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Jonata Investments Pty Ltd v Mikhael[2022] QDC 229

Jonata Investments Pty Ltd v Mikhael[2022] QDC 229

DISTRICT COURT OF QUEENSLAND

CITATION:

Jonata Investments Pty Ltd v Mikhael [2022] QDC 229

PARTIES:

JONATA INVESTMENTS PTY LTD

(ACN 010 959 163)

(Plaintiff/Respondent)

v

CINDY MIKHAEL

(Defendant/Applicant)

FILE NO/S:

70/2022

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court, Southport

DELIVERED ON:

14 October 2022

DELIVERED AT:

Southport

HEARING DATE:

29 July 2022

JUDGE:

Wooldridge KC DCJ

ORDER:

  1. The application to set aside default judgment is allowed.
  2. No order is made as to costs.
  3. The applicant is to file a Notice of Intention to Defend and Defence within 14 days.

CATCHWORDS:

PRACTICE AND PROCEDURE – JUDGMENTS AND ORDERS – APPLICATION – DEFAULT JUDGMENT – SETTING ASIDE – application pursuant to r 290 of the Uniform Civil Procedure Rules to set aside default judgment entered against the applicant – whether the Court should exercise its discretion to set aside the judgment

Uniform Civil Procedure Rules 1999 (Qld) rr 137, 139, 150, 281, 282, 283, 290

Sale of Goods Act 1896 (Qld) ss 3, 4, 50

National Mutual Life Association of Australasia v Oasis Developments Pty Ltd [1983] 2 Qd R 441

Embrey v Smart [2014] QCA 75

COUNSEL:

D Parish for the applicant

K Wylie for the respondent

SOLICITORS:

Brander Smith McKnight Lawyers for the applicant

Hickey Lawyers for the respondent

Nature of the application

  1. [1]
    This is an application by Cindy Mikhael, pursuant to rule 290 of the Uniform Civil Procedure Rules (“UCPR”), for an order setting aside the default judgment entered by order of a Deputy Registrar of this Court[1] on 20 May 2022, in favour of the plaintiff, Jonata Investments Pty Ltd[2] (the respondent), against the applicant, as defendant.
  2. [2]
    Default judgment was obtained on the basis of the applicant having failed to file a Notice of Intention to Defend[3] where service of the claim was proved[4] and the claim was for a liquidated demand.[5] Pursuant to rule 283(10) UCPR, in granting the request the Registrar was not required to consider the merits of the claim against the applicant.

Factual background to the claim[6]

  1. [3]
    The respondent was (and remains) the owner of a 2017 Holden HSV GTSR W557 motor vehicle (“the vehicle”).  The vehicle was one of a number of vehicles available for sale at an auction on 25 September 2021 by Lloyd’s Auctioneers and Valuers Pty Ltd (“Lloyd’s Auctioneers”).
  2. [4]
    Prior to the auction the vehicle had been advertised for sale on the website for Lloyd’s Auctioneers.
  3. [5]
    The auction was undertaken online. Interested parties could become registered bidders to bid at the auction remotely, using a computer.
  4. [6]
    A registered bid of $425 000 was made at the auction, for the purchase of the vehicle, in the name of the applicant as the registered bidder.[7] This was the final and highest bid made for the vehicle at the auction.
  5. [7]
    The applicant did not subsequently make payment of the amount of $425 000, for the purchase of the vehicle.

Chronology of the proceedings

  1. [8]
    On 14 March 2022 the respondent filed a Claim,[8] and accompanying Statement of Claim, in the District Court at Southport against the applicant Cindy Mikhael, as the named defendant, seeking, effectively:
  1. 1.
    Orders (further, or in the alternative to one another):
  1. a.
    That the defendant pay the purchase price of $425 000 pursuant to s. 50(2) Sale of Goods Act 1896 (Qld);[9]
  1. b.
    For specific performance of the contract;
  1. c.
    For the payment of damages for breach of contract;[10] and
  1. 2.
    Interest (further, or in the alternative to one another), calculated pursuant to:
  1. a.
    (the terms of) the contract;
  1. b.
    Section 58 Civil Proceedings Act 2011.
  1. [9]
    The aforementioned Claim and Statement of Claim[11] were served on the applicant, personally, on 23 March 2022.[12] The applicant did not file a Notice of Intention to Defend or Defence in the Registry within 28 days as required by rules 137 and 139 of the UCPR.[13]
  2. [10]
    On 20 May 2022, the respondent filed a Request for Default Judgment against the applicant, the applicant being in default of filing of a Notice of Intention to Defend in response to the Claim.[14]
  3. [11]
    Per the Statement of Claim the respondent identified[15] the interest owing to be calculated to be $13, 190.14, and claimed costs of $3615.85 to have been incurred for the issuing of the Claim and Statement of Claim. It was further asserted that should the respondent be in default by not filing a Notice of Intention to Defend within the time allowed, the respondent would be entitled to claim additional costs of $467.40 for the entering of judgment in default.
  4. [12]
    The Request for Default judgment provided that “[t]he Claim against the defendant is for $448, 241.97, as the liquidated demand with interest and costs”. That amount was comprised of the principal amount sort by the claim of $425, 000, interest (calculated on the basis claimed by the Statement of Claim), and costs of $4084.25.[16] 
  5. [13]
    On the same date, 20 May 2022 default judgment was entered, in the terms sought by the respondent - that, the applicant not having filed a Notice of Intention to Defend, the applicant pay to the respondent the amount of $448, 241.97, including $19 157.72 interest and $4084.25 in costs.
  6. [14]
    On 24 May 2022 the respondent sent correspondence to the applicant advising of the default judgment. The correspondence indicated that the respondent would not take action to enforce the judgment if payment was made on or before 7 June 2022. After that date the respondent took steps to register the judgment and commence enforcement action.

