Shofay v Boral Resources (Qld) Pty Ltd
[2020] QDC 210
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- Shofay v Boral Resources (Qld) Pty Ltd[2020] QDC 210
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Shofay v Boral Resources (Qld) Pty Ltd[2020] QDC 210
Shofay v Boral Resources (Qld) Pty Ltd[2020] QDC 210
DISTRICT COURT OF QUEENSLAND
CITATION: | Shofay v Boral Resources (Qld) Pty Ltd [2020] QDC 210 |
PARTIES: | ANDREW SHOFAY (appellant) v BORAL RESOURCES (QLD) PTY LTD (respondent) |
FILE NO/S: | BD 4412 of 2019 |
DIVISION: | Appellate |
PROCEEDING: | Appeal pursuant to section 45 Magistrates Court Act 1921 |
ORIGINATING COURT: | Magistrates Court of Queensland |
DELIVERED ON: | 3 September 2020 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 25 August 2020 |
JUDGE: | Loury QC DCJ |
ORDER: |
|
CATCHWORDS: | APPEAL – DEFAULT JUDGMENT – APPLICATION TO SET ASIDE DEFAULT JUDGMENT – APPEAL AGAINST MAGISTRATE DECISION TO REFUSE APPLICATION – where the respondent filed a claim and statement of claim against the appellant – where, on application by the respondent, default judgment was entered against the appellant – where the appellant’s application to have the default judgment set aside was dismissed by the Magistrate – where the appellant appeals against the decision of the Magistrate – whether the Magistrate erred in finding there was no prima facie case – whether the Magistrate erred in applying the wrong test in the appellant’s application to set aside default judgment – whether the Magistrate erred in considering the appellant’s credibility as a relevant factor in determining a prima facie case Uniform Civil Procedure Rules 1999 r 290 National Mutual Life Associate of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441 House v The King (1936) 55 CLR 499 National Australia Bank Limited v Singh [1995] 1 Qd R 377 |
COUNSEL: | A Fronis for the appellant |
SOLICITORS: | Prolaw Legal for the appellant |
- [1]On 3 July 2019 default judgment was entered against the second defendant (the appellant) in the amount of $77,894.98. On 2 September 2019 the appellant brought an application pursuant to rule 290 of the Uniform Civil Procedure Rules 1999 that default judgement be set aside. The application was heard on 9 November 2019. The learned Magistrate refused the application.
- [2]The appellant appeals that decision pursuant to section 45 of the Magistrates Court Act 1921. Section 47 of that Act sets out the jurisdiction of the District Court. It states that on the hearing of an appeal the District Court may relevantly do any of the following:
- draw inferences of fact from facts found by the Magistrates Court or from admitted facts or facts not disputed;
- order a new trial;
- order judgement to be entered for any party; and
- make any other order to ensure the determination on the merits of the real questions in the controversy between the parties.
- [3]That the Act gives a power to a District Court judge to draw inferences suggests that the appeal ought to be by way of rehearing consistent with the nature of an appeal brought to the Court of Appeal under the Uniform Civil Procedure Rules 1999.
- [4]The appellant did not argue that the judgment had not been regularly entered but rather sought to persuade the learned Magistrate to exercise her discretion to set aside the default judgment by explaining the delay in filing the notice of intention to defend and by demonstrating that there is an arguable defence.
- [5]As the decision appealed against involved the exercise of a discretion the appeal is governed by the principles in House v The King:[1]
“If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for this if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
- [6]The appellant’s grounds of appeal are:
- the learned magistrate erred in finding there was no prima facie defence;
- the learned magistrate applied the wrong test in effectively conducting a summary judgment application by embarking on a consideration of the evidence; and
- the learned magistrate erred in considering that the appellant’s credibility is a relevant factor in determining whether there was a prima facie case.
Background to appeal
- [7]The respondent supplies building and construction products and services. The appellant was the director of Sinopacific Constructions Pty Ltd (Sinopacific).
