PN SEA, af REGISsEy Ry, "~~ ON Practicé.and-Procedure - A.C.T. Supreme Court - writ - indorsement - leave given to enter summary judgment for monies owing pursuant to building contract - whether writ 'specially indorsed or accompanied by statement of claim' - good defence demonstrated on the merits - claim for damages for defective performance constitutes defence to action for money due. A.C.T. Supreme Court Rules 0.3 r.3; 0.4 r.5; 0.15 r.1, r.2; 0.24 r.l. LOUIS JOSEPH ARGENTO and MARIA DOLORIS ARGENTO Appellants - and - COQBA DEVELOPMENTS PTY. LIMITED. Respondent ACT G 99 of 1985 Fisher, Gallop and Neaves Jd. Canberra 17 February 1987. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISTON MINUTES No. ) ) ) ) ) A.C.T. G99 of 1985 ) ) ON __APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: LOUIS JOSEPH ARGENTO and MARIA DOLORIS ARGENTO Appellants - and - COOBA DEVELOPMENTS PTY. LIMITED. Respondent OF ORDER JUDGES MAKING ORDER WHERE MADE : DATE OF ORDER THE COURT ORDERS THAT: The appeal be allowed. Territory made on 15 November 1985 be set summons dismissed, and the proceedings August 1985. of the respondent dated 23 the appellants be given commenced by writ of summons FISHER, GALLOP & NEAVES JJ. CANBERRA 17 FEBRUARY 1987 The order of the Supreme Court of the Australian Capital aside, the October 1985 be leave to defend issued l 2. 3. The matter be remitted to the Supreme Court of the Australian Capital Territory for such further directions for trial as may be necessary. 4. The respondent pay the costs of the appellants of the application for summary judgment and of this appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY No. A.C.T. G99 of 1985 ) ) ) ) ) ) GENERAL DIVISION ) ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: LOUIS JOSEPH ARGENTO and MARIA DOLORIS ARGENTO Appellants - and - COOBA DEVELOPMENTS PTY. LIMITED. Respondent REASONS FOR JUDGMENT CORAM: Fisher, Gallop & Neaves JJ. 17 February 1987 Fisher J.: This is an appeal by Louis Joseph Argento and Maria Doloris Argento ("the appellants") against an order of the Supreme Court of the Australian Capital Territory. This order was made on 15 November 1985 on the application of Cooba. Developments Pty. Limited ("the respondent") seeking leave to enter judgment for the amount which it claimed against the appellants (then the defendants) in a specially indorsed writ of summons. On that date the Supreme Court entered judgment for $11,123.75 in favour of the respondent against the appellants, 2. and directed that execution be stayed on the judgment except as to $4,983.00 thereof. The principal ground specified in the notice of appeal was that the trial judge erred in law in finding that the affidavit filed by the appellants failed to comply with the Rules of the Supreme Court, 0.15 r.2. At the outset of the hearing of the appeal the question was raised by the Court whether the trial judge was in the circumstances of the matter entitled to proceed under 0.15 of the Rules of Court and to make an order thereunder granting the respondent leave to enter judgment. Following a discussion on this aspect, the appellants applied for and obtained leave to amend their notice of appeal by adding the following additional ground, namely: "9. The writ was not specially indorsed with, or accompanied by, a Statement of Claim, and it was not open to the plaintiff to proceed pursuant to Order 15 of the Supreme Court Rules." The resolution of this ground of appeal necessitates an identification and review of the procedural steps taken by the parties and it is appropriate to undertake this task prior to considering the other grounds of appeal. It should be noted that this matter was not argued before the trial judge and the point was not taken by the appellants. Both the trial judge and the parties proceeded on the assumption that an application under 0 15 for leave to enter judgment was properly on foot. Order 15 r.1(1) states the circumstances in which a plaintiff may seek 3. summary judgment on his claim as follows: "(1) Where a defendant appears to a writ of summons specially indorsed with or accompanied by a statement of claim under Order 4, rule 5, the plaintiff may, on affidavit made by himself or by any other person who can swear positively to the facts, verifying the cause of action and the amount claimed (if any liquidated sum is claimed), and stating that in his belief there is no defence to the action except as to the amount of damages claimed (if any), apply to the Judge for liberty to enter judgment for such remedy or relief as upon the statement of claim the plaintiff is entitled to." It is apparent that this summary procedure is only available if the writ of summons is "Specially indorsed with or accompanied by a statement of claim under Order 4 rule 5", toa which writ the defendant has appeared. The requirements of 0.4 r.5 are to the extent here relevant - "5. In actions - (a) where the plaintiff seeks to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising- (i) a (ii)... (iii) under any law where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or (iv)... (v) see (b) aes (c) oe and in all other actions for damages..., the writ of summons may, at the option of the plaintiff, he specially indorsed with or accompanied by a 4. statement of his claim, or of the remedy or relief to which he claims to be entitled." Order 3 r.3 requires that