Legal basis for the application

  1. [15]
    The application for the setting aside of the judgment by default is brought with reference to rule 290 of the UCPR.
  2. [16]
    Rule 290 provides: “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.”
  3. [17]
    Rule 290 therefore confers a discretion on the Court.[17] While the discretion to set aside a regularly entered judgment is unfettered, there are a number of considerations which will ordinarily be of relevance to the determination of an application of this nature. They include:[18]
    1. (a)
      Whether or not the applicant has given a satisfactory explanation for the failure to appear or otherwise defend the claim as required;
    2. (b)
      Whether or not there has been any delay in making the application to set aside the order for judgment in default, such that the applicant should be precluded from relief; and
    3. (c)
      Whether or not the applicant has a prima facie defence on the merits of the claim on which the judgment is founded.
  4. [18]
    An applicant need not necessarily demonstrate each of the above matters to succeed on the application. Rather, these matters assume importance in informing the appropriate exercise of the discretion.[19]
  5. [19]
    As was observed by McPherson J in National Mutual Life Association of Australasia v Oasis Developments Pty Ltd [1983] 2 Qd R 441 at 449, it is the consideration of whether the applicant has a prima facie defence on the merits of the claim that will generally be the most cogent.[20] Even where a lengthy interval of time may have elapsed, an applicant who has an apparently good ground of defence would not commonly be refused the opportunity of so defending an action, provided no irreparable prejudice is thereby done to the plaintiff.
  6. [20]
    Further to the aforementioned considerations, the applicant submits that in the present case, the Court would also have regard to the circumstances in which the default judgment was entered.[21] The respondent submits regard would also be had to the applicant’s conduct in the action before and after the judgment[22] - although it may be observed that often such matters may in any case be of relevance to a consideration of the explanation given for the failure to defend the claim as required. 

The applicant’s contentions on this application as to why default judgement ought to be set aside

  1. [21]
    In support of the application, the applicant relies upon affidavit material under the hand of the applicant Cindy Mikhael,[23] and of her solicitor in defending the proceedings, Mark Rodger Smith.[24]
  2. [22]
    The applicant contends[25] that the order for judgment in default ought be set aside for reason that:
    1. (a)
      The applicant “has explained her failure to appear”;
    2. (b)
      The respondent failed to observe the custom of giving a solicitor notice of their intention to seek default judgment;
    3. (c)
      The applicant sought to file her defence on the same day that default judgment was sought; and
    4. (d)
      The applicant “has at least an arguable defence”.

Explanation for the failure of the applicant to file the Notice of Intention to Defend, and the circumstances leading to the obtaining of judgment in default