- [8]On 26 April 2018 Sinopacific entered into an agreement with the respondent for the supply of goods. The agreement was purported to have been executed by the appellant, as was a guarantee under which he became liable for the debts of Sinopacific in relation to the goods supplied by the respondent.
- [9]Pursuant to the agreement, goods and services were supplied. A total amount of $71,742.34 in invoices remained unpaid by Sinopacific. On 9 November 2018 the respondent initiated proceedings against both Sinopacific and the appellant seeking recovery of this amount. Default judgment was entered against Sinopacific on 10 April 2019.
- [10]A process server attended at the address of the appellant in Palm Beach on 3 April 2019 to serve the appellant with the claim and statement of claim. The process server spoke with a woman named Kaitlyn Neuendorf. Ms Neuendorf confirmed that the appellant lived at the address but was at work at the time. Ms Neuendorf agreed to pass on the documents to the appellant when he returned home from work.
- [11]On the basis of not having filed a notice of intention to defend, default judgment was entered against the appellant on 3 July 2019 in the amount of $77,894.98, including $3,779.98 interest and $2,372.65 in costs.
- [12]On 10 July 2019 the respondent’s solicitors sent letters to the appellant at addresses in both Toowoomba and Palm Beach, enclosing sealed copies of the default judgment. No response was made in relation to either of these letters.
- [13]On 9 August 2019, a process server attended at the appellant’s address in Palm Beach and personally served the appellant with a bankruptcy notice issued 7 August 2019 and a copy of the default judgment.
- [14]The appellant then filed an application on 2 September 2019 seeking that the default judgment be set aside and the appellant be entitled to defend the matter.
- [15]The application was heard on 8 November 2019 and both parties made submissions to the Magistrate. Relevantly, the appellant denied ever executing and/or guaranteeing any credit applications or agreements on behalf of Sinopacific. The appellant also alleged that the purported signature on the guarantee was a forgery.
The learned Magistrate’s decision
- [16]The learned Magistrate set out the relevant matters for her to consider as being whether;
- there was a satisfactory explanation for the failure to file a defence;
- there had been a delay in making the application;
- the defendant has shown a prima facie defence on the merits; and
- there was any prejudice to the plaintiff which could not be cured by a costs order.
- [17]She considered that the third factor was the most important and cited National Australia Bank Limited v Singh[2] and quoted McPherson JA in National Mutual Life Associate of Australasia Ltd v Oasis Developments Pty Ltd[3] to the effect that it would not often be that the court would refuse a defendant who has an apparently good ground of defence, of defending where no irreparable prejudice would be done to the plaintiff even though the defendant’s explanation for allowing judgment to go by default may be dubious.
- [18]The learned Magistrate considered each criteria in turn.
- [19]In relation to the appellant’s explanation for failing to file a defence she referred to his evidence contained in two affidavits that firstly he did not recall being served with the claim and statement of claim and did not recall his “housemate” making him aware of the claim and statement of claim. He further deposed that had he seen the statement of claim he would have instructed his solicitor to act on his behalf as he was defending other claims against him on the basis of guarantees which he had not signed.
- [20]The learned Magistrate considered that the appellant’s reference to his housemate not making him aware of the claim and statement of claim as being disingenuous as the evidence before her established that the person who had been served with the documents was in fact the appellant’s girlfriend/partner. She also took into account that the appellant had failed to indicate when he did become aware of the existence of the claim and statement of claim. She considered this failure to explain as “curious”. She also considered the absence of evidence as to when the appellant was overseas if that was his explanation for not becoming aware of the proceedings.
