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James v Yerkovich[2024] QSC 14



James v Yerkovich [2024] QSC 14








BS 5670/20






Supreme Court of Queensland at Brisbane


9 February 2024




5 February 2024


Brown J


  1. 1.The application is dismissed.
  2. 2.The parties will be heard as to costs at 9:15am on Thursday 15 February 2024.


PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – DEFAULT OF APPEARANCE – POWER TO SET ASIDE DEFAULT JUDGMENT – CAPACITY – where default judgment was granted in favour of the plaintiff – where no notice of intention to defend or defence was filed – where the defendant applies to set aside summary judgment – whether the defendant was a person with impaired capacity at the time of service – whether there are other irregularities – whether default judgment should be set aside on discretionary grounds


M T de Waard, for the applicant

P Travis, for the respondent


Kelly Legal for the applicant

Axia Litigation Lawyers for the respondent

  1. [1]
    The court must decide whether to set aside a default judgment entered by Applegarth J on 12 November 2021. The application is brought by Ms Melissa Joy who is the litigation guardian for her grandmother, Ms Eileen Yerkovich, the defendant in the proceedings.  Ms Gina James, the plaintiff, is Ms Yerkovich’s daughter. Ms James claimed that she had transferred her interest in a property at Maleny to Ms Yerkovich in circumstances where that transfer of title should be set aside.
  2. [2]
    There is no issue that the defendant was personally served with the proceedings in New Zealand and did not defend them.  She was also served personally with the order made by Applegarth J on 12 November 2021.  The principal basis relied upon by the applicant is that Ms Yerkovich lacked capacity at the time of the claim and statement of claim being served upon her in 15 May 2021 and should have been served pursuant to r 109 of the Uniform Civil Procedure Rules 1999 (UCPR). Other matters said to demonstrate the judgment was irregularly entered have also been raised by the applicant. Alternatively the applicant seeks to set aside the judgment on the basis that there are a number of discretionary matters which favour the judgment being set aide.
  3. [3]
    Default judgment was given by an order of this Court pursuant to r 288 UCPR.  The default judgment declared that Ms Yerkovich and her daughter Ms James held a property at Maleny as tenants-in-common, with each having a half interest in the real property. The plaintiff’s earlier transfer of her legal interest in the property to the defendant on or about July 2011 was set aside in equity on the grounds of unconscionable dealing. Orders were also made to appoint statutory trustees for the sale of the property and provided that the plaintiff and defendant were entitled to income from the property sale in equal shares. Those orders were not included in the original relief claimed in the statement of claim. The orders of the Court provided that the order as to the appointment of trustees be stayed for a period of 60 days. 
  4. [4]
    The stay was extended on two occasions, the final occasion being 10 March 2022 which extended the stay of the orders in relation to the appointment of statutory trustees for a further period of 165 days.  After the stay had lapsed, the statutory trustees duly sold the property. The proceeds of the sale have been distributed between the defendant (through Ms Joy who was appointed as Ms Yerkovich’s guardian and property manager permanently on 10 February 2023) and the plaintiff.
  5. [5]
    Notwithstanding the receipt of the proceeds of the sale by Ms Yerkovich’s guardian Ms Joy on 10 January 2023, it was not until 21 July 2023 that complaints were raised as to the judgment, with the defendant advising (through her guardian) that she would seek to set aside the judgment.
  6. [6]
    A number of issues were raised in relation to the application which have to be determined by the court, firstly:
    1. whether the defendant Ms Yerkovich was a person of impaired capacity such that they should have been served in accordance with r 109 UCPR;
    2. whether there were any other irregularities that affected the entry of the default judgment. In that regard the applicant raises four other grounds as constituting irregularities, namely:
      1. that the relief granted to appoint a statutory trustee to sell the property the subject of dispute was not part of the relief claimed in the Statement of Claim and was not justified on the pleadings;
      2. that service was not proven for the purposes of r 282 UCPR because the affidavit of service did not provide for a certificate in the approved form as required by rule 120(2)(a);
      3. the statement of claim fails to plead all material facts to prove the causes of action as required by rules 149(b) UCPR; and
      4. the action was statute barred pursuant to s 27 of the Limitation of Actions Act 1974 (Qld).
    3. whether as a result of any irregularities and/or in the court’s discretion, the judgment should be set aside pursuant to r 290 UCPR.

Default Judgment

  1. [7]
    Rule 290 UCPR provides that:

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.

  1. [8]
    The case of Cusack v De Angelis [2008] 1 Qd R 344 examined authorities relating to the concept of regularity within the context of default judgement.[1] Muir J (with whom Lyons J agreed) observed that:[2]

[36] It has been long accepted that a defendant is entitled to have an irregularly entered judgment set aside as of right, subject to the exercise of a power of amendment and the futility of interfering with the judgment. Such judgments are the product of the exercise of administrative acts performed without legal authority. Irregularity, as that term is used in relation to default judgments, normally results from a failure to comply with the rules of court relating to the entering of default judgments.

[37] But the concept of irregularity has been given a more extended meaning. A number of cases support the proposition that where judgment is entered for too large an amount, the defendant is entitled to have them set aside ex debito justitiae… (footnotes omitted)

His Honour further noted that:

[43] The cases in which default judgments have been held to be irregular are ones in which there was either some deficiency in the steps prerequisite to the entering of default judgment or an abuse of process or something akin to it resulting from the plaintiff’s obtaining a judgment to which the plaintiff knew or ought reasonably have known he or she was not entitled. …

Alleged Irregularities


  1. [9]
    It is uncontentious that personal service Rule 109 UCPR provides for service on a person who suffers from impaired capacity. It is uncontentious that Ms Yerkovich was not served as provided under r 109 UCPR. 
  2. [10]
    Moreover, if Ms Yerkovich was a person of impaired capacity, r 93 UCPR would have required that the proceedings issued by the plaintiff could only be defended by Ms Yerkovich’s litigation guardian.
  3. [11]
    There are two questions which must be considered:
    1. Whether the Court can be satisfied that Ms Yerkovich was of impaired capacity at the time of service of the claim and statement of claim;
    2. If she was of impaired capacity how does that affect the entry of default judgment in circumstances where the evidence does not establish the plaintiff was aware she was of impaired capacity.
  4. [12]
    An adult is presumed to have capacity for a matter and make decisions on his or her own behalf.[3]
  5. [13]
    A “Person with impaired capacity” is defined in the dictionary in schedule 5 to the Supreme Court of Queensland Act 1991 (Qld) as follows:

person with impaired capacity means a person who is not capable of making the decisions required of a litigant for conducting proceedings or who is deemed by an Act to be incapable of conducting proceedings.

