on deaf ears. They are not interested in the Pontiac but you cannot assume that Khristian [sic] can retain it. He needs to sell it and pay the sale proceeds to the trust. That may at least assist with the GST.
We will now have to wait and see what they do after obtaining judgment. Their application for judgment is before the court next Monday. There is no point in my appearing.” [Emphasis added]
- The second defendant’s evidence was that relying on the advice contained in this email he did not appear or instruct his solicitors to appear at the summary judgment application. Whilst I accept that the second defendant was unaware until October 2018 that the Judgment was subsequently amended to remove the words “as trustee for the Supa Dupa Cleaning Products Trust” from the court heading, I find that he was aware from 27 January 2017 that in all likelihood judgment was going to be entered against him (albeit in his capacity as trustee for the Supa Dupa Cleaning Products Trust). The fact that the second defendant did not appreciate, due to erroneous legal advice, that this meant that his personal assets were exposed does not derogate from the fact that he knew a judgment was going to be entered against him in his capacity as trustee from January 2017.
- On 2 November, shortly after the enforcement warrant for the sale of the Property was served on the second defendant, he contacted Mr Wright’s office. Mr Wright told the second defendant: that he knew nothing of the Judgment or enforcement warrant; that he was too busy to further represent him; and that the second defendant ought to seek the advice of a solicitor experienced in litigation.
- On 20 November 2018 the second defendant met with his current solicitor Mr Taylor. On 14 December 2018 the current application and supporting affidavit was filed and made returnable on 8 February 2019.
- It is against this background that the second defendant now seeks to have the Judgment set aside.
Relevant Legal Principles
- UCPR r 302 states as follows:
“302 Setting aside judgment
The court may set aside or vary a judgment given on an application under this part against a party who did not appear on the hearing of the application.”
- The authorities establish that on an application under UCPR r 302, the court is to consider all relevant facts and circumstances. In The Reserve Vault Pty Ltd v Barrier Reef Arts Pty Ltd  Muir JA (with whom Fraser JA and Daubney J agreed) relevantly stated:
“A failure to explain the applicant’s non-attendance at the hearing of the application for summary judgment is, no doubt, a highly relevant consideration and, in some circumstances, may prove fatal to the success of the application. It cannot, however, be treated as a precondition to the favourable exercise of the discretion. Its relative importance in the exercise of the discretion will tend to diminish as an applicant’s case increases in strength…” [Emphasis added]
- Whilst in GEL Custodians Pty Ltd v RQ Consultants Pty Ltd & Anor Alan Wilson J observed that on an application under r 302, the applicant must give a reasonable explanation for its failure and a sufficient basis for the judgment not to be maintained, in my respectful view the correct approach is as articulated by Muir JA in The Reserve Vault as follows:
“…no warrant in principle for the grafting on to r 302… of a pre-requisite to a successful application that an applicant which failed to appear on the hearing of the summary judgment application must provide a reasonable explanation for the failure…”
- Counsel for the plaintiffs’ submitted that the overriding principle for application in this case was one of case management as espoused in Aon Risk Services Australia Limited v Australian National University. He developed this argument further by submitting that even if there is an arguable defence, the Judgment should not be set aside because: enough time and money and resources have been wasted by the second defendant’s conduct; the second defendant has refused to protect his own interests; and, it is fairly arguable “that he [the second defendant] is guilty of an abuse of process”.
- In Aon Risk, the High Court was not considering the principles applicable to UCPR r 302 but rather a late amendment to a pleading. I accept that issues of case management may potentially arise as one of the facts and circumstances to be taken into account under UCPR r 302. But I reject that such issues arise on the present facts.
- The overriding focus of the oral and written submissions on behalf of the plaintiffs in their vehement opposition to the second defendant’s application is that the second defendant has acted in a cavalier and contemptuous manner and to such extent that his conduct ought to be characterised as an abuse of process. It is also submitted that his overall conduct is unreasonable and inexcusable and reveals a blatant disregard for court processes such that [again] his conduct is an abuse of process.
- In my view there is no factual basis for such contentions to have been made.
- I reject the submission that the second defendant is “guilty” of an abuse of process in this case. Such a serious allegation ought not to have been made without any foundation.
- With the relevant legal principles in mind, I now turn to consider the facts and circumstances of this case.
Reasonable excuse for not appearing at the application for summary judgment
- As discussed above, the second defendant did not appear at the return date of the application for summary judgment because he had been told by his then solicitor that he was not personally exposed and that following any judgment obtained by the plaintiffs, their only recourse was to the assets of the trust of which there were none. This advice was wrong of course. It is uncontroversial that a trustee is personally liable for debts properly incurred in the course of acting as trustee. 
- Whilst the fact or circumstance of the erroneous advice is not the fault of the plaintiffs, it is relevant to the issue of whether there has been a reasonable excuse offered by the second defendant for his failure to appear at the summary judgment application. Whilst the second defendant does not state in his evidence before me that if he had known about his personal exposure he would have appeared, I infer by his immediate action in seeking legal advice to set aside the Judgment and warrants that he would have appeared and opposed the summary judgment application if he had known the true legal position.