the writ of summons for commencement of an action be in accordance with Form 1 or Form 2 in the first schedule, the latter Form being that appropriate for a specially indorsed writ. It differs from Form 1 in that it is required, in lieu of an ordinary indorsement of the nature of the plaintiff's claim, to be indorsed as follows: " STATEMENT OF CLAIM The plaintiff's claim is PARTICULARS (Signed) (If the plaintiff's claim is for a debt or liquidated demand only, the following should appear above the signature) And the sum of § Cor such sum as may be allowed on taxation], for costs. If the amount claimed is paid to the plaintiff or his solicitor or agent within , further proceedings will be stayed." A sidenote requires that the number of days allowed for appearance be inserted in the last sentence of the abovementioned indorsement. On 1 August 1985 the respondent by its solicitors issued a writ of summons out of the Supreme Court of the Australian Capital Territory against the appellants. It bore the following indorsements in addition to the standard requirements of the Forms: 5. INDORSEMENT OF CLAIM The plaintiff claims the sum of $11,143.75 being the balance due to the plaintiff from the defendant pursuant to a building agreement dated 31 January 1985. And the plaintiff claims the sum of $11,143.75 And the plaintiff claims the sum of $252.00 for costs. If the amount claimed is paid to the plaintiff or its solicitor or agent within 8 days, further proceedings will be stayed. Dated this lst day of August 1985 Csigned3 Vandenberg Reid Pappas & MacDonald Solicitors for the Plaintiff" This indorsement was signed by the plaintiff's solicitors, in accordance with the Form, but it was not headed "Statement of Claim" nor were any Particulars provided as required by the Form. No separate statement of claim accompanied the Writ of Summons. Order 15 r.1(1) requires that the defendant shall have entered an appearance to the specially indorsed writ. We were informed by the parties that the appellants entered an appearance to the writ of summons on 15 August 1985. On 23 October 1985, the respondent took out an interlocutory summons seeking the following order: "An order pursuant to Order 15 of the Rules of the Supreme Court granting liberty to enter judgment for the amount claimed by the plaintiff in the specially endorsed writ of summons and statement of claim, namely $11,123.75 and interest from the 12th day of June 1985." 6. Interest was not claimed by the indorsement on the writ but was subsequently claimed by the statement of claim. The summons makes it abundantly clear that the respondent (plaintiff) was applying for summary judgment under 0.15 on the assumption that its writ was specially indorsed under 0.4 r.5. On 25 October 1985 a statement of claim dated 23 October was filed. This document contains at the end thereof the following indorsement the second sentence of which appears to be such as is required to be made on a specially indorsed writ and is not otherwise a requirement of the Rules or the Forms: "And the plaintiff claims the sum of $11,123.75 together with interest pursuant to section 53A of the Supreme Court Act and costs to be taxed. If the amount claimed is paid to the plaintiff or its solicitor or agent within 8 days of the service hereof, further proceedings will he stayed." This statement of claim was signed by the solicitors for the respondent. Furthermore the Rules not only provide that statements of claim must generally be delivered within 14 days after appearance (0.24 r.1(1)) but sub-r.(2) thereof specifically directs: "(2) Where the writ is specially indorsed with or accompanied by a statement of claim under Order 4, rule 5, no further statement of claim shall be delivered unless the Court or Judge otherwise orders." The statement of claim therefore was not only unnecessary but delivered in contravention of this sub-rule. The managing director of the respondent swore an 7. affidavit in support of the summons as required by the provisions of 0.15 r.1(1) in which he verified its cause of action, the amount claimed and stated his belief that there was no defence to the action. That affidavit, as it appeared in the appeal book, was sworn on 23 October 1985, the date upon which the interlocutory summons was issued. However an exhibit thereto reproduced in the appeal book is identified as an annexure to an affidavit of the managing director sworn on 4 November 1985 and the affidavit in support of the application is identified in the order subsequently made as one sworn on 4 November 1985. Notwithstanding all these discrepancies the solicitors to the parties certified on 16 June 1985 (sic) that the appeal papers were a correct record of the proceedings. The male appellant swore three affidavits pursuant to the requirements of 0.15 r.1(2), certain paragraphs of which were rejected by the trial judge. Order 15 ¥.1(2) provides as follows: "(2) The Judge may thereupon, unless the defendant satisfies him that he has a good defence to the action on the merits, or discloses such facts as are deemed sufficient to entitle him to defend the action generally, make an order empowering the plaintiff to enter such judgment as is just, having regard to the nature of the remedy or relief claimed." In his reasons for judgment the trial judge made it quite clear that he proceeded on the assumption he was dealing with an application by a plaintiff under 0.15 for summary judgment, and the hearing before him was conducted on this basis. 