  1. [14]
    The question of whether a party is of impaired capacity is usually determined predominantly but not exclusively by medical evidence.[4]
  2. [15]
    In Thomson v Smith,[5] the Court of Appeal considered whether the trial judge had erred in not adjourning a matter to allow a litigation guardian to be appointed. Muir J, with whom McPherson JA agreed, considered the question of whether the plaintiff had impaired capacity as defined in schedule 2 of the Supreme Court of Queensland Act 1991 (Qld) in the following way:[6]

The concept of “impaired capacity” concerns a person’s ability to make decisions which must be made in the course of litigation. The existence of a condition or character trait which affects the quality or timeliness of such decisions would not establish “impaired capacity” unless its extent was so gross as to compel the conclusion that the person was relevantly incapacitated. Imprudence or defective judgment, even if resulting from an obsession about the litigation or some aspect of it, normally would not constitute “impaired capacity”. The primary judge was entitled, on the evidence before him, not to find “impaired capacity” on the part of the appellant.

  1. [16]
    In the present case, the question is whether Ms Yerkovich was capable of making decisions relevant to the conduct of proceedings. Those decisions at least initially upon being served would include matters such as whether she would defend the proceedings and whether or not she needed and could afford to engage solicitors to act on her behalf and could provide instructions.
  2. [17]
    In Aziz v Prestige Property Services Pty Ltd[7], Lyons J had to consider whether the plaintiff had capacity to prosecute proceedings at the time of accepting an offer to settle the claim. In the course of her decision, her Honour made note of the following:[8]

In determining this issue of whether a person understands the effect of a decision it must be remembered that it is the nature and effect of the decision or the transaction after it is explained to the person. As Sir Owen Dixon CJ said in Gibbons v Wright:[9]

‘… the mental capacity required by law in respect of any instrument is relative to the particular transaction which is effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained.’

This was also discussed in the more recent decision of Masterman-Lister v Brutton & Co[10] where Chadwick LJ said:[11]

‘The broad propositions are not in doubt. The question of difficulty in any particular case is likely to be whether the party does have the mental capacity, with the assistance of such explanation as he may be given, to understand the nature and effect of the particular transaction.’