  1. [23]
    The matters relating to the chronology of the litigation,[26] are inter-related and may conveniently be considered together.
  2. [24]
    The reference to “failure to appear” may be understood in this instance to be the failure to file the Notice of Intention to Defend the subject claim within the timeframe required.
  3. [25]
    As concerns the applicant having sought to file a Notice of Intention to Defend and Defence, the affidavit material relied upon by the applicant contends as follows:
    1. (a)
      That upon being served with the Statement of Claim, the applicant, (on or about the same date),[27] instructed her legal representative to assist her in the preparation of her defence in the proceedings.
    2. (b)
      That on 19 May 2022, prior to the respondent’s Request for Default Judgment being forwarded to the Court, the applicant’s legal representatives had prepared a Notice of Intention to Defend, and a Defence in response to the Statement of Claim.
    3. (c)
      That on 19 May 2022 at 2:46pm an agent of the applicant’s legal representatives sent copies of the Notice of Intention to Defend and the Defence to be relied upon by  the applicant by email to the Southport District Court Registry. An auto response was received from the Southport District Court Registry email address, confirming receipt of the email correspondence and that the email would be “actioned accordingly”.[28] 
    4. (d)
      That on 19 May 2022 the applicant’s legal representative, Mr Smith, sent a copy of the Notice of Intention to Defend and the Defence to be relied upon by the applicant by Express Post to the Registry of the Southport District Court.[29]
    5. (e)
      That on 20 May 2022 the Notice of Intention to Defend and Defence were “delivered at the Court” at 11:46am.[30]
    6. (f)
      On 23 May 2022, correspondence was sent on behalf of the Registrar of the Southport District Court Registry to the legal representatives of the applicant, returning the Notice of Intention to Defend and Defence unfiled, due to Judgment in Default having been entered on 20 May 2022.[31]
  4. [26]
    Although it was not submitted by Counsel for the applicant, in written submissions, or in oral submissions at the hearing, that the default judgment was not entered regularly, in accordance with the rules, in the affidavit of both Cindy Mikhael[32] and Mark  Rodger Smith under the heading “Explanation for the Delay” it is asserted that “there may have been a clerical error on the basis that the Notice of Intention to Defend and Defence were delivered at the Court on the same day as the Default Judgement was entered”, further to events set out under the heading “Irregularity”.
  5. [27]
    As concerns the chronology asserted within the affidavit material relied upon by the applicant, the printed Australia Post tracking record provided,[33]  indicates that as at 11:44am[34] on Friday 20 May 2022 the mail had been delivered to “post office box SOUTHPORT BC” – that is to suggest a post office box at the Southport post office, not confirmation of delivery of the mail to the Court premises, or the Registry, at that time, or anytime later that day. Both parties identified in the course of submissions that this was the basis on which the matter should proceed.[35] Further, the correspondence of 23 May 2022 sent by the Court to the legal representatives of the applicant[36] states that the subject returned documents “…were received via post on 23 May 2020”,[37] and were unable to be filed “…as Judgment was entered on 20 May 2022”. This is also evidenced on the face of the returned documents which are shown to have been stamped consistent with having been processed by the Registry on 23 May 2022, such endorsements on the document then having been struck through, presumably for reason of the earlier entering of judgment in default having been identified.
  6. [28]
    I am unable to conclude that there was a “clerical error” of the nature which the affidavit material of the applicant identifies[38] there “may have been”. There is no basis to conclude such an error occurred. The Notice of Intention to Defend and the Defence had not in fact been filed.
  7. [29]
    Although the hypothesised “clerical error” is included under the heading “Explanation for the Delay” in the affidavit of the applicant, the matters there asserted do not in fact provide explanation for the delay by the applicant in any effort to file the Notice of Intention to Defend, or the Defence, prior to 19 May 2022, such as may have been intended to be reflected by the heading.
  8. [30]
    Under the heading “Explanation for the Delay” in the affidavit of Mark Rodger Smith, in addition to the potential “clerical error”, it is also asserted that further to communications with the legal representatives of the respondent about the possible settlement of the claim, it had been expected by Mr Smith, that the respondent’s legal representatives would provide notice that they would be making a Request for Default Judgment in the proceedings.[39]
  9. [31]
    It is not suggested by the applicant on this application that the respondent was in any way aware that efforts had been made by the applicant toward filing the Notice of Intention to Defend at the time of filing the Request for Default Judgment, or that the default judgment was otherwise obtained in bad faith.  Rather, it is submitted, that the respondent failed to follow “the usual custom of notifying in advance of making the application to seek default judgment”.[40] That is relied upon both by way of explanation for the applicant’s delay or inaction, and - as is said would also be of relevance to the discretion - as a matter going to the circumstances in which the default judgment was entered.
  10. [32]
    On the face of the affidavit of Mr Smith of 22 June 2022, the communications which would be taken to have informed any belief that further notice would be given before an order for judgment in default would be sought, occurred only on the 10th and 12th of May 2022, not before.[41] Those communications are:
    • That on 10 May 2022 there was a telephone conversation between Mr Smith and the legal representatives of the respondent, during which Mr Smith advised the respondent’s legal representatives “to the effect” that the applicant wanted to discuss the possibility of settling proceedings and enquiring if the respondent “would be agreeable to the possibility of a further auction to sell the car”. The response is said to have been to the effect that they would seek instructions.
    • That two days later, on 12 May 2022, Mr Smith again spoke to the same individual, advising “to the effect” that the proceedings would be “vigorously” defended and asking if instructions had as yet been received in relation to the earlier “settlement offer of 10 May 2022”. The response attributed to the respondent’s legal representative was to the effect that they were still seeking instructions, but requested that the applicant’s offer be provided at their earliest convenience.
  11. [33]
    The respondent does not accept Mr Smith’s account of the effect of these communications as being entirely accurate.[42] In particular the respondent does not accept that there was a conversation on 10 May 2022 – only that a message was left by Mr Smith asking the respondent’s legal representatives to contact him. Further, while the respondent accepts that there was reference during a later discussion (on 12 May 2022) by the applicant to an offer to resolve the proceedings, the indication by the legal representative of the respondent is said to have been to the effect that instructions would be sought from the respondent upon receipt of the forthcoming offer in writing.
  12. [34]
    I have determined that it is unnecessary to resolve any dispute, such as there may be, as concerns the precise detail of the communications.
  13. [35]
    Accepting for the moment Mr Smith’s account of the effect of the communications relied upon, it would be generous to describe the representations by the legal representative of the applicant in the telephone conversation of 10 May 2022 as a “settlement offer”, so much as an indication of a willingness to discuss or work towards potential resolution. As at 12 May 2022, on the account of events maintained by both the applicant and the respondent, the respondent’s communications were indicative of the respondent proceeding on the basis that “the offer” of the applicant was still forthcoming, even if instructions may also have been taken in the meantime around whether the respondent may have been “agreeable to the possibility of a further auction to sell the car” as queried on behalf of the applicant in the conversation of 10 May 2022.
  14. [36]
    As matters transpired, no correspondence was sent to the respondent further to such telephone conversation as occurred on 12 May 2022[43] as concerns settlement of the matter, or otherwise. On 20 May 2022 the respondent proceeded with the Request for Default Judgment. In the meantime, over the same intervening period, the applicant had prepared and taken steps toward filing the Notice of Intention to Defend and the Defence, as outlined above. The applicant contends that “notwithstanding what appears to have been at that point in time a gap on one or the other side of someone getting instructions, that did not abrogate the responsibility of the plaintiff’s solicitors to notify the defendant’s solicitors that they were intending to make an application for default judgment”.[44]
  15. [37]
    The respondent submits that notice had been given of the prospect of seeking default judgment. On 26 April 2022 the legal representatives for the respondent had sent correspondence to the legal representatives of the applicant, referring to steps to be taken, including a request for default judgment without further notice if time limits were not strictly adhered to.[45] Whether such correspondence may or may not be aptly described, as the applicant submits,[46] as “a pretty standard boilerplate letter about seeking to take any steps that their client deemed fit, including default judgement without further notice”, does not, I accept, alter that being the express indication within that correspondence.
  16. [38]
    I accept the submission of the respondent that a fair reading of the subsequent discussions as are suggested to have occurred on 10 and 12 May 2022, do not themselves indicate – explicitly or implicitly - that notice would be given by the respondent before seeking default judgment.[47] 
  17. [39]
    I find that the above circumstances do not themselves provide a clear explanation for the delay of the applicant in the filing or attempted filing of the Notice of Intention to Defend prior to the communications between the parties of 10 and 12 May 2022 such as occurred, or prior to 19 May 2022 when the legal representatives caused the subject documentation to be sent for filing.
  18. [40]
    Notwithstanding, it does in my view remain of significance that the applicant’s legal representatives had in fact taken all steps that would have been required of them to effect filing of the documents prior to the Request for Default Judgment being made. The documents were posted, by express post, for filing, in circumstances of the applicant’s legal representatives being outside of the jurisdiction. The applicant’s legal representatives also took the step  - although not constituting electronic filing – of informing the Registry that the documents that had been sent by post, and providing copies of the same. Those steps occurred prior to the Request for Default Judgment being made. This is not a case where it may be concluded that there is a lack of bona fide intention to defend the claim. Those circumstances are such as would, subject to the weighing of other relevant considerations, tend toward a view that the application be allowed.
  19. [41]
    Further, while I accept that there was no legal obligation on a plaintiff to give notice of having determined to in fact proceed with a Request Judgment by Default,[48] the giving of notice of that course being taken by the respondent, whether as a matter of good practice, professional etiquette or otherwise, would have been appropriate and prudent.[49] That is particularly so in circumstances where:
    • The applicant was, to the knowledge of the respondent, legally represented;
    • The applicant’s legal representatives were to the knowledge of the respondent, based interstate;
    • The legal representatives of the applicant had on 21 April 2022, when the Notice of Intention to Defend was otherwise to have been filed by, sent correspondence to the legal representatives for the respondent advising that they anticipated being in a position to serve their defence by 5 May 2022. That is, the respondent was on notice that the applicant intended to make defence to the claim.
  20. [42]
    I note that the Request for Judgement in Default was made 28 days after the Notice of Intention to Defend was required to have been filed under the UCPR, 15 days after the date that the legal representatives had indicated (in their correspondence of 21 April 2022) that they anticipated that their Defence would be filed, and 8 days after the last identified communication between the parties, which had related to possible resolution. 
  21. [43]
    Had such notice of the intention to proceed with a Request for Default judgment been given, even on the day of the filing of the request, the applicant would have been in a position to inform the respondent’s legal representatives, and evidence to the respondent’s legal representatives, that all necessary steps had in fact been taken to file the documentation, such that, presumably, the Request for Default Judgment would not have been proceeded with, on the basis that it was. It may also be observed that the legal representatives of the applicant may also have acted to keep the legal representatives of the respondent better informed as to the further delay in the preparation and filing of the documentation, than had been earlier foreshadowed, and to have included the other party in the correspondence to the Court Registry; however such matters do not detract from the relevance on this application of the steps that had in fact been taken to file the documents prior to default judgment being sought.

