FEDERAL COURT OF AUSTRALIA

Burke v Residential Investments Australia Pty Ltd [2009] FCA 885

PRACTICE AND PROCEDURE – default judgment – respondent had not entered an appearance or filed a defence – respondent in default – judgment given.

Federal Court Rules O 35A r 3, O 62 r 36A

DOUGLAS AND NAOMI BURKE, KOK-HOONG CHONG AND YOKE CHEE LEONG, DAVID RICHARDSON AND JANINE RICHARDSON, FIFTH GENERATION CONSULTING PTY LTD (ACN 072 389 032) and IAN STOREY v RESIDENTIAL INVESTMENTS AUSTRALIA PTY LTD (ACN 007 049 603), 122-136 MASON STREET PTY LTD (ACN 098 065 644), RIVERDALE INDUSTRIES PTY LTD (ACN 097 964 979), STEVEN MATTHEW APPERLY and LAWRENCE EDWIN BOWTELL

VID 201 of 2009

KENNY J

14 AUGUST 2009

MELBOURNE

THE COURT ORDERS THAT:

1.                  On or before 4 pm on 20 August 2009, the applicants file and serve:

(a)    proposed minutes of orders in accordance with these reasons for judgment; and

(b)   any affidavit evidence as to costs upon which they wish to rely.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

EX TEMPORE REASONS FOR JUDGMENT

1                     Pursuant to O 35A r 3(2) of the Federal Court Rules, the applicants seek judgment in default of appearance against the first, second and third respondents. The applicants rely on two affidavits of their solicitor, Andrew Sullivan, respectively sworn on 15 June and 13 August 2009, and numerous affidavits of service.

2                     The applicants began the proceeding by an application and a statement of claim filed on 2 April 2009.  An amended statement of claim and an amended application were filed on 22 May and 19 June 2009 respectively. 

3                     At the relevant time, the fourth respondent, Steven Matthew Apperly, was allegedly a director and secretary of the first respondent, Residential Investments Australia Pty Ltd.  Also, at the relevant time, the fifth respondent, Lawrence Edwin Bowtell, was a director of Residential Investments and a director and secretary of the second and third respondents, namely, 122-136 Mason Street Pty Ltd and Riverdale Industries Pty Ltd.  Messrs Apperly and Bowtell have both filed appearances.  Mr Apperly has filed a Defence dated 12 June 2009. Mr Bowtell has filed a Defence dated 18 June 2009.

4                     The applicants plead breach of contract against Mason Street and Riverdale Industries in respect of a property development at Newport in Victoria, known as “Park Waters”. The applicants allegedly entered into contracts with these companies for the sale of land, and agent agreements pursuant to which Mason Street and Riverdale Industries were to engage a builder to build on the land.  Also, according to the applicants’ pleading, the applicants entered into a deed of undertaking with Mason Street and Riverdale Industries, in accordance with which the two respondent companies agreed to advance certain monies to the applicants. 

5                     The applicants allege that Mason Street and Riverdale Industries are in breach of the undertaking because they “failed to advance to each applicant sufficient funds to meet until the Date of Completion … interest on the loan made to each applicant by the relevant Bank to enable construction of the Dwelling in each case, which amount of interest has been paid by each applicant to each relevant Bank in each case”.  The applicants plead loss and damage, which is particularised.

6                     The applicants also claim that Residential Investments has engaged in misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth); and that Messrs Apperly and Bowtell are jointly liable for the contravention pursuant to s 75B of that Act “because they aided, abetted and/or were knowingly concerned in the contravention”.  The applicants plead loss and damage, but this is not particularised. The misleading and deceptive conduct is said to have been constituted by misrepresentations that:

·        the Development Price set out in each Agent Agreement would be the total amount payable by each applicant in respect of the Development;

·        it would advance to the applicant at settlement of the contract for the sale of land an amount sufficient to meet until the Date of Completion interest on the loan made to each applicant by the relevant Bank to enable construction of the dwelling on the land; and

·        the applicants would have to make no interest payments during construction.

7                     Mr Sullivan’s first affidavit, the various affidavits of service on the court file and the court file establish that:

·        the application and statement of claim were posted to the company secretaries of Residential Investments, Mason Street and Riverdale Industries at the companies’ registered offices on 7 April 2009.

·        there was no appearance for Residential Investments, Mason Street and Riverdale Industries at the first directions hearing on 22 April 2009, although Mr Apperly and Mr Bowtell were legally represented and appearances were entered. Orders made that day required the three respondent companies to file and serve their notices of appearance by 29 April 2009 and defences, by 13 May 2009.  

·        On 22 April 2009, Mr Sullivan wrote to the three respondent companies.  These letters were duly posted to the registered offices of the companies. 

·        On 27 April 2009, a letter and a copy of the orders made that day were posted to the company secretaries of Residential Investments, Mason Street and Riverdale Industries at the companies’ registered offices.

·        A letter dated 1 May 2009, signed by L Bowtell, advised that: “I have received confirmation from Andrew Sullivan of Orders having been made against each of 122-136 Mason Street Pty Ltd and Riverdale Industries Pty Ltd.  I will request Mr Dean Gianerilli to contact you in order to express his views in this matter”.