  1. [18]
    In February 2023 Ms Joy was appointed permanently as Ms Yerkovich’s welfare guardian and property manager on the basis of her incapacity pursuant to s 31 of the Protection of Personal and Property Rights Act 1988 (NZ) (NZ Act).
  2. [19]
    Ms Joy had previously applied to be appointed as Ms Yerkovich’s guardian in December 2020 prior to Ms Yerkovich being served (December 2020 Application). According to the application, Ms Yerkovich was 80 years old and suffering from irreversible dementia.  She was said to have had a history of progressive decline over the last few years and now suffered a cognitive impairment.  It was stated that she was unable to understand the nature and consequences of her decision regarding her property, healthcare and welfare.
  3. [20]
    The affidavit by Ms Joy provided in support of the application for her appointment noted that Ms Yerkovich was “embroiled in court proceedings in Queensland against Gina James over a property which the person owns.”[12]  At the time proceedings had been issued but not served. It is unclear whether the reference was to a caveat or the Supreme Court proceedings.
  4. [21]
    Ms Joy gave an affidavit in support of the present application to set aside default judgment in these proceedings. She was not cross-examined and I generally accepted her evidence, although I note it was in some respects expressed in very general terms. She deposed as to the deterioration of Ms Yerkovich, particularly over the last 5-6 years, although she stated she had started to need assistance earlier, in relation to her memory and ability to manage her own affairs, such as paying bills. According to Ms Joy, she had observed that after Ms Yerkovich had crashed her ute into a tree that she was forgetting where she would place things, getting names muddled, missing bills and moving items back and forth between the house.  She had then noticed her not showering and changing clothes regularly, her house becoming unkept, not remembering the names of people including her daughter and getting lost while driving her car. These observations prompted Ms Joy, after consultation with her mother, brother and grandfather, to decide to make the decision to be appointed as manager of her grandmother’s affairs and property. 
  5. [22]
    A report written by Dr Jon Elliott on 8 November 2020 was provided in support of the December 2020 Application. Dr Elliott is a family practitioner at the medical practice where Ms Yerkovich attended. He saw Ms Yerkovich for the first time on 2 October 2020 for a consultation of some 20-30 minutes. She was 79 at the time. He considered that she had dementia and was “not capable of managing her own affairs or medical and self-care to some extent”.[13]
  6. [23]
    Dr Elliott gave evidence at the hearing and was cross-examined. He did not resile from his views expressed in the report of 8 November 2020. He was undoubtedly an honest witness and made proper concessions. His assessment of Ms Yerkovich was limited by the fact he only saw her once, albeit it appeared that he was told of some aspects of her behaviour by others, particularly Ms Joy and reviewed other medical reports. He had an advantage over the plaintiff’s witnesses because he had some contact with Ms Yerkovich, even if it was only brief.
  7. [24]
    In reaching his view he reviewed two cognitive screening assessments, a Montreal Cognitive Assessment commonly known as MoCA. One was carried out on 6 September 2017 where Ms Yerkovich scored 19 out of 30 and one on 5 June 2020 where she scored 17 out of 30. The 2020 MoCA was carried out by the practice nurse and reviewed by Dr Gane, a locum at Dr Elliott’s practice. Dr Elliott had regard to her notes, which stated the loss of points in the 2020 MoCA was noted to be due to short term memory and date questions. Dr Gane referred Ms Yerkovich for an eye test.
  8. [25]
    On 11 June 2020 Ms Yerkovich had gone to see an optometrist. Dr Elliott had regard to a letter from the optometrist, which reported that Ms Yerkovich turned up but did not have any idea why she had been sent to the optometrist by the GP.  As a result of that being reported to Dr Gane, it was resolved to indicate that a drivers licence should not be given to Ms Yerkovich.  Dr Gane spoke to Ms Yerkovich on 12 June 2020  and noted she had had a very full discussion with Ms Yerkovich on 5 June 2020 as to why she needed an eye test. She noted that a letter should be written to say she was not fit to drive and also that she had informed Ms Yerkovich via her long term partner, Lawrence Bolton, that she was not to drive and that a referral to a geriatrician was being made. 
  9. [26]
    On 14 September 2020 Ms Yerkovich was reviewed by Dr Samad, a geriatrician. Dr Elliott reviewed his report. According to the report, Dr Samad was given collateral history by Lawrence Bolton, who appeared to be her partner of some 41 years.  He did not regard her memory loss as significant nor did he report any executive dysfunction.  Notwithstanding that she had been advised through her partner not to drive, she had apparently driven to the clinic that day.  Ms Yerkovich stated that she had not been told about this and was uncertain why she could not drive.  Ms Yerkovich told the doctor that Laurie was not her partner but her worker at home which the doctor noted was “very different from what is in the notes”.[14]  She told the doctor that she was managing an orchard.  She received 19 out of 30 on the MoCA carried out by him.  It was noted her visuospatial/executive function was 4 out of 5, naming 3 out of 3, attention 4 out of 6, language 1 out of 3, abstraction 1 out of 2, delayed recall 0 out of 5 and orientation 5 out of 6.  GDS was said to be 1 out of 15.  Dr Samad stated that there was cognitive impairment but did not expand on the nature of that impairment. He stated he would organise a CT brain scan and that he would obtain a collateral history from the rest of the family. According to Dr Elliott the result of the CT scan was normal. It is also evident from Dr Samad’s report that while Dr Samad in his report of 14 September 2020 had formed the view that Ms Yerkovich had cognitive impairment, he intended further assessments such as in relation to testamentary capacity and collateral information from family needed to be obtained
  10. [27]
    On 2 October 2020 the defendant attended her family medical practice and saw Dr Elliott for the first time. Dr Elliott relevantly stated that he engaged in a conversation with Ms Yerkovich to evaluate her capacity for the purpose of the medical report for the court and found that while she was initially able to participate in the conversation in a normal manner she subsequently would wander and not stay on point and became confused and not able to participate in the conversation. She told Dr Elliott she had driven to the clinic but got lost on the way, even though she had visited the clinic many times and despite having been told not to drive. He told her that based on her review of the medical records and his consultation that day she had dementia and should not be driving for her safety and that of a public. He considered she had a cognitive defect and had totally lost capacity.
  11. [28]
    According to Dr Elliott, the score on the 2017 MoCA test was indicative of mild cognitive impairment and the score of 17 out of 30 on the 2020 MoCA test was indicative of moderate cognitive impairment which was consistent with what he observed in the consultation. Dr Elliott makes no mention of the results of Dr Samad’s tests although he reviewed the report. Dr Elliott stated that “As at least 2 October 2020 the defendant was suffering from cognitive deficit such that she lacked total capacity and was and is unable to manage her affairs and unlikely to recover.”
  12. [29]
    Dr Elliott completed a report of a registered medical practitioner on an application for property and welfare orders which was made by Ms Joy on 8 November 2020.   
  13. [30]
    Dr Elliott’s November report was a proforma report, answering various questions. Dr Elliott stated that Ms Yerkovich lacked competence to manage her own affairs in relation to property which was total.  Further, he stated that she lacked capacity to understand the nature and foresee the consequences of decisions relating to her personal care and welfare which was total.  He stated that while she could communicate, the substance of her communication was flawed referring to a cognitive deficit.  He indicated that she was vulnerable to undue influence in the management of her affairs as a result of her condition and did not consider that she would recover.  In particular, Dr Elliott  responded that she would not understand the nature of advice that would be given to her by a solicitor in relation to the application, understand the purpose of the proceedings or foresee the consequences of any order made. 
  14. [31]
    While Dr Elliott had given a medical report which strongly supported the fact that Ms Yerkovich lacked capacity, Ms Helen Jones, a barrister appointed by the Family Court to act on behalf of Ms Yerkovich, wrote a report questioning that Ms Yerkovich lacked capacity.
  15. [32]
    Ms Jones swore an affidavit and was cross-examined.  Ms Jones went and saw the defendant Ms Yerkovich at her orchard.  She spent some time watching Ms Yerkovich and observed her dealing with customers and subsequently had a conversation with Ms Yerkovich.  At that time, she outlined to Ms Yerkovich the matters that were in Ms Joy’s affidavit in relation to concerns about her ability to manage her welfare and finances.  That was rejected by Ms Yerkovich, who stated she did not have dementia.  Ms Yerkovich stated that Ms Joy had not spoken to her for five or six years and that:[15]

I am fine and I run my own business.  I have had businesses all my life and I previously ran a rest home.  This is all about my money and they are concerned I own properties in Auckland and will give stuff away.

  1. [33]
    And further:[16]

I have a partner Lawrence, who looks after me.[17]