- In all of the circumstances, I find that the second defendant has provided a reasonable excuse for not appearing - namely that he acted on the wrong advice of his then solicitor.
Strength of the second defendant’s defence
- By the second defendant’s proposed further amended defence he has pleaded in some detail his version of the terms of the oral agreement between Mr Nettle and the first defendant and how the second defendant’s bank account came to be used in pursuance of that agreement.
- The second defendant has also pleaded: the vehicles that were purchased pursuant to the agreement; how the money paid by Mr Nettle was expended; how the proceeds obtained from the sale of those vehicles have been used; a reconciliation of the moneys received from Mr Nettle and from the sale of the vehicles, and expended on the purchase of vehicles, their upkeep and repair.
- In addition, the second defendant has adduced some evidence of invoices in support of his allegations as to how the monies were expended. This reconciliation supports the counterclaim that the plaintiffs have been overpaid by almost $2,500.
- The second defendant’s case is that the agreement was fulfilled by the defendants because the vehicles were purchased and imported from the United States, they were repaired at significant costs to the second defendant and they were on-sold. The second defendant accepts that the venture was not profitable but submits that this is irrelevant as the agreement was not subject to the venture being a profitable one.
- The plaintiffs submit that I would be concerned about the merits of the defence because the agreement pleaded is one where Mr Nettle paid all the money but was liable to receive nothing in return - unless some kind of profit was made. I accept that the agreement as pleaded by the first defendant is an unusual one. But that does not mean it was not made and that the defence is without merit. It must be viewed in the circumstances pleaded and in light of all of the evidence relied upon by the second defendant. On the second defendant’s case Mr Nettle wanted to import particular vehicles from the United States. His circumstances at the time were that he was very ill, he had some money to play with and he wanted to have some fun at that stage of his life. When viewed this way, the agreement as pleaded by the second defendants is not improbable as the plaintiffs suggest.
- It is instructive to observe at this juncture that the plaintiffs concede they are unsure what the agreement was [from Mr Nettles perspective]. The most recent written submissions filed on their behalf refer to Mr Nettles payment of $160,000 as his part of the agreement “whatever it was”. In earlier written submissions filed on 30 January 2017, it was submitted that the plaintiffs’ main witness is deceased and cannot give complete and informed instructions. In other words, the plaintiffs have pleaded an agreement between Mr Nettle and the first defendant without knowing what the agreement was.
- The plaintiffs submit that I should draw an adverse inference against the second defendant because there is no evidence from the first defendant and as such, the rule in Jones v Dunkel applies. I do not accept this submission. On this application, one of the considerations is whether the second defendant has an arguable defence. He has adduced some cogent evidence to support his pleading. He does not need to adduce all of the evidence upon which he intends to rely.
- It is also submitted by the plaintiffs that the evidence of Mrs Paino of her telephone conversation with Mr Nettle in December 2014 is redolent with hearsay and there is no explanation as to why it was not produced at the summary judgment application. I do not accept this submission for two reasons. First, the affidavit is not full of hearsay. Mrs Paino’s evidence is of her recollection of a conversation she had directly with Mr Nettle. Second, there is an explanation as to why evidence was not produced at the summary judgment application. That is, that the second defendant had acted on the incorrect advice of his then solicitor.
- Mrs Paino was not called for cross-examination and there is no basis for me to make any finding about her recollection being (as the plaintiffs’ counsel describes it in his written submissions) “suspect”.
- In my view on the pleading and material before me, the second defendant has a good arguable defence to the plaintiffs’ claim.
Deficiency in the plaintiffs’ pleading
- The second defendant submitted that there is a critical deficiency in the plaintiffs’ pleaded case that will need to be amended should the Judgment be set aside. That is, the plaintiffs do not currently plead that the second defendant is personally liable for debts as they were properly incurred in the course of acting as a trustee. I accept this submission. This deficiency is another fact and circumstance that is relevant to my current determination. If the Judgment is set aside and the plaintiffs amend their pleading, counsel for the second defendant has submitted that his instructions are that this allegation will be denied. This will be a crucial issue at trial. If the plaintiffs are unable to prove that the second defendant is personally liable for debts properly incurred in the course of acting as trustee, then the second defendant will not be personally liable.
- The plaintiffs place much emphasis on the alleged delay by the second defendant.
- I reject this submission. In my view some of the delay in this case is attributable to the plaintiffs. In particular, I find that the delay between Judgment [on 10 March 2017] and the plaintiff being in a position to enforce the Judgment over the Property was due in no small part to the difficulties with the name of the second defendant as described on the court heading of the plaintiffs’ claim. This problem was not rectified until the Judgment was varied on 4 June 2018 and the warrant was then able to be executed in October 2018. As stated earlier, I am satisfied and I find that the second defendant acted promptly when he became aware in mid-October 2018 that the plaintiffs had obtained the Judgment against him and were seeking to execute against the Property.