Delay in bringing of this application

  1. [44]
    By way of further affidavit under the hand of Mark Rodger Smith affirmed 28 July 2022,[50] Mr Smith attested to circumstances by way of explanation for the delay between 24 May 2022, when the applicant became aware of the default judgment having been ordered against her, and the filing of this application on 27 June 2022.   Whether the explanation provided for delay is reasonable, and whether the consequences of any delay can be adequately addressed by for example, being compensated in costs, are matters to be considered in the exercise of the Court’s discretion, in the circumstances of each case. I accept the material provides some explanation for the period of delay of approximately one month in the bringing of this application. While mindful that the litigation itself pertains to events that occurred, and a liability said to arise in September 2021, no obvious prejudice, apart from the fact of the delay itself, is identified to arise here, that cannot be addressed. The respondent does not submit that any resulting prejudice to the respondent should the application be allowed, could not be remedied.[51]  I do not consider that the period of one month delay between the order for default judgment and the bringing of this application is a matter which would in the circumstances tend against the application being allowed.

Has the applicant demonstrated a prima facie defence on the merits?

  1. [45]
    As concerns the applicant’s purported defence to the claim, the applicant’s affidavit asserts[52] the following:

“In light of the Plaintiff’s claim, and the Notice of Intention to Defend and Defence, [she has] a genuine defence against the allegations raised by the Plaintiff in the Statement of Claim on the following basis:

  1. The Plaintiff made various false and incorrect representations to me through its online advertisement of the Goods which created impressions about the Goods which were relied upon;
  2. The Plaintiff failed to take reasonable steps to mitigate avoidable loss, as alleged.”
  1. [46]
    These two grounds were reiterated within the applicant’s outline of submissions[53] and oral submissions at the hearing[54] as being the two primary grounds for the applicant’s defence.
  2. [47]
    No further content going to the substance or merits of any alleged defence relied upon by the applicant is contained within the applicant’s affidavit. The applicant’s affidavit produces and in effect, relies upon the Defence which was sent for filing by the applicant.[55]
  3. [48]
    The respondent takes issue with the adequacy of the matters contained within the applicant’s affidavit as producing evidence of the applicant having a prima facie defence,[56]  and in particular that the applicant “does not swear to the correctness of the matters set out in the defence”.[57] The respondent otherwise submits that the Defence relied upon by the applicant does not disclose any reasonable defence.[58]
  4. [49]
    What needs to be demonstrated by an applicant to establish a prima facie defence on the merits of a claim was considered by Applegarth J[59] in Embrey v Smart [2014] QCA 75,[60] where it was said:
  1. [68]
    The third matter has been described in different ways. Lord Atkin in Evans v Bartlam referred to rules that guide the discretion and one of them was ‘an affidavit of merits, meaning that the applicant must produce to the court evidence that he has a prima facie defence’. It has been said that the affidavit ‘must set out all the defences on which the defendant intends to rely and briefly set out the facts by which the defendant seeks to establish such defences’. The defendant must make more than a bare allegation: the allegation must be supported by ‘some reference to evidence to suggest that the defence is plausible and not just raised for the purpose of having default judgment set aside’. It is insufficient for an applicant:

‘… to allege that he has a defence upon the merits and swear to such a defence generally. He must go further and disclose what such merits are, and show to the court that his application is bona fide.’

  1. [69]
    The requirement to refer to evidence, not generalities, does not necessarily require a lengthy affidavit of merits. As Prus-Butwilowicz v Moxey illustrates, the contents of a fulsome draft defence may be sworn to by a short affidavit. In that case it was not necessary for the applicant to swear ‘a long affidavit touching the same matters as appear in his long, detailed pleading’. …”
  1. [50]
    In Embrey v Smart [2014] QCA 75, the state of the affidavit material filed was distinguished[61] from the situation referred to Prus-Butwilowicz v Moxey,[62] in that the applicant in Embrey v Smart did not swear to the truth of the contents of the draft defence, and swore to matters of the defence only very generally.
  2. [51]
    The respondent’s submissions on this application place significant emphasis on this also, it is said, being reflective of the state of the applicant’s material on this application.[63] I do not proceed on the basis that an applicant having not sworn within an affidavit to the truth of each of the matters set out in the defence is itself fatal to the success of an application of this nature.[64] Such matters may however be of relevance to an assessment of the weight that may be given to the subject contentions said to go toward demonstrating the presence of a prima facie defence on the merits.