  1. [34]
    Ms Jones noted that Ms Yerkovich could tell her of her date of birth, address and her children’s names correctly and that one of her daughters lived in Australia and another daughter had died of cancer.  She stated that Eileen was well dressed and that her conversation was coherent and sensible.  Ms Jones also had had a conversation with Dr Elliott where according to her he told her that he had tested Eileen’s memory on three occasions and refused to renew her driving licence as her short term memory was of concern and her ability to drive safely was his primary concern. 
  2. [35]
    Ms Jones considered that under the NZ Act, Ms Yerkovich did not indicate a lack of competence under and did not require the appointment of a property manager or welfare guardian.  She considered she had capacity and could care for herself and conduct her business.  She stated that she had formed the view very quickly upon having observed Ms Yerkovich and met her.
  3. [36]
    In that regard, the relevant test for making an appointment is contained in s 12 of NZ Act:  a court would not make the order for an appointment of a property manager unless it was satisfied, amongst other things, “that the person in respect of whom the application is made wholly lacks the capacity to make or to communicate decisions relating to any particular aspect or particular aspects of their personal care and welfare of them.” That is a more onerous test than is required to establish someone has impaired capacity under the UCPR. The NZ Act also provided that every person is presumed, until contrary is proved, to be competent to manage his or her own affairs in relation to property.[18] 
  4. [37]
    Ms Jones provided a report to the Family Court where she stated that there was no evidence or behaviours that would indicate the level of lack of competence under the NZ Act. She noted that in her conversation with Dr Elliott that the doctor’s focus was on Ms Yerkovich’s ability to drive safely. Dr Elliott could not recall speaking to Ms Jones but did not refute the things she told her.  She stated that there was no evidence from Ms Joy to substantiate the broad allegations in paragraph 7a and 7b of her affidavit. Those paragraphs refer to Ms Yerkovich suffering irreversible dementia and a statement that MsYerkovich lacked the cognitive ability to understand the nature and consequences of decisions in regard to her property, healthcare and welfare. Ms Jones did not appear to have great regard to the report of Dr Elliott supporting the application, which did support Ms Joy’s statements.  In cross-examination Ms Jones said that while she would have had a cursory look at Dr Elliott’s November report, she did not have great regard to such reports until she after she had seen her client and formed her own view.  In her report Ms Jones suggested that a second medical opinion from a psychogeratrician or the results of comprehensive cognitive testing regime needed to be produced and that the appropriateness of an order to administer property or to appoint a person, care and welfare guardian was not apparent without significant indepth medical advice and other evidence to support Ms Yerkovich’s alleged lack of competence. In cross-examination she stated that was because if the matter was to go further she considered that further medical evidence was required given her initial assessment that she did not consider that Ms Yerkovich lacked capacity and the application had not prospects.
  5. [38]
    Ms Jones in her evidence stated that she quickly formed the view that Ms Yerkovich had no issues in terms of capacity. She is clearly experienced in this area. While I accept the honesty of her evidence and reached her view that Ms Yerkovich did not lack capacity very quickly after meeting her and regard her evidence  of some weight, although not medically trained, her view as to Ms Yerkovich’s capacity doesn’t marry with or address Dr Elliott’s opinion in the November medical report. Although she rang Dr Elliott, she did not appear to question him about the medical report he had provided in support of the application nor did she appear to give it any great attention or accord it any great weight at that stage. I accept Ms Jones’ evidence of her observations of Ms Yerkovich and that she appeared to her to be able to manage her affairs. As she is not medically trained the relevance of her evidence for the present matter lies in the fact that what she observed seemed to be contrary to Dr Elliot’s and Ms Joy’s observations and bring into question the suggestion that Ms Yerkovich had totally lost capacity. Ms Joy stated as a result of Ms Jones’ report, she decided that she would simply try to continue to assist Ms Yerkovich behind the scenes rather than continue to seek to obtain a court order appointing her as welfare guardian and property despite her concerns about capacity remaining.
  6. [39]
    While Ms Joy has deposed as to Ms Yerkovich requiring further assistance over the last 10 years, she did not comment on what Ms Yerkovich told Ms Jones other than to say that prompted her not to continue with the application and continue to seek to render help behind the scenes. Somewhat consistent with what Ms Yerkovich relayed to Ms Jones, there was a disagreement between Ms Yerkovich and Ms Joy about Ms Joy giving her assistance with paying her bills and paperwork and Ms Yerkovich told her to stop, although Ms Joy said she still gave assistance without telling her.
  7. [40]
    Dr Elliott’s conclusions were brought into question by Professor Morris and Dr Zuscak.  Professor Morris is a psychiatrist qualified in geriatric psychiatry while Dr Zuscak is a clinical psychologist who has expertise in assessing legal decision-making capacity.  It was not apparent to the court why both individuals had to provide a report which was provided as a joint report.  Be that as it may, the joint report of Professor Morris and Dr Zuscak considered that, on the basis of their desktop retrospective assessment of capacity, Dr Elliott had not observed Ms Yerkovich thoroughly enough in order to answer the question of capacity.  They concluded that there was insufficient relevant information to rebut the presumption that Ms Yerkovich had retained decision-making capacity. 
  8. [41]
    Both Professor Morris and Dr Zuscak were candid witnesses who were knowledgeable in relation to capacity and dementia.  Their evidence was however limited by the fact that they were doing a desktop exercise which was retrospective without the benefit of having seen the defendant.  Nevertheless, I accept their assessment that Dr Elliott’s opinion was reached on a limited basis and that the testing by Dr Elliott was relatively cursory, although the fact that the defendant suffered mild to moderate cognitive impairment was supported by Ms Yerkovich’s results in the MoCA.  Dr Elliott did not have information before him demonstrating that Ms Yerkovich had apparently instructed Kelly Legal on her response to the matters raised in the caveat lodged by the plaintiff. Nor did he have Ms Jones affidavit and the report she provided to the Family Court in New Zealand both of which had some relevance to Ms Yerkovich’s capacity. Both of these matters were matters to which Profesor Morris and Dr Zuscak attached weight.
  9. [42]
    The evidence in late 2020 and early 2021 is conflicting in terms of Ms Yerkovich’s capacity. While Ms Joy considered Ms Yerkovich was struggling to manage her finances and the orchard. At least on the day Ms Jones was present at the property she observed Ms Yerkovich dealing with customers in selling plums from her orchard and in her conversation found her oriented as to time and place and able to articulate here position to the application and provide other information consistent with her having some capacity.
  10. [43]
    Ms Yerkovich also appeared to provide detailed instructions to Kelly Legal in response to the caveat lodged by the plaintiff which was set out in their letter of 21 May 2020, which was considered by Professor Morris and Dr Zuscak to be important in determining Ms Yerkovich’s opinion. While the applicant contends that there is no evidence that Ms Yerkovich provided the instructions to Kelly Legal, there were acting on her behalf, it is a reasonable inference they were doing so upon her instructions, in the absence of evidence to the contrary.  No-one from Kelly Legal has provided evidence as to the course of their instructions nor their observations of her cognitive ability but it may be assumed, consistent with their response to Axia Litigation Lawyers dismissing concern’s about Ms Yerkovich’s dimunition in capacity, that they formed the view that she had capacity. Her failing to act upon proceedings when they were served upon her and engage Kelly Legal to act on her behalf is inconsistent with the position reflected in Kelly Legal’s letter of 21 May 2020 to Axia. That could be indicative of her lacking capacity to conduct litigation but it may also be that she decided not to defend the proceedings against her daughter. While Ms Joy was told by her mother that she found documents which were the claim and statement of claim in April or May 2022, the affidavit of service did not suggest they had been in an envelope, so whether or not she looked at the documents remains uncertain.
  11. [44]
    In light of the above, the matters raised by Professor Morris and Dr Zusak in terms of the incomplete nature of the assessment carried out by Dr Elliott has some foundation. Professor Morris was taken through matters observed by Ms Joy and others evidencing Ms Yerkovich’s decline and behaviour in cross-examination but considered they were not without more information sufficient to conclude she lacked capacity to make decisions with respect to the conduct of litigation. Given his specialty, I found Dr Morris’ opinion to be of some weight in this regard, notwithstanding that he did not see Ms Yerkovich. While Dr Zuscak accepted short tem memory is one of the crucial elements of the cognitive processes involved in legal decision-making, the deficiency he identified in Dr Elliott’s approach was he wasn’t conducting a legally informed semi-structured interview in relation to the decisions which Ms Yerkovich was facing as opposed to general conversation which Dr Elliott had, which I accept to be the case.
  12. [45]
    Dr Elliott is clearly an experienced family medical practitioner and his opinion is of some weight but it did not appear to be based on a complete picture just as Ms Jones’ view was reached based on a snapshot in time and also limited for that reason.While Dr Elliot’s opinion was based on his observations of Ms Yerkovich on 5 October 2020 and her continuing to drive when told not to and informed by other observations of medical practitioners and the MoCA tests and it appears, matters of which he was informed of by Ms Joy, I consider that his limited interaction with Ms Yerkovich was not sufficient to be able to reach any conclusive view as to Ms Yerkovich’s capacity, at least in relation to her ability to conduct litigation.  Contrary to the submissions of the applicant, I accepts he did not engage in a semi-structured interview relevant to the decision being made. While he engaged in general conversation and she wondered off, that failed to test her in relation to other aspects of her decision-making such as the ability to conduct her orchard and how she did that.There were also matters of which he was not aware and which brought into question his assessment of total loss of capacity. Although he knew of Ms Yerkovich having an orchard, his opinion that she had totally lost capacity does not reconcile the conflicting observations of others which suggest that Ms Yerkovich was still was able to do things such as sell plums on her orchard and were indicative of the fact she had not completely lost capacity.  Nor did he have the benefit of knowing that she had instructed Kelly Legal some five months before in relation to the legal dispute. Concessions made by Dr Elliott in respect of matters presented to him in cross-examination such as Ms Yerkovich operating the orchard and observations of Ms Jones, that there were matters which indicated Ms Yerkovich still had a level of cognitive capacity.
  13. [46]
    There is no doubt Ms Yerkovich suffered a level of cognitive impairment in 2020 and had suffered some level of deterioration from 2017. While the MoCA tests were indicators of cognitive impairment they are not definitive or sufficient to inform of the level of incapacity.
  14. [47]
    The difficulty is what level of capacity Ms Yerkovich had at the time of the proceedings being served. If she was of impaired capacity she could not defend the proceedings, default judgment could not have been entered against her and a litigation guardian would have had to have been appointed to defend the proceedings. While Dr Elliott did the best he could in the circumstances he was in, I consider that his assessment and investigations were not sufficient to rebut the presumption that Ms Yerkovich retained decision-making capacity, at least in relation to the conduct of litigation. I accept the opinion of Professor Morris and Dr Zucsak that there were factors suggesting she lacked capacity and factors suggesting that she did have capacity and that Dr Elliot’s opinion was not based on a complete picture nor investigations to properly ascertain the extent of her decision-making capacity. While her short term memory clearly was shown in the MoCA to be a deficit, that does not, as Professor Morris stated in cross-examination necessarily lead to a conclusion that with prompting she would not have been able to understand matters and communicate her decision in that regard. Thus, in relation to the Statement of Claim, not remembering it had been served does not necessarily mean that upon reminded of it and its content Ms Yerkovich may not have been able to comprehend and give instructions in relation to it. She did at least from her interaction with Ms Jones appear to understand the nature of the guardianship proceedings and refute the basis for such an application.
  15. [48]
    As was noted by McPherson JA noted in Thomson v Smith[19] strong medical evidence is required to negate the presumption of capacity and as was also stated by Lyons J in Aziz v Prestige Property Services Pty Ltd[20] the assessment of capacity needs to be made by reference to the kinds of decisions that have to be made in the conduct of a litigation. While Ms Yerkovich was clearly suffering short term memory loss which would be an impediment in the conduct of litigation, the evidence before me is insufficient to satisfy me that her cognitive impairment affected Ms Yerkovich such that she had impaired capacity within the meaning of the rules, and that there was a failure to serve her in accordance with r 109 UCPR. Her cognitive impairment is however something which I will consider in the context of the exercise of the Court’s discretion.
  16. [49]
    Given that I have not found Ms Yerkovich was at the time of service a person of impaired capacity, I do not need to consider the argument raised by the respondent that even if Ms Yerkovich did have impaired capacity, there was no irregularity in the entry of the default judgment given there is no evidence that the plaintiff was aware of any impairment. Given that a person of impaired capacity can only defend proceedings through a litigation guardian, if Ms Yerkovich had impaired capacity at the time it would, in my view, have required the judgement to be set aside, even if it was not an “irregularity” in the strict sense.
  17. [50]
    In any event,  Ms Yerkovich’s cognitive difficulties remain relevant in the exercise of the Court’s discretion as to whether to set aside the judgement.