·        On 13 May 2009, the court made orders requiring the respondents to serve their defences by 12 June 2009.   These orders were also duly posted to the respondent companies’ registered offices. 

·        The present notice of motion for default judgment and ancillary orders was filed on 16 June 2009, together with the affidavit of Mr Sullivan.

·        On 17 June 2009, orders were made (amongst other things) granting the applicants leave to file an amended application and statement of claim, and the fifth respondent, an extension of time in which to file a defence. 

·        The notice of motion and the affidavit of Andrew Sullivan were posted to the respondent companies’ registered offices on 4 August 2009.

8                     None of the respondent companies has filed an appearance or defence.  None appeared at the hearing of the application today.  None of the respondent companies has attended any duly listed directions hearing. 

9                     At the hearing of the motion, Mr Sullivan, who appeared for the applicants, informed the court that he had recently spoken with the legal representatives of Messrs Apperly and Bowtell about the hearing of the motion this day.

CONSIDERATION

10                  Pursuant to O 35A r 2(2) of the Rules, a respondent is in default if the respondent has not satisfied the applicant’s claim and:

(a) the time for the respondent to enter an appearance has expired and the respondent has failed to enter an appearance; or

(b) the time for the respondent to file a defence has expired and the respondent has failed to file a defence; or

(c)  the respondent fails to attend a directions hearing; or

(d) the respondent fails to comply with an order of the court in the proceeding; or

(e)   the respondent fails to file and serve a pleading as required by Order 11; or

(f)   the respondent fails to serve a list of documents or an affidavit or other document, or does not produce a document as required by Order 15; or

(g)   the respondent fails to do any act required to be done by these Rules; or

(h)   the respondent fails to defend the proceeding with due diligence.

…

11                  Further, O 35A r 3(2) of the Rules provides that, if a respondent is in default, the court may:

(a)   order that a step in the proceeding be taken within the time limited in the order; or

(b)   if the claim against the respondent is for a debt or liquidated damages – grant leave to the applicant to enter judgment against the respondent for the debt or liquidated damages and, if appropriate:

       (i) costs:

            (A) in a sum fixed by the court; or

            (B) to be taxed; and

       (ii) interest; or

(c)   if the proceeding was commenced by an application supported by a statement of claim or the court has ordered that the proceeding continue on pleadings – give judgment against the respondent for the relief that:

       (i)  the applicant appears entitled to on the statement of claim; and

       (ii) the court is satisfied it has power to grant; or

(d)   give judgment or make any other order against the respondent; or

(e)    make an order specified in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the court in the proceeding in the time limited in the order.

12                  The applicants rely particularly on O 35A r 3(2)(c) of the Rules, which does not require proof by way of evidence of their claim.  Instead, on the face of the statement of claim, there must be a claim for the relief sought and the court must have jurisdiction to grant that relief: see Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3] per Heerey J; Diesel SPA v Hwang [2005] FCA 1619 at [2] per Tamberlin J; Wu v Avin Operations Pty Ltd [2006] FCA 36 at [57] per Kenny J; and HIT Entertainment Ltd v Lodin [2006] FCA 722 at [5]-[6] per Stone J.  Having read the statement of claim, I find that these conditions are satisfied.  O 35A r 3 is, nonetheless, discretionary and the circumstances attending the application must be taken into account.  In some circumstances, although not here, it is appropriate to exercise some caution before granting relief: see Universal City Studios LLLP v Hoey t/as DVD Kingdom (2006) 232 ALR 525 at 527 [10] per Sackville J.

13                  Four months have passed since the applicants began proceedings in the court against the three corporate respondents, all of whom have been duly served with the initiating documents, the court’s orders, this motion and accompanying affidavit, as well as various other documents: see Corporations Act 2001 s 109X.  None of them has taken any step to acknowledge the applicants have applied to this court for relief in respect of their claims against it.  None has entered an appearance or filed a defence. None has attended a directions hearing.  None has complied with the court’s orders in so far as they affect it.  If it matters, this has occurred at the same time as Mr Bowtell is apparently a director of the three companies concerned.

14                  Having regard to matters discussed above, I am satisfied that Residential Investment, Mason Street and Riverdale Industries are in default for the purposes of O 35A r 3(2).  I am also satisfied that, on the face of the amended statement of claim, the applicants appear entitled to the relief sought against them; and that the court has power to grant the relief.  This history indicates these companies are either unable or unprepared to co-operate in having the applicants’ claims for relief brought to trial within an acceptable period in an acceptable way or otherwise having the matter resolved in accordance with the legal regime that governs in this country.  Their uncooperative conduct is productive of unnecessary delay and expense.  It is prejudicial to the administration of justice. 

15                  Whilst an order of the kind the applicants seek should not lightly be made, in this case, there is no countervailing consideration greater than those to which I have referred.

16                  Accordingly, the applicants have made out an entitlement to enter judgment in default.  I would direct that the applicants file proposed minutes of order.  In respect of its contractual claim, this should state the total sum for which judgment should be entered.  This will comprise the principal sum that is sought in the statement of claim and an amount of interest, the calculation of which is to be disclosed. 

17                  No evidence has been given concerning the costs that the applicants have incurred in relation to the present proceeding.  I would afford the applicants an opportunity to file such evidence, particularly as to a reasonable estimate of party-party costs.

Associate:

Dated:         14 August 2009