False and incorrect representations

  1. [52]
    The affidavit of the applicant[65] asserts that the respondent made “various false and incorrect representations” to her about the vehicle, through the online advertisement of the vehicle, which created  impressions about the vehicle “which were relied upon” (presumably, by her).[66]
  2. [53]
    It is submitted on behalf of the applicant that “[the applicant] pleads that she was left with the impression that the original colour of the vehicle was XU3 yellah or similar, when it was in fact not, and that this Colour Representation and Impression (as defined) meant that the vehicle contract was void ab initio”.[67]  This is said to be pleaded by virtue of paragraphs 11 b) and c) and 20 of the Defence, exhibited to the affidavit of the applicant.
  3. [54]
    Paragraph 11 of the defence is pleaded in response to paragraph 11 of the Statement of Claim. Paragraph 11 of the Statement of Claim sets out the description of the vehicle within the advertisement for the vehicle which appeared on the website for Lloyds Auctioneers prior to the auction. By paragraph 11 of the Defence it is accepted that the advertisement included the description of the vehicle as set out within paragraph 11 of the Statement of Claim.[68]
  4. [55]
    The Defence pleads[69] that the website advertisement indicated that the vehicle’s “Paint” was “XU3 yellah”, and “did not state or otherwise specify the vehicle’s original colour”. Further it is pleaded that collectively these “colour representations” created “impressions”, namely:
  • “that the vehicle’s original paint colour was “XU3 yellah” or otherwise a similar colour; and
  • “that the original paint colour was not markedly different prior to the customisation of the vehicle”.
  1. [56]
    Paragraph 20 of the Defence is pleaded in response to paragraph 20 of the Statement of Claim. Paragraph 20 of the Statement of Claim alleges that (for the reasons stated therein) a contract was formed between the applicant and the respondent whereby the respondent would sell the applicant the vehicle for payment of $425 000. On one view, as the Defence is pleaded, that there was such an agreement does not seem to be disputed by the applicant.[70] However, with reference to and reliance on the matters identified in paragraph 11 of the Defence, as outlined above, and other matters then referred to within paragraph 20 of the Defence, it is contended that the contract is “void ab initio on the basis of misrepresentations”.[71] 
  2. [57]
    It is useful to set out paragraph 20 of the Defence in full:
  1. 20.
    In response to paragraph 20 of the Statement of Claim, the Defendant:
  1. a.
    Refers to paragraph 11 inclusive above;
  1. b.
    Says that the Defendant participated in the Auction and otherwise entered the Vehicle Contract due to, inter alia, the Colour Representations and the Impressions;
  1. c.
    Says that the Plaintiff did not take reasonable care to ensure that the information provide in the Website Advertisement was accurate and sound[72];
  1. d.
    Says that the value of the Vehicle is reduced by reason of the customisations of the Vehicle;
  1. e.
    Says that by reason of the matters stated in above, the Colour Representations and the Impressions, that the Contract is void ab initio on the basis of misrepresentation/s;
  1. f.
    Otherwise denies the balance of allegations in paragraph 20 of the Statement of Claim.
  1. [58]
    It is not in issue that the vehicle was not originally the colour ‘XU3 yellah’.[73] Nor is it contended that the advertisement was incorrect in representing that the colour of the vehicle for sale was at that time ‘XU3 yellah’.
  2. [59]
    The basis of the applicant’s defence that there was a misrepresentation is that it was not explicitly stated that ‘XU3 Yellah’ was not the original colour.[74] The  Defence[75] pleads that it was “immediately after placing the highest bid on the vehicle in the auction that the defendant began researching the vehicle on the internet and became aware that the original colour of the vehicle was not ‘XU3 yellah’ or a similar colour and that the original colour of the vehicle was markedly different prior to the customisation of the vehicle”. It is asserted that the applicant indicated that she would not be proceeding with the agreement due to this matter on 2 October 2021.[76]
  3. [60]
    The assertion of the applicant that “the value of the vehicle is reduced by reason of the customisations of the Vehicle”, must be understood to pertain to the painting of the vehicle, given that it is not asserted that the applicant had otherwise understood any of the other customisations stated in the website advertisement to be original features of the vehicle at the time.[77]
  4. [61]
    It was submitted on behalf of the applicant that it is arguable that failure to explicitly disclose that the advertised colour of the vehicle was not the original colour, could, in circumstances of the vehicle being a “collectable unique car” be a misrepresentation that affected the value of the vehicle and have mislead the applicant into bidding too much for it.[78] 
  5. [62]
    I note the following matters within the subject website advertisement:[79]
  • The vehicle is described using the words “RETRO FIT”;
  • The advertisement states “The car was customised by Eagers Holden Newstead especially for the Mater Foundation as a modern take on the iconic 1996 VS GTSR”;
  • The advertisement also states “The base car is 2017 built (2018 sold) VF GTSR with 6 speed auto/paddle shift transmission. It was then customised as follows…..”;
  • The list of customisations expressly identified as ‘then’ having then been done, (after the car was built), included “ ‘XU3 yellah’ paint to match  the 1996 GTSR, undertaken by the award winning Solden Paint and Panel of Brendale”;
  • Other customisations stated within the advertisement to have been undertaken included:
  • “Bespoke yellow and black leather trim….undertaken by industry leaders Awespec Upholstery of Caboolture;
  • “Genuine V8 Supercars rear spoiler supplied by 888 Race Engineering”
  • “Custom GTSR and ‘HRT enhanced’ decals”.
  1. [63]
    The advertisement expressly identified the vehicle to have been customised in a number of ways by a number of different contributors, and expressly included the painting of the car the colour ‘XU3 yellah’ as one such customisation.  It is in that context that any assertion that the failure of the advertisement to expressly state the vehicle had originally been a different colour, or what that colour was prior to the customisation of the vehicle, could reasonably be taken to be a representation that the original colour of the vehicle was ‘XU3 yellah’, need be considered.
  2. [64]
    The respondent has also referred the Court on this application to the photographs of the vehicle which are said to have accompanied the website advertisement for the vehicle on the Lloyd’s Auctioneers website ahead of the auction. These photographs included a photograph of the vehicle identification plate which specified the colour of the vehicle as ‘Phantom’[80] – that is, not ‘XU3 Yellah’.
  3. [65]
    I am not satisfied that a prima facie defence has presently been demonstrated on the basis of this ground, such as would lead me to conclude that I ought to exercise my discretion to allow the application for setting aside of the default judgment. 

The failure on the part of the respondent to take reasonable steps to mitigate its loss.

  1. [66]
    The affidavit of the applicant asserts that the respondent “failed to take reasonable steps to mitigate avoidable loss as alleged”.  The affidavit of the applicant does not otherwise expand upon what is contended by this defence, or the relevant legal or factual basis for it.
  2. [67]
    The submissions which are made by the applicant in reference to this suggested defence, while also under the heading “steps to mitigate loss”,[81] may be understood as being directed toward the applicant not having, an action for price pursuant to section 50(2) Sale of Goods Act 1896 (Qld), that being the basis for the first limb of the respondent’s Claim.
  3. [68]
    Section 50(2) Sale of Goods Act 1896 provides:

“When, under a contract of sale, the price is payable on a day certain, irrespective of delivery, and the buyer wrongfully neglects or refuses to pa such price, the seller may maintain an action for the price, although the property in the goods has not passed, and the goods have not been appropriated to the contract”.