The Plaintiff’s awareness of Ms Yerkovich’s cognitive issues

  1. [51]
    There is no evidence that the plaintiff or her solicitors were aware of the application to the Family Court in December 2020 or in September 2022 after the statutory trustees had contacted Hayden Joy (Ms Joy’s brother) and then Ms Joy herself following the sale of the property. Indeed the application in 2020 specifically stated that the plaintiff should not be told of the application because she was in a legal dispute with Ms James and Ms Yerkovich would be distressed. While the submissions of the applicant suggested some criticism against the plaintiff in not serving Ms Yerkovich under r 109 UCPR and obtaining judgment ex parte, that criticism is unfounded.
  2. [52]
    The present dispute arose out of the purchase of a property at Maleny by the plaintiff and Ms Yerkovich which was held jointly. In 2011 the plaintiff transferred her interest to the defendant. The plaintiff was living at the Maleny property and remained in the property after 2011. In 2020 an agent informed the plaintiff that the defendant wished to sell the property. The plaintiff lodged a caveat against the Maleny property. The plaintiff’s solicitors wrote directly to Ms Yerkovich informing her of the caveat and the basis for it. Kelly Legal then responded on Ms Yerkovich’s behalf in May 2020.
  3. [53]
    Kelly Legal required the plaintiff to commence proceedings to establish any interest in the property and disputed the grounds of claim in the caveat.  In a letter dated 20 May 2020, the plaintiff’s solicitors raised by way of correspondence with Kelly Legal concerns that the defendant had diminished capacity, stating that:[21]