- Even if I am wrong and all of the delay in this matter is attributable to the second defendant, the delay is one of approximately 18 months (between 10 June 2017 and early December 2018 when the current application was filed). Such delay is not so unreasonable that it ought to deprive the second defendant of defending the proceeding.
- In any event the authorities clearly establish that a defendant who has an apparently good ground of defence would not often be refused the opportunity of defending, even though a lengthy interval of time has elapsed, providing that no irreparable prejudice is thereby done to the plaintiffs.
- For the reasons discussed below, in my view, any delay in this case has not resulted in any real and relevant prejudice to the plaintiffs.
Prejudice to the parties
- The plaintiffs submit that as the principal witness Mr Nettle passed away in 2015, they are prejudiced due to the passing of time and fading evidence. I do not accept this submission. Mr Nettle died on 24 February 2015 almost 18 months before the executors of his estate, the plaintiffs, brought this proceeding. That the plaintiffs’ central witness is deceased was always a risk to the plaintiffs in prosecuting their case especially one where the plaintiffs plead the term of an oral agreement made by the deceased and the first defendant.
- The second defendant points to significant prejudice if the judgment is not set aside. I accept this submission.
- An enforcement warrant has been issued and execution is sought against the Property. I accept that if the Judgment is not set aside the reasonable inference is that the Property, the second defendant’s home that he shares with his wife, will be sold by enforcement officers.
Conclusion and Orders
- Upon the above analysis, the Judgment ought to be set aside.
- It follows and I order that pursuant to UCPR r 302, the Judgment entered against the second defendant on 10 March 2017 be set aside.
- It follows and I order that that the enforcement warrants issued on 14 September 2017 and 15 June 2018 be set aside.
- The second defendant seeks leave to file his further amended defence [and counterclaim] if necessary, on the basis that it was apprehended that summary judgment may have been entered because there were deemed admissions.
- As discussed earlier, I do not consider that the earlier defence contained deemed admissions because the particulars of denial were material facts upon which the basis of the denial was set out. Even if I am wrong about that, I would have granted leave to file the further amended defence now proposed. It follows that it is not necessary for leave to be granted for the second defendant to file his proposed further amended defence. Ordinarily I would make a direction as to the timing for the filing of this further pleading but given the identified deficiency in the plaintiffs pleading which will require amendment, I have not done so in this case.
The cross-application by the plaintiffs
- The plaintiffs have cross-applied that the application that I have just determined be dismissed or alternatively that the second defendant pay the amount of judgment into court and the sum of $10,000 for the plaintiffs’ costs thrown away to date.
- Given my findings in relation to the second defendant’s application, it follows that the plaintiffs’ cross application to dismiss the second defendant’s application is dismissed as is the plaintiffs’ application that the warrant be renewed.
- In this case I have found that:
- (a)There was a reasonable explanation for the failure of the second defendant to appear at the summary judgment application;
- (b)The delay in this matter is not lengthy, and in some way can be said to be due to the plaintiffs’ conduct;
- (c)There is no prejudice to the plaintiffs and considerable prejudice to the first defendant if judgment is not set aside; and most crucially
- (d)The second defendant has a good arguable defence to the plaintiffs claim.
- In my view there is no basis or any reason for me to order that the second defendant pay the amount of the Judgment [I have now set aside] into court as some sort of security or condition or for any reason at all.
- In my view there is also no basis for the second defendant to pay the plaintiffs the sum of $10,000 for costs thrown away to date. Whilst I accept there will be costs thrown away by the setting aside of the Judgment, there is no evidence about what they are. The issue of costs will need to be determined separately.
- It follows and I order that the plaintiffs cross application filed 4 February 2019 be dismissed.
- I will hear the parties in relation to costs.
 Judgment was given for an amount less than the $160,000 that had been claimed due to evidence of there being two payments received by the plaintiffs from the defendants after the proceedings had commenced.
 A draft of the second defendant’s proposed further amended defence [which adds a counterclaim] is exhibited to his affidavit filed in support of this application.
 A copy of the email exchange is exhibited to the affidavit of Dominic Anthony Arcuri filed 4 February 2019.
  QCA 35 at para .
  QSC 181 at para .
 The Reserve Vault Pty Ltd v Barrier Reef Arts Pty Ltd  QCA 35 at para .
 (2009) 239 CLR 175;  HCA 27.
 Section 3 and 9 of the plaintiffs’ outline filed 8 February 2019.
 General Credits Limited v Tawilla Pty Ltd (1984) 1 Qd R 388, 389.
 (1959) 101 CLR 298.
 National Mutual Life Association of Australasia Limited v Oasis Developments Pty Ltd  2 Qd R 441 at 449; cited with approval by Muir JA in The Reserve Vault Pty Ltd v Barrier Reef Arts Pty Ltd  QCA 35 at .
- Published Case Name:
Robert John Nettle and Julie-Anne Margaret Tap as Trustees and Executors of the Estate of Gregory James Nettle (Deceased) v Paino and Anor
- Shortened Case Name:
Nettle v Paino
 QDC 10
14 Feb 2019