  1. [69]
    It is submitted by the applicant that the matter is pleaded to be in issue by virtue of paragraph 25 of the Defence.
  2. [70]
    Paragraph 25 of the Defence is pleaded in response to paragraph 25 of the Statement of Claim.  Paragraph 25 of the Statement of Claim provides[82] as follows:

“As a consequence of s. 50(2) of the Sale of Goods Act 1896, and in circumstances where:

  1. The Defendant’s obligations to pay the Purchase Price was irrespective of delivery; and
  2. The property in the Vehicle has not passed to the Defendant;

The Plaintiff may maintain an action for the Purchase Price.”

  1. [71]
    Per paragraph 25 of the Defence, the applicant denies these contentions of the respondent other than, to accept what is stated in section 50(2) of Sale of Goods Act 1896. The defence is in part predicated[83] upon the alleged representations concerning the colour of the vehicle, already considered above. Otherwise, paragraph 25 additionally references the matters referred to in paragraph 21 to 24 of the Defence which in turn contain the following propositions:
  • The vehicle has not transferred in possession and ownership to the applicant;
  • It is denied that by virtue of the General Conditions and Auction Conditions that under the vehicle contract, property in the vehicle would not transfer to the applicant unless and until the purchase price is paid in full;
  • It is denied that there was an obligation on the applicant to pay the purchase price of $425 000 to Lloyd’s Auctioneers by 4:30pm on 29 September 2021;[84]
  • It is denied that the applicant is in breach of the payment obligation under the vehicle contract;[85]
  • It is not admitted that the vehicle contract is an “agreement to sell” as defined in section 4(3) of the Sale of Goods Act 1896, or a “contract of sale” as defined in section 3(1) of the Sale of Goods Act 1896.
  1. [72]
    While, per the Defence, as presently pleaded, the applicant admits that the auction was subject to the identified General Terms (Lloyd’s Auction Terms and Conditions of 10 June 2015), the applicant does not admit that the auction was subject to the Auction Specific Conditions identified by the respondent, or that such conditions were, as the respondent contends, available on the Lloyd’s Auctioneers website.[86]  It is pleaded that the applicant was never provided with, or was otherwise unable to access, the Auction Conditions, prior to the auction.[87] It is these Auction Specific Terms which include the reference to payment by the specific date and time, on which the respondent relies.[88]
  1. [73]
    The applicant makes (in effect) the following submissions in furtherance of the applicant’s suggested defence to the claim for action for price with reference to Section 50(2):
  • There is nothing in the General Conditions to which the auction was subject which provides expressly that the price is “payable on a day irrespective of delivery”. It is necessary to infer that to be the effect of the Conditions of the auction, and consequential agreement, by construing several clauses together.
  • While it is accepted that a date for payment is identified (within the Auction Conditions), and that under the General Terms, ownership and title in the  vehicle shall not pass until the payment is made in full, it is submitted that in the absence of an express stipulation that payment is “irrespective of delivery”, and in circumstances where the contract is said to be otherwise silent as to delivery, that “it is arguable” that under the terms of the contract payment is not irrespective of delivery.
  1. [74]
    The respondent contends that the issue may be framed simply as “is this a contract where the price is payable on a day certain, irrespective of delivery”. To some extent, that is true. However, matters, more broadly, that underpin that issue include the terms of the contract, the construction and interplay of those terms, and the availability of recourse to section 50(2) Sale of Goods Act 1896, further to the construction of the contract. While I consider there may ultimately be merit in the respondent’s submissions that the effect of the contract is to provide for delivery following payment, but payment being irrespective of delivery, I also accept that the applicant may have a defence, that she should, on balance be entitled to pursue, particularly given the other factors of relevance on this application to which I have referred. 
  2. [75]
    As the applicant identifies[89] it is only by virtue of this aspect of the claim that the applicant was able to seek default judgment from the Registrar for the specified amount of liquidated damages, without any assessment of the amount of damages.[90]   The further or alternative submission of the respondent that even if there were to be thought to be an arguable defence, on this limb of the claim, for “action for price”, that it would also be open to the court to order specific performance of the contract, it is said without prejudice to the applicant, as a reason for exercising the discretion against the allowing of the application, need be considered in light of the default judgment only having been able to have been given in the form it was on the basis of the claim for liquidated damages on grounds of “action for price”, as well as what has already been observed about the circumstances in which default judgment came to be entered. 

Conclusion

  1. [76]
    On balance, I have determined that in all the circumstances, the discretion ought be exercised in favour of allowing the application.

Costs

  1. [77]
    Having regard to the circumstances leading to the entering of default judgment in this case, and that this proceeding may have been avoided in its entirety had each party communicated their intended course to the other party, I have determined that it is appropriate that each party bear their own costs of and incidental to this application.
  1. [78]
    Accordingly, no order as to costs is made.

Footnotes

[1]“Registrar” includes “Deputy Registrar”, see UCPR, Schedule 3.

[2]ACN 010 959 163.

[3]UCPR , r 281.

[4]UCPR, r 282.

[5]UCPR, r 283. See also UCPR, r 287. The claim for liquidated damages is with reference only to paragraph 1 of the claim filed 14 March 2022, for payment of the purchase price of $425 000, pursuant to the provisions of section 50(2) of the Sale of Goods Act 1896 (Qld).

[6]These matters were not in contest as between the parties on the application. See Transcript of Proceedings of 29 July 2022 at page 4.

[7]By paragraph 14(a) of the proposed Defence, the applicant contends that her spouse participated in the auction under her authority.

[8]D70/2022.

[9]It is this first limb of the claim which gives rise to the claim for liquidated damages on which the application for default judgment by the Deputy Registrar, pursuant to rule 183 was predicated.

[10]Per the Statement of Claim these are said to be in the amount of $150 000.