We are instructed that since last year at the latest your client appeared to be suffering a significant diminution in mental capacity and the fact that you appear to have no direct instructions from your client tends to support that diminution of capacity.  We consequently query the basis of your assertion that the caveat lodged by our client was improper and await your response.

  1. [54]
    In responding to that correspondence Kelly Legal on behalf of the defendant appeared to refute the suggestion made stating that:[22]

“We have also received another letter from you dated 20 May 2020 in which you have made further suppositions about the capacity of Ms Yerkovich based on the wording of the letter which we wrote to your office.  It would seem that you are content to rely on assumptions and suppositions based on scant details that could not meet any reasonable standard of evidence in order to draw into a question a transaction which, on our instructions, your client entered into freely of her own volition without any influence of any kind with the transfer of your client’s interest in the property was prompted solely because of the conduct of your client, in circumstances where your client received valuable consideration as explained hereunder.”

  1. [55]
    The letter from Kelly Legal of 21 May 2020 set out a detailed argument negating the plaintiff’s contention that she had not freely transferred her interest in the Maleny property to the defendant.
  2. [56]
    On 27 May 2020 the plaintiff filed a claim and statement of claim.  The claim sought relief on the basis of unconscionable dealing, a joint endeavour constructive trust and equitable estoppel.
  3. [57]
    On 20 November 2020 the respondent’s solicitors wrote to the applicant’s solicitors foreshadowing that they would be seeking to serve the proceedings constituted by the claim and statement of claim from the respondent and asking whether the applicant’s solicitors could accept service.  They received no response.  Subsequently, after a further enquiry was made on 30 April 2021, Kelly Legal responded that:[23]

Kelly Legal has not been retained by Ms Eileen Yerkovich for the purpose of defending or otherwise responding to the litigation commenced by your client in this matter.  We therefore do not hold current instructions to otherwise respond to your letter.

  1. [58]
    In the December 2020 application Ms Joy in her affidavit had stated she did not contact the plaintiff for consent to the application because the plaintiff and Ms Yerkovich were estranged and involved in a dispute in Queensland.
  2. [59]
    In the circumstances based on the above, neither the plaintiff or her solicitors can be criticised for proceeding as they did when their correspondence raising questions about Ms Yerkovich’s diminution in mental capacity were refuted and a detailed response to the plaintiff’s complaint was given and there is no evidence that the plaintiff or the plaintiff’s solicitors were informed of steps taken in New Zealand questioning Ms Yerkovich’s capacity. It was not until June 2023 that the plaintiff’s solicitors were made aware of Ms Joy’s appointment.
  3. [60]
    There is no evidence of an abuse of process in the entry of the default judgment by the plaintiff.

Other alleged irregularities

  1. [61]
    The other matters relied upon by the applicant to contend there was irregularity in relation to the obtaining of the default judgment are that:
    1. the relief granted to appoint a statutory trustee to sell the property, the subject of the dispute, was not part of the relief claimed in the statement of claim and was not justified on the pleadings;
    2. service was not proven for the purposes of r 282 UCPR because the affidavit of service did not provide for a certificate in the approved form as required by r 120(2)(a);
    3. the statement of claim fails to plead all material facts necessary to prove the causes of action as required by r 149(b) UCPR; and
    4. the claim that Ms Yerkovich held the plaintiff’s title on trust was statute-barred pursuant to s 27 of the Limitation of Actions Act 1974 (Qld).
  2. [62]
    I will deal with each of these matters briefly given, as was properly conceded by Ms Yerkovich’s counsel, the principal point upon which Ms Yerkovich sought to establish irregularity was incapacity.
  3. [63]
    The relief to appoint statutory trustees to sell the property the subject of the dispute was not part of the relief that was claimed in the statement of claim and claim.  The default judgement in the present case was made after an application to the Court where submissions were provided by Counsel outlining the basis upon which the allegations contained in the statement of claim established the plaintiff’s claim and default judgment should be entered. The appointment of statutory trustees and incidental orders sought were addressed in the submissions that were before Applegarth J and stated to be orders that were consequential upon the other declarations sought.  Rule 288(3) UCPR provides that:

The court may give the judgment it considers justified on the pleadings even if the judgment was not claimed.

  1. [64]
    It was evident on the face of the pleading that the defendant wished to sell the property. By the plaintiff’s submission, the plaintiff demonstrated the same intent. Given by the orders of the Court provided for Ms James and Ms Yerkovich to be tenants-in-common, the appointment of statutory trustees would normally be a consequential order if there could not be agreement between the co-owner as to the sale of the property and the division of proceeds.  His Honour stayed the orders in order to allow time to see if an agreement could be reached between the co-owners as to the sale of the property.  The decision of Equititrust Ltd v Gamp Developments Pty Ltd[24] is of limited relevance to the present case given it dealt with summary judgement.  In the present case, the orders were justified on the basis of the statement of claim.
  2. [65]
    As to the contention that there was an irregularity because of the lack of the certificate in an approved form being attached to the exhibit, the affidavit of service referred to the documents that were served as exhibit “A”.  While no certificate of exhibit was included, the affidavit identified the documents that were served which had been  filed, the fact of filing being evidenced on the face of the documents themselves.  There was no irregularity and the affidavit of service complied with r 120(2)(b) UCPR. 
  3. [66]
    As to the deficiencies at pleading, relief was sought before Justice Applegarth on the basis that the property had been transferred as a result of unconscionable dealing for no consideration.  Submissions were placed before his Honour and the allegations demonstrating that the elements of the cause of action were outlined.  While there may be technical complaints in terms of the pleading such as pleading material facts as particulars, the pleading disclosed a cause of action and the relief sought was justified on the pleading.
  4. [67]
    Finally as to the fact that the action is alleged to have been statute-barred, in relation to claims for declarations that property was held on trust by operation of s 27 of the Limitation of Actions Act 1974 (Qld), that is a matter of defence. The fact that an action may be statute barred is a matter of defence and does not constitute an irregularity in the judgment.  It is arguably relevant to whether there is any defence on the merits.  However, other than the bald assertion it applied by the applicant and the bald denial it had any application by the plaintiff, there was no further elaboration of the argument in oral submissions. It is not evident on the face of the section that it would have any application to the claim based on unconscionable dealing, which was the basis upon which default judgment was entered. 
  5. [68]
    I do not find that the applicant has established that the judgment was irregularly entered. While such irregularities will often lead to a judgment being set aside, it does not appear given the discussion by Muir JA (with whom Lyons J agreed) in Cusack v De Angelis[25] that is necessarily of right under r 290 UCPR. That is not a matter I am required to consider given my findings.