- [21]The learned Magistrate considered that there was an absence of frankness by the appellant which also fed into her assessment of the delay in bringing the application before her. She took into account the appellant’s conduct before and after the default judgement was entered and any evidence of his acting in good faith. She considered that the appellant was “obtuse” about when he became aware of the default judgement. A sealed copy of the judgement had been posted to the appellant’s address in Palm Beach (where the claim and statement of claim had been served on the appellant’s “housemate”) and to the appellant’s address in Toowoomba as revealed by Australian Securities and Investments Commission searches as to the appellant’s directorship of four companies each of which recorded his address for service as the Toowoomba address. She considered that the appellant was evasive because he stated that he had not lived at the Toowoomba address for two and one-half years but failed to explain why he used that address in relation to ASIC records. He further did not indicate that he did not use the address in Toowoomba or collect mail from that address. She considered that this reflected an absence of good faith.
- [22]The learned Magistrate considered the undisputed evidence that the appellant was served with the sealed copy of the default judgement on 9 August 2019 yet failed to bring his application to set aside the default judgement until 2 September 2019. She considered that the absence of frankness in the appellant’s affidavits meant that the appellant had not provided a satisfactory explanation for failing to file a notice of intention to defend and failing to explain the delay in bringing his application to set aside the default judgement.
- [23]The learned Magistrate referred to the fact that there was no suggestion that there would be any prejudice to the respondent if the judgement was set aside which could not be cured by a costs order.
- [24]The learned Magistrate considered that the most important factor which impacted upon the exercise of her discretion however was whether there was a prima facie defence.
- [25]The defence outlined in the appellant’s affidavit is that he did not sign the guarantee documents or the application for finance. The learned Magistrate referred to the appellant’s submission that the signature appearing on the guarantee documents and the application for finance were different. He also submitted that one of the signatures on a document appeared to be an exact copy of another signature.
- [26]The learned Magistrate considered the respondent’s submissions that emails (exhibited to an affidavit prepared by Ms Brooke Cheree Backer) suggested communication between the appellant and the respondent about the credit application and guarantee. She referred to the absence of any explanation in the appellant’s affidavits for this communication.
- [27]The learned Magistrate said that she could not make findings as to credit or factual findings in an interlocutory application, however she considered that in assessing whether a prima facie defence had been established that she must have regard to all of the evidence before her. That included her assessment of the frankness of the appellant’s evidence generally and any other evidence which would support his “bald assertion of a forgery”. She took into account the lack of any complaint by the appellant to police as to the forged use of his signature or the lack of any intention on the part of the appellant to take such action. Finally, the learned Magistrate said that in weighing all of the evidence she was not satisfied that the appellant had established a prima facie defence to the claim. She refused to exercise her discretion to set aside the default judgement.
Consideration
- [28]Rule 290 of the Uniform Civil Procedure Rules 1999 provides:
“290 Setting aside judgment by default and enforcement
The court may set aside or amend a judgment by default under this division, and any enforcement of it, on terms, including terms about costs and the giving of security, the court considers appropriate.”
- [29]There are three considerations relevant to an application to set aside a judgement entered in default. They are:
- whether there has been a satisfactory explanation for the failure to file a defence;
- whether there has been an absence of delay in applying to set aside the judgement; and
- whether the defendant has demonstrated a prima facie defence on the merits.
- [30]It is not the case that an applicant seeking to set aside a default judgement must establish each of those three matters before the discretion to set aside the judgement can be exercised. Of most importance is whether the applicant is able to demonstrate an arguable defence on the merits.[4] It would be rare for a court to refuse a defendant the opportunity of defending when he/she has a good ground of defence.[5]
- [31]The appellant’s ground of defence is that he did not sign the guarantee upon which the plaintiff’s action to recover a debt was based. If the appellant is able to demonstrate that he did not sign the guarantee he has a defence to the plaintiff’s action. In that respect it is an arguable defence.
- [32]The evidence before the learned Magistrate which went to establish that defence included the sworn affidavit of the appellant that he did not sign the guarantee. He exhibited copies of guarantees purportedly given by him to Beaumont Tiles, Carpet Call and M&K Plant Hire. He identified that the signatures on these documents were different to each other and different to his own signature. He further deposed that he had instructed a solicitor in relation to other matters he was defending on the same basis, that his signature found on guarantees was a forgery. He exhibited to his affidavit his purported defence. The respondent correctly identified that it is sparse and does not comply with the Uniform Civil Procedure Rules 1999.