[11]Along with the Form 1 - Notice to Respondent under the Service and Execution of Process Act 1992 (Cth).

[12]Affidavit of Kareem Kenan Kabbara sworn 13 May 2022, filed 20 May 2022. See also the affidavit of the applicant Cindy Mikhael sworn 20 June 2022, filed 27 June 2022, at paragraph 4.

[13]The Claim itself also included the pro forma notice, as required by rule 23, referring to the requirements for filing of the Notice of Intention to Defend. See also Service and Execution of Process Act 1992 (Cth), section 17(1)(a)(ii).

[14]See also the affidavit of Antony John Knox, sworn 20 May 2022 and filed 20 May 2022 at paragraph 2.

[15]As required pursuant to UCPR r 150(3).

[16]Reflecting the amount of costs stated in the Statement of Claim with reference to UCPR, r 150(3). See also affidavit of Antony John Knox sworn 20 May 2022 and filed 20 May 2022 at paragraphs 3-8.

[17]See Yankee Doodles Pty Ltd v Blemvale Pty Ltd [1999] QSC 134 at [13].

[18]National Mutual Life Association of Australasia v Oasis Developments Pty Ltd [1983] 2 Qd R 441 at 449 per McPherson J; Deputy Commissioner of Taxation v Johnston (2006) 230 ALR 575  per Atkinson J at 576; Yankee Doodles Pty Ltd v Blemvale Pty Ltd [1999] QSC 134 at [13]. 

[19]Cook v D A Manufacturing Co Pty Ltd [2004] QCA 52 at [16]; Embrey v Smart [2014] QCA 75 at [67].

[20]See also Embrey v Smart [2014] QCA 75 at [67].

[21]Applicant’s Outline of Submissions, paragraph 14(d), relying on Gavin Boyle Constructions Pty Ltd v Fabrok Pty & Anor [2011] QDC 214 at [14].

[22]Respondent’s Outline of Argument, paragraph 15(c).

[23]Affidavit sworn 20 June 2022, filed 27 June 2022.

[24]First affidavit affirmed 20 June 2022, filed 27 June 2022, second affidavit affirmed 28 July 2022 and filed with leave at the hearing on 29 July 2022.

[25]Applicant’s Outline of Submissions, paragraph 3.

[26]That is not pertaining to the merit of any potential defence.

[27]See the affidavit of Cindy Mikhael sworn 20 June 2022, filed 22 June 2022 at paragraph 5 and the affidavit of Mark Rodger Smith affirmed 20 June 2022, filed 27 June 2022, at paragraph 4.

[28]See the affidavit of Mark Rodger Smith affirmed 20 June 2022, filed 27 June 2022 at paragraph 9, and Exhibit B thereto reproduced at pages 27-28.

[29]See the affidavit of Mark Rodger Smith affirmed 20 June 2022, filed 27 June 2022 at paragraph 8.

[30]See the affidavit of Mark Rodger Smith affirmed 20 June 2022, filed 27 June 2022, at paragraph 10, and the Australia Post Tracking Record reproduced within Exhibit “A” at pages 23-26. The record indicates “Delivered – Most recent update – Delivered to post office box SOUTHPORT BC – Fri 20 May, 11:44am”.

[31]See the affidavit of Mark Rodger Smith affirmed 20 June 2022, filed 27 June 2022 at paragraph 12, and Exhibit D thereto.

[32]Sworn 20 June 2022, filed 22 June 2022, page 3, paragraph 13.

[33]Within Exhibit A of the affidavit of Mark Rodger Smith, filed 22 June 2022, at pages 23-24.

[34]Not 11:46am.

[35]Transcript of Proceedings of 29 July 2022, page 6 lines 13 to 39.

[36]Within Exhibit D to the affidavit of Cindy Mikhael sworn 20 June 2022, filed 22 June 2022, at page 32.

[37]It may be inferred that 2020 is stated in error and the correspondence intended to refer to 23 May 2022.

[38]Sworn 20 June 2022, filed 22 June 2022, page 3, paragraph 13.

[39]At paragraph 15.

[40]See further the submissions of Counsel for the defendant at Transcript of Proceedings of 29 July 2022 at page 6 lines 39-47.

[41]If the source of these matters is other than the recollection of the deponent, that is not disclosed on the face of the affidavit.

[42]Affidavit of Antony John Knox sworn 25 July 2022, and filed 25 July 2022, at page 4, paragraph 5, outlining hearsay representations of the other party to whom Mr Smith is said to have communicated.

[43]This is expressly deposed to by the plaintiff at paragraph 5(iv) of the affidavit of Antony John Knox sworn 25 July 2022, filed 25 July 2022.

[44]Transcript of Proceedings of 29 July 2022 at page 7 lines 22-25.

[45]See the affidavit of Antony John Knox sworn 25 July 2022 and filed 25 July 2022 at page 2 paragraph 3(f), and the submissions on behalf of the applicant at Transcript of Proceedings of 29 July 2022 at page 7 line 27.

[46]See Transcript of Proceedings of 29 July 2022 at page 7 lines 28-30.

[47]See Transcript of Proceedings of 29 July 2022 at page 21 line 10.

[48]Further to the Notice as contained within the correspondence of 26 April 2022.

[49]See Gavin Boyle Constructions Pty Ltd v Fabrok Pty Ltd & Anor [2011] QDC 214, per McGill J at [13]-[18]. See also Mark AC Enterprises PL v Done Diesel Pty Ltd (No 2) [2012] QDC 314 at [23].

[50]Filed with leave at the hearing on 29 July 2022.

[51]See Transcript of Proceedings of 29 July 2022 at page 18 lines 14-15.

[52]At paragraph 12.

[53]Applicant’s Outline of Submissions at paragraph 28.

[54]Transcript of Proceedings of 29 July 2022 at page 9 lines 33-36.

[55]Affidavit of Cindy Mikhael affirmed 20 June 2022, filed 27 June 2022 at paragraph 10, and Exhibit A at pages 4-21.

[56]Respondent’s Outline of Argument at paragraph 22; Transcript of Proceedings of 29 July 2022 at page 18 lines 25 to 32.

[57]Transcript of Proceedings of 29 July 2022 at page 19 lines 7-10.