Should the Default judgment be set aside in the Court’s discretion?

  1. [69]
    In Burtenshaw Super Pty Ltd (as trustee for the Superannuation Fund) v De Castro[26], Henry J referred to Atkinson J in Deputy Commissioner of Taxation v Johnstone[27] where her Honour identified three matters which would usually be relevant to the exercise of the discretion, where a judgment was regularly entered, namely:
    1. whether the defendant has given a satisfactory explanation of the failure to defend;
    2. whether the defendant’s delay in making the application to set aside precludes it from obtaining relief; and
    3. whether the defendant has a prima facie defence on the merits.
  2. [70]
    Given Ms Yerkovich now lacks capacity, she cannot depose as to why she failed to defend the proceedings. I proceed on the assumption that there may be a satisfactory explanation given her short term memory loss and cognitive difficulties, although it appears that she must have relayed some aspects of the dispute to Ms Joy given it was referred in Ms Joy’s affidavit supporting her application for guardianship in December 2020. Ms Joy identified it as a basis upon which Ms Joy did not obtain the plaintiff’s consent to the application because she was estranged from Ms Yerkovich and was “embroiled in court proceedings in Queensland”.[28] At that time the Queensland Supreme Court proceedings had not been served so it may well have been loose language to refer to the caveat that had been lodged earlier in 2020.
  3. [71]
    In the present case, a defence has been prepared. It largely attacks the pleading in the Statement of Claim on the basis of the failure to properly plead the allegations relied upon, but also denies that the property was transferred without consideration or that the defendant was aware of any special disadvantage of the plaintiff.  The draft defence is also denies that the plaintiff had exclusive possession of the property or that the plaintiff had been paying all the maintenance, rates and insurance. 
  4. [72]
    The gravamen of the defence raised is that the plaintiff had failed to pay outgoings and rent as agreed in respect of the Maleny property and set up an overdraft account without Ms Yerkovich’s knowledge. Ms Yerkovich went to Australia in 2011 and had accompanied the plaintiff to the doctor. After the trip, Ms Yerkovich organised for the property to be transferred into her name and was not going to hold the plaintiff to account and had paid the plaintiff $30,000 for cars for her sons and herself and a lump sum. The defendant apparently discharged the mortgage on the property.
  5. [73]
    The difficulty with the defence is that it is largely cobbled together on the basis of bits and pieces which Ms Joy says she has been told by her grandmother at different periods of time before she lost capacity.  That evidence suffers from the fact that it is likely to be inadmissible in many respects due to the rule against hearsay and given its piecemeal nature is of little probative value in any event, bearing in mind the inevitable further deterioration of evidence given the relevant events predominantly took place in 2011.[29] There is no evidence of a statement of Ms Yerkovich which may be admissible under s 92 of the Evidence Act 1977 (Qld).  While the defendant did appear to provide detailed instructions to Kelly Legal when they were acting for her in the context of the caveat, there is no evidence suggesting that a statement had been taken from her at the time which could be admissible. 
  6. [74]
    Other than the hearsay evidence no other evidence demonstrating a plausible defence has been provided to the Court. While Ms Joy had produced bank statements of Ms Yerkovich said to relevant to showing the financial transactions that occurred with respect to the property, the best that the transactions do is demonstrate that Ms Yerkovich transferred money to an Australian account around the time of the transfer of title by the plaintiff to Ms Yerkovich. No further documentation was provided to the Court despite the period of the adjournment to substantiate the financial transactions further. In particular, there was no documentation to show the money went to the plaintiff or was used to purchase cars for the plaintiff or her sons as alleged. Although consideration for the transfer of title is of some weight, it is not necessarily a complete answer to the plaintiff’s claim. While there is some evidence to refute the plaintiff’s lack of exclusive possession, that again relies on a statement made to her grandson he could stay at the Maleny property. Critical to proof of a case of alleged unconscionability in equity is that the stronger party knew or ought to have known of the weaker party’s special disadvantage.  While the onus lies on the plaintiff, Ms Yerkovich’s evidence is critical in that regard and Ms Yerkovich will not be able to give any of the evidence that would go to that critical aspect demonstrating what she knew at the time. What she told Ms Joy about her attending the doctor with the plaintIff and informing the doctor she had thrown away the medication when in fact the plaintiff had consumed it gives some support to the fact she may have been aware of the plaintiff being drug dependent as pleaded. Similarly the evidence that the plaintiff and defendant had reached an agreement whereby the plaintiff would not have to pay for the property as alleged would critically rely on what was said and done by the plaintiff and Ms Yerkovich, in circumstances where Ms Yerkovich cannot give that evidence.
  7. [75]
    There is little evidence to support the merits of any  defence. It relies on bare denials which are generally unsupported by any admissible evidence. While the plaintiff would bear the onus of proving her claim, there is no real evidence of any defence to meet it. In the circumstances setting aside the judgment is likely to prove futile as if the judgement was overturned and summary judgement then sought the defendant has no real prospect of defending it.
  8. [76]
    In the present case the delay in bringing the application raises considerable hurdles to relief being granted to the applicant.  A period of some 20 months passed between the entry of the judgement and notice being given that the default judgment should be set aside. The applicant of course was not appointed as temporary guardian and property manager until early December 2022 (and was appointed permanently in February 2023). The applicant has been aware of the claim and the fact judgment was entered since September 2022 after being contacted by the statutory trustees. At that time she applied to be appointed the applicant’s guardian and property manager. She was provided with a copy of the Orders of Applegarth J in the exchanges with the statutory trustees. The applicant also applied for temporary guardianship in order to receive the proceeds of the sale and that did in fact occur on behalf of her grandmother in early January 2023.  Ms Joy has explained she was addressing needs of her grandmother upon her appointment, including her being placed in care and was not cross-examined in that regard. She was no doubt having to attend to a number of things however it does not fully explain the failure to take any steps in relation to the judgment which she had known of since about September 2022, until after the costs statement was served in circumstances where she was aware of the orders made by this court, the fact that the property had been sold and the proceeds distributed between the plaintiff and Ms Yerkovich. The delay in seeking to set aside the judgment after her appointment as welfare guardian and property manager was significant.
  9. [77]
    Setting aside the default judgment now cannot restore the status quo. The property in relation to which the declarations were made has been sold, the statutory trustees have carried out their role pursuant to the orders such that the only thing that remains are some of the proceeds of sale. Any claim of the defendant will be limited to claiming she was entitled to those proceeds of sale if the plaintiff’s claim is unsuccessful,
  10. [78]
    While the plaintiff has not provided an affidavit as to the steps taken, she vacated the Maleny property which she had been living in for the sale and subsequently had the proceeds at her disposal to use which apparently have been dissipated, at least in part, without any notice of challenge to the judgment and expended money on seeking default judgment and its execution. I accept there is some degree of prejudice suffered by the plaintiff which can’t be met through a costs order.
  11. [79]
    It was not until July 2023 that Kelly Legal wrote to Axia, after the applicant was served with a costs statement, raising issues not only in relation to a costs statement which was served upon Ms Joy on 20 June 2023 but also as to the entry of the default judgment. There is a significant gap of some six months between the applicant receiving the proceeds on behalf of Ms Yerkovich and the applicant’s appointment.  As a result of that delay, Ms James is potentially prejudiced to the extent that she may have dissipated the funds received from the sale of the property. Of course if there is a proper defence she potentially had no entitlement to the funds so it is a matter of limited weight. However as pointed above the evidence now available does not support any defence of its merits being able to be established, notwithstanding the plaintiff would bear the onus of the claim.
  12. [80]
    Even accepting the delay in Ms Joy’s appointment was due to Ms Yerkovich suffering cognitive difficulties, the orders had largely been executed meaning the status quo cannot be restored. The delay in seeking to set the judgment aside after Ms Joy became appointed in circumstances and the proceeds of the sale of the property was distributed is a factor which weighs against setting aside the default judgement.
  13. [81]
    While I accept that Ms Yerkovich was suffering cognitive difficulties at the time that the proceedings were filed and served upon her, based on the above I do not consider that the default judgment should be set aside in the Court’s discretion given that:
    1. I have not found that the cognitive deficit was such that there was an impairment of capacity;
    2. Setting aside the default judgment is likely to prove futile given Ms Yerkovich’s evidence would be critical to establishing a defence and there would be there would be insufficient evidence to defend a summary judgment application; and
    3. the delay in bringing this application has resulted in the Orders of Applegath J being fully executed. The property has been sold and proceeds distributed. Setting aside the default judgment cannot restore the status quo. If the defence was successful, there may be a basis upon which the applicant could claim the benefit of the proceeds of sale, however, considerable time has passed since the sale and at best through correspondence of the solicitors only $235,000 of the proceeds remain.
  14. [82]
    In all the circumstances, while there was a proper basis for the application being brought I dismiss the application. I will hear the parties as to costs at 9:15 on Thursday 15 February.