- [33]The appellant swore a further affidavit in which he denied engaging in any correspondence with the plaintiff. Email correspondence was exhibited to Ms Backer’s affidavit which appears to indicate that a person “Andrew” engaged in correspondence by email with the respondent about an increase in the credit limit and his guarantee. Counsel for the appellant contends that there is no evidence either on the face of the correspondence or otherwise that points to it having been sent by the appellant. The writer uses an email address [email protected] and signs correspondence simply as “Andrew”. Disclosure, it is argued, might lead to identification of the IP address from where the email was sent.
- [34]The appellant also swore that the signature on the Credit Application Form exhibited to the affidavit of Ms Backer was nothing like his own signature. On the face of the documents which are copies, the signature on the guarantee and the credit application appear different to each other. The appellant’s counsel also refers to the fact that it appears that the defendant’s name is misspelt on the guarantee adding further weight to his claim of an arguable defence.
- [35]The appellant also swore that he did not reside at the address in Toowoomba where correspondence was sent by the respondent to him. Other material exhibited to Ms Backer’s affidavit tends to suggest that the appellant lived in Palm Beach although there was a body of further evidence demonstrating that he used the Toowoomba address in relation to other companies of which he was a director.
- [36]The appellant swore that he did not work at the offices of the first defendant, Sinopacific, and was effectively a director in name only.
- [37]In considering whether the appellant had an arguable defence the learned Magistrate took into account her assessment of the appellant’s frankness generally and the absence of any supporting evidence. The reference to the appellant’s frankness was a reference to matters that related to her consideration of the appellant’s explanation for failing to file a defence and delay in bringing the application to set aside the default judgment.
- [38]The learned Magistrate referred to the appellant’s evidence as “seemingly disingenuous”, “curious” and “obtuse”. She considered that the appellant was evasive and that reflected an absence of good faith. She also referred to his lack of frankness in explaining his failure to file a defence and explain his delay in applying to set aside the default judgment.
- [39]Whilst the learned Magistrate referred to not making findings as to credit or factual findings, her references to a lack of frankness, being disingenuous, curious, obtuse and evasive are findings in relation to the appellant’s credibility. I consider it was an error for the learned Magistrate to take into account the credibility of the appellant in circumstances where he did not give evidence. Secondly whilst the explanations for the failure to file a defence and the delay given by the appellant might well be considered to be dubious that circumstance did not, in my view, warrant the learned Magistrate refusing to exercise her discretion to set aside the default judgement when there was no prejudice done to the respondent which could not be cured by a costs order.
- [40]The learned Magistrate considered that the appellant’s defence to be little more than a bald assertion of forgery. I consider that to be an error as there was material filed by the appellant which raised at least an arguable case that his signature was forged. That material included the fact that the signatures on the credit application and guarantee appeared different to each other. It also included the suggestion that the appellant’s name is misspelt by the person who signed the guarantee. It also included other guarantees exhibited which appear to contain exact copies of his signature.
- [41]As I have found that the learned Magistrate erred it is necessary for me to exercise the discretion afresh. Whilst I agree with the learned Magistrate’s statement that some of the evidence of the appellant was disingenuous and that his explanations for failing to file a defence and delaying in bringing the application to set aside the judgement are dubious, that does not mean that he is not acting in good faith in putting forward the defence that his signature on the guarantee was forged. There is some support in the material given the suggested misspelling of his name, what appears to be an exact copy of his signature on another guarantee and the differences in the appearances of his signature on the credit application and guarantee, which in the end demonstrates that there is at least an arguable ground of defence available to the appellant.
- [42]My orders are:
- The appeal is allowed.
- The default judgement obtained by the respondent on 3 July 2019 is set aside.
- The appellant is to file and serve a notice of intention to defend and defence within 14 days.