[58]Respondent’s Outline of Argument at paragraph 24.

[59]With whom Muir and Morrison JJA agreed.

[60]At [68]-[69], citations omitted.

[61]See Embrey v Smart [2014] QCA 75 at [69].

[62][2002] QDC 166.

[63]Transcript of Proceedings of 29 July 2022 at page 19 lines 7-15, page 23 lines 34-36. However, see also page 24 lines 28-37.

[64]See for example the further discussion at paragraphs [70] and [71] of Embrey v Smart [2014] QCA 75.

[65]Affidavit of Cindy Mikhael affirmed 20 May 2022 filed 27 June 2022.

[66]The affidavit itself does not otherwise identify the subject representations, how and in what way they were false and incorrect, what impressions they created about the vehicle, and in what way they were relied upon (presumably by the applicant). The legal basis for the applicant’s position, and how it is here established, is not further articulated within the affidavit material.

[67]Applicant’s Outline of Submissions at paragraph 29. No legislative defences are pleaded as being relied upon by the applicant within the Defence (see UCPR, rule 149(e)), or otherwise referred to in the submissions made on behalf of the applicant on the application.

[68]See paragraph 11(a) and (d) of the Defence.

[69]Paragraph 11(b)(i) of the Defence.

[70]See paragraph 20(b) and 32 of the Defence, although see paragraph 23 of the Defence.

[71]Paragraph 20(e) of the Defence.

[72]Although not otherwise addressed, that may be to suggest that the applicant contends the misrepresentation of the respondent to have been negligent.

[73]See paragraph 19 of the affidavit of Anthony Lenan sworn 25 July 2022, filed 25 July 2022, referred to by the applicant at paragraph 30 of the applicant’s Outline of Submissions.

[74]See Transcript of Proceedings of 29 July 2022 at page 12 lines 7-12. The material does not further articulate how the failure to expressly state in the advertisement that ‘XU3 Yellah’ was not the original colour led the applicant to believe that the stated colour of the vehicle was the original colour, or why the content of the advertisement in all the circumstances would or could, objectively, be seen to be misleading as to that matter.

[75]Paragraph 33 of the Defence.

[76]Paragraph 35 of the Defence.

[77]The applicant’s affidavit or Defence do not further articulate why the value of the vehicle, otherwise customised in the way specified, is reduced by virtue of the paint colour of the vehicle in fact being, but not originally having been ‘XU3 yellah’.

[78]Paragraph 32 of the applicant’s Outline of Submissions.

[79]As set out at paragraph 11 of the Statement of Claim, the content of which is not in issue, per paragraph 11 of the Defence.

[80]Affidavit of Anthony Leonard Lenan sworn 25 July 2022, filed 25 July 2022, at paragraph 13 and page 26.

[81]See paragraph 33 to 40 of the applicant’s Outline of Submissions.

[82]See also paragraphs 9 and 10 and 24 of the Statement of Claim.

[83]By reference in paragraph 25 of the Defence to paragraphs 11 and 20 of the Defence.

[84]While there is reference within paragraph 21 of the Defence to the matters in paragraphs 11 and 20 of the Defence, it is not clear if the matters within paragraphs 11 and 20 are the sole basis for the denial of the “balance of the allegations” within paragraph 21 of the Statement of Claim.

[85]Again, while there is reference within paragraph 21 of the Defence to the matters in paragraphs 11 and 20 of the Defence, it is not clear if the matters within paragraphs 11 and 20 are the sole basis for the denial of the “balance of the allegations” within paragraph 21 of the Statement of Claim.

[86]Defence, including at paragraphs 7 and 8.

[87]Defence, paragraph 7(d).

[88]Statement of Claim, paragraph 10.

[89]Paragraph 40 of the applicant’s Outline of Submissions.

[90]To the extent that the submissions on behalf of the respondent at the hearing had contended that in the absence of any reasons on the face of the default judgment as to the power upon which the judgment was ordered, that it was unclear which of the various grounds of relief sought in the claim had been relied upon in giving default judgment for the plaintiff, that cannot be accepted: See Transcript of Proceedings of 29 July 2022 at page 29 lines 26-31.

Close

Editorial Notes

  • Published Case Name:

    Jonata Investments Pty Ltd v Mikhael

  • Shortened Case Name:

    Jonata Investments Pty Ltd v Mikhael

  • MNC:

    [2022] QDC 229

  • Court:

    QDC

  • Judge(s):

    Wooldridge KC DCJ

  • Date:

    14 Oct 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Cook v D A Manufacturing Co Pty Ltd [2004] QCA 52
1 citation
Jump To
Cite 1 - [2004] QCA 52
DCT v Johnston (2006) 230 ALR 575
1 citation
Jump To
Cite 1 - (2006) 230 ALR 575
Embrey v Smart [2014] QCA 75
7 citations
Jump To
Cite 1 - [2014] QCA 75
Cite 2 - [2014] QCA 75
Cite 3 - [2014] QCA 75
Cite 4 - [2014] QCA 75
Cite 5 - [2014] QCA 75
Cite 6 - [2014] QCA 75
Cite 7 - [2014] QCA 75
Gavin Boyle Constructions Pty Ltd v Fabrok Pty Ltd [2011] QDC 214
2 citations
Jump To
Cite 1 - [2011] QDC 214
Cite 2 - [2011] QDC 214
Mark AC Enterprises Pty Ltd v Done Diesel Pty Ltd (No 2) [2012] QDC 314
1 citation
Jump To
Cite 1 - [2012] QDC 314
National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441
3 citations
Jump To
Cite 1 - [1983] 2 Qd R 441
Cite 2 - [1983] 2 Qd R 441
Cite 3 - [1983] 2 Qd R 441
Prus-Butwilowicz v Moxey t/a NLM Auto Services [2002] QDC 166
1 citation
Jump To
Cite 1 - [2002] QDC 166
Yankee Doodles Pty Ltd v Blemvale Pty Ltd [1999] QSC 134
2 citations
Jump To
Cite 1 - [1999] QSC 134
Cite 2 - [1999] QSC 134

Cases Citing

Case NameFull CitationFrequency
Jonata Investments Pty Ltd v Mikhael(2023) 3 QDCR 30; [2023] QDC 227 citations
1

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