  1. 1.The application is dismissed.
  2. 2.The parties will be heard as to costs at 9:15am on Thursday 15 February 2024.


[1] Which has been followed including by the Court of Appeal in Wallace v Rural Bank Ltd [2014] QCA 285 at [40]

[2] Cusack v De Angelis [2008] 1 Qd R 344 at [36]-[37].

[3] Guardianship and Administration Act 2000 (Qld) sch 1 s 1.

[4] Thomson v Smith [2005] QCA 446 at [7].

[5] [2005] QCA 446.

[6] Ibid at [132].

[7] [2007] QSC 265.

[8] Ibid at [61]-[62]

[9] (1954) 91 CLR 423 at 438.

[10] [2003] 3 All ER 162.

[11] Ibid at 182.

[12] NLB-23 to the affidavit of Nakita Brown sworn 17 August 2023, CFI-24 at page 114.

[13] MMJ-2 to the Affidavit of Melissa Joy filed 5 September 2023, CFI-28 at Page 1.

[14] JPE-1 to the affidavit of Dr Jon Elliott sworn 15 December 2023, CFI-35 at page 14.

[15] Affidavit of Helen Jones sworn 19 January 2024, CFI-42 at page 2.

[16] Ibid.

[17] Although she described him as a worker, which Ms Jones attached little significance to.

[18] Protection of Personal and Property Rights Act 1988 (NZ) s 24.

[19] [2005] QCA 446 at [7].

[20] [2007] QSC 265.

[21] NLB-4 to the affidavit of Nakita Brown sworn 17 August 2023, CFI-24 at page 9.

[22] NLB-5 to the affidavit of Nakita Brown sworn 17 August 2023, CFI-24 at page 11.

[23] NLB-9 to the affidavit of Nakita Brown sworn 17 August 2023, CFI-24 at page 29.

[24] [2009] QSC 115.

[25] [2008] 1 Qd R 344.

[26] [2023] QSC 60.

[27] (2006) 230 ALR 575.

[28] NLB-23 to the affidavit of Nakita Brown sworn 17 August 2023, CFI-24 at page 114.

[29] Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1 at 8.


Editorial Notes

  • Published Case Name:

    James v Yerkovich

  • Shortened Case Name:

    James v Yerkovich

  • MNC:

    [2024] QSC 14

  • Court:


  • Judge(s):

    Brown J

  • Date:

    09 Feb 2024

Appeal Status

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

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