8. However, 0.15 procedure is only available to a plaintiff if his writ of summons is specially indorsed with or accompanied by a statement of claim under 0.4. It is appropriate to consider at this stage whether the respondent has complied with this requirement. Three decisions of the Supreme Court of the Australian Capital Territory are of assistance when compliance with these requirements falls for determination. Each of these decisions however turns on its own particular facts and all three were given in circumstances where the judgment entered was in default of appearance or defence by the defendant and was not a summary judgment entered on an application under 0.15. In Harrison's Timber Pty. Ltd. v Haster tradin Hastrim) (1974) 3 A.C.T.R.1 judgment had been signed in default of defence. This procedure was available only if the writ was specially indorsed, a statement of claim not having been separately delivered with the writ. The indorsement on the writ was in the following terms: "The plaintiff's claim against the defendant is for the sum of Nine thousand one hundred and seventy-four dollars and eighty-two cents ($9174.82) being monies due and owing by the defendant to the plaintiff for goods sold and delivered during April, May and June 1973 by the plaintiff to the defendant at the defendant's request particulars whereof have already . been supplied by the plaintiff to the defendant. And the Plaintiff claims the sum of nine thousand one hundred and seventy-four dollars and eighty-two cents ($9174.82)." This indorsement was found to be defective as a special indorsement in that it did not bear the heading "Statement of 9. Claim" nor was it signed. Fox J. said in Harrison's case that although the indorsement went very close to being a statement of claim, it could have been mistaken by the defendant for an ordinary indorsement. On page 3 he said: "It is now well established under similar rules and in relation to similar forms, that in the absence of the title 'Statement of Claim' the writ cannot be regarded as specially indorsed, with the result that judgment cannot be signed thereon in default of defence (Whittlesea Land Co v Urs (1890) 16 VLR 574; Cassidy & Co_v M'Aloon (1893) 32 LRIr 368). It is also necessary that the statement of claim be signed (019, r 3 and Form 2) and the absence of a signature has the same effect as the absence of the title (Cassidy & Co v M'Aloon, supra; Howell v Nicholson £1963] SASR 54). I have consulted with the other two judges of the Court and we are agreed that judgment in default of defence should not be entered where either the title or the signature are lacking." Fox J. referred to an earlier decision of his in Geelong Retreads Pty. Ltd. v Alistates Transport Pty. Ltd. reported at (1974) 3 ACTR 5. In that matter judgment was also entered in default of defence. The writ asserted a claim for a balance of moneys due for work and labour done. Under the heading "Indorsement" there appeared the statement "Particulars whereof exceed three folios and have previously been delivered". Fox J. was of opinion that this indorsement could not reasonably be understood by a defendant to be a statement of claim under the. Rules. But even if it could be so considered it did not provide particulars as required by the Forms. The default judgment was set aside. Blackburn C.J. also considered the requirements of a 10. special indorsement in F.H. Brunning Pty. Ltd. v Briarwood Pty. Ltd. (1978) 27 ACTR 45 and approved each of the decisions of Fox J. The indorsement in that matter was headed "Statement of Claim", it was signed and particulars were provided. The Plaintiff had entered judgment in default of defence but the defendant applied to have the default judgment set aside on the ground that the indorsement was only a general indorsement. Blackburn C.J. held that the indorsement was a sufficient special indorsement under the Rules, the plaintiff having used an accepted short form of pleading. The appellants relied upon the reasoning in these cases to support their contentions that the writ of summons in this Matter was not specially indorsed. There is no doubt that the indorsement here under consideration was, in accordance with this reasoning, defective in that it did not comply with the requirements of Form 2. It was not headed "Statement of Claim", 1t did not provide particulars and was not a standard short form of pleading. Blackburn C.J. identified these short forms of statements of claim as those which are sufficient to found an application under 0.15 and which appear now in Atkin's Court Forms 2nd Edit. 1983 Issue pp.225-236. The special indorsement . in this matter did not comply with any of these forms, certainly to the extent that it did not provide particulars. If the present indorsement was to be critically considered in circumstances exactly akin to those ir the two matters considered by Fox J. I would have no hesitation in applying his reasoning. ll. It follows that I accept each of these decisions and would not wish to derogate from their authority. However the circumstances here are significantly different. In each of those three cases the Court was concerned with a default judgment where judgment follows administratively and as amatter of course from the default. It involved no consideration by the Court of the merits of the case. A summary judgment under 0.15 is to be distinguished from a default judgment in that it involves a decision by the Court that the defendant has failed to show a triable defence or an answer to the plaintiff's claim. In an application for leave to enter judgment under 0.15 the defendant has the opportunity to point to defects in the plaintiff's indorsement and have it reviewed by the Court. A defendant has no such opportunity when default judgment is entered. It is therefore appropriate to attach significance in this matter to the fact that the appellants raised no objection to the propriety of the hearing of the respondent's application in accordance with 0.15 and that both the trial judge and the parties all acquiesced in having the merits determined in this . Manner. For these reasons I prefer to determine the appeal on substantive rather than procedural grounds. Two such groinds have been established upon which I uphold the appeal. In the first instance the trial judge 12. acknowledged in his reasons the appellants' contention that the sum claimed by the respondent had been miscalculated and that the maximum amount payable under the contract was $4,983. However he appeared thereafter to overlook this aspect of the matter and, notwithstanding, entered judgment for the respondent for the full amount claimed by it, namely $11,143.75. He could only have reached this conclusion if he was of the opinion that there was no substance in the contention that the respondent's claim had been miscalculated. In his affidavit the male appellant gave detailed evidence as to how he calculated the balance due under the contract and he was not subjected to cross-examination. The trial judge in his reasons gave no consideration to this evidence which he should have assessed in determining whether there was a defence to the action on the merits or whether such facts were sufficient to entitle the appellants to defend the action generally. Upon this ground the appeal must be upheld. The second ground relates to a matter conceded by counsel for the respondent, namely that the trial judge erred in law with regard to the appellants' claim for rectification of the building work. The male appellant deposed to the fact that the work had been defectively performed and that it would cost. $19,823 to rectify the defects. The trial judge was of opinion that the cost of rectification of the bad workmanship was properly the subject of a counterclaim and thus did not provide a defence to the respondent's action (0.15 r.(1)(2)). In this respect he was clearly wrong. (Mondel v Steel (1841) 8M. & JW. 13. 858, 1835-1842 All E.R.R. Sll. D.Galambos & Son Pty. Ltd v McIntyre (1974) 5 ACTR 10, Hanak v Green £19581 2 Q.B. 9). In the light of the concession by counsel for the respondent that the trial judge was in this respect in error, it is not necessary to canvass the authorities. Notwithstanding this concession, counsel contended that the judgment could be supported upon the basis that the appellants' evidence was unsatisfactory and found to be such by the judge. I am of opinion that this criticism is not justified. The appellants (defendants) were not required to give detailed and exhaustive evidence of the matters upon which they relied. They were merely required to put sufficient material before the Court to indicate that they have a defence on the merits and to give reasons for this contention. It is sufficient that they show that they have a real case to be investigated either in fact or in law. The appeal must be allowed with costs and I agree with the further orders proposed by Neaves J. I certify that this and the i2 preceding pages are a true copy of the Reasons . for Judgment of Mr Justice Fisher. Associate => 7a . Dated: 17 February 1987 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G99 of 1985 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: LOUIS JOSEPH ARGENTO and MARIA DOLORIS ARGENTO Appellants (Defendants) AND: COOBA DEVELOPMENTS PTY. LIMITED Respondent (Plaintiff) Coram: Fisher, Gallop and Neaves JJ. Date: 17 February, 1987. REASONS FOR JUDGMENT GALLOP J. This 1S an appeal by the defendants in an action brought against them by the plaintiff in the Supreme Court of the Australian Capital Territory for the balance of moneys Owing under a building agreement dated 31 January 1985. By order made on 15 November 1985 the Chief Justice of the Supreme Court, on the application of the plaintiff (the present respondent), entered summary judgment for the Plaintiff against the defendants for the sum of $11,123.75 which was the amount claimed and directed that execution be stayed on the judgment until further order, except as to $4,983. 2. The principal ground of appeal set out in the notice of appeal was that the Chief Justice erred in holding that the cost of rectification of defective building work did not constitute a defence to the plaintiff's claim and was more properly the subject of a counterclaim. The Chief Justice held that the defendants had not shown a good defence on the merits. At the commencement of the appeal to this court a question was raised by the court whether the application for summary judgment was properly brought. The question posed was whether the writ of summons in the action was specially indorsed with or accompanied by a statement of claim under 0.4 r.5 as required on an application for liberty to enter summary judgment pursuant to 0.15 r.1 of the Rules of the Supreme Court of the Australian Capital Territory. The appellants thereupon applied for and obtained leave to amend the notice of appeal by adding the following additional ground: "9, The writ was not specially indorsed with or accompanied by a statement of claim and it was not open to the plaintiff to proceed pursuant to Order 15 of the Supreme Court Rules." This added ground of appeal raises a fundamental matter of procedure which it is appropriate to resolve before embarking upon the more substantive grounds of appeal. It 1s to be noted that the procedural point was not raised before the Supreme Court. The hearing of the summons proceeded on the basis that the application for leave to enter summary judgment pursuant to 0.15 r.1 was available and properly instituted by the plaintiff. 3. The relevant portions of 0.15 r.1 are: "1.(1) Where a defendant appears to a writ of summons specially indorsed with or accompanied by a statement of claim under Order 4, rule 5, the plaintiff may, on affidavit made by himself or by any other person who can swear positively to the facts, verifying the cause of action and the amount claimed (if any liguidated sum 1s claimed), and stating that in his belief there is no defence to the action except as to the amount of damages claimed (if any), apply to the Judge for liberty to enter judgment for such remedy or relief as upon the statement of claim the plaintiff 1s entitled to. (1A) ... (2) The Judge may thereupon, unless the defendant satisfies him that he has a good defence to the action on the merits, or discloses such facts as are deemed sufficient to entitle him to defend the action generally, make an order empowering the plaintiff to enter such judgment as 1s just, having regard to the nature of the remedy or relief claimed." The writ of summons issued out of the Supreme Court Registry on 1 August 1985 and it bore the following indorsement: "INDORSEMENT OF CLAIM The plaintiff claims the sum of $11,143.75 being the balance due to the plaintiff from the defendant Pursuant to a building agreement dated 31 January 1985. AND the plaintiff claims the sum of $11,143.75. AND the plaintiff claims the sum of $252.00 for costs. Tf the amount claimed 1s paid to the plaintiff or its solicitor or agent within 8 days, further proceedings will be stayed. DATED this 1st day of August 1985. (Sgd) Vandenberg Reid Pappas & MacDonald Solicitors for the plaintiff This writ was 1ssued by VANDENBERG REID PAPPAS & MacDONALD of "Torrens Court", 15 Torrens Street, Braddon in the Australian Capital Territory, Solicitors for the said plaintiff Cooba Developments Pty. Limited 4. of C/- Vandenberg Reid Pappas & MacDonald, "Torrens Court", 15 Torrens Street, Braddon in the Australian Capital Territory." The appellants entered an appearance to the writ of summons on 15 August 1985. The plaintiff took out a summons for summary judgment supported by affidavit on 23 October 1985 returnable on 1 November 1985. The order claimed in the summons was an order pursuant to 0.15 granting liberty to enter judgment for the amount claimed by the plaintiff "in the specially indorsed writ of summons and statement of claim, namely $11,123.75 and interest from the 12th day of June 1985". As set out above, the amount claimed in the indorsement to the writ of summons was $11,143,75, not $11,123.75. However 1t 1S clear on the affidavit evidence in support of the summons for summary judgment that the amount the plaintiff was claiming is $11,123.75. The error no doubt explains why the Chief Justice entered summary judgment for the plaintiff in the sum of $11,143.75. But when his formal order was issued by the Registrar 1t showed the correct amount of $11,123.75. I note also that the summons issued by the court bears the signature of the solicitors for the plaintiff together with the seal of the court. The signature of the solicitors for the plaintiff 1s inappropriate and 1S not provided for in the general form of summons which 1s Form 67 5. in the First Schedule to the Rules. There 1s no signature provided for in Form 67. Nor is there any signature provided for in the form of summons used in the Supreme Court of Judicature in England where applications far summary judgment are likewise instituted by summons supported by an affidavit verifying the facts in support of the claim (see Atkin's Court Forms, 2nd Ed., Vol.1, p.61 and Forms 72 and 73). Nevertheless, 1t would be appropriate for a summons for summary judgment in the Supreme Court of the Australian Capital Territory to issue over the hand of the Registrar of the court with the seal affixed. It 1s, after all, a court process and not merely a document inter partes (see 0.56 rs.12, 13 and 14). Alternatively, the summons should issue without signature but bearing the seal of the court. Somewhat Surprisingly, the plaintiff, having instituted the application for summary Judgment by the summons issued on 23 October 1985, delivered a statement of claim in proper form dated 23 October 1985 and apparently delivered on 25 October 1985. That step was contrary to 0.24 r.1(2) 1£ the writ of summons was specially indorsed with or accompanied by a statement of claim under 0.4 r.5. Order 24, r.1(2) provides: . "(2) Where the writ 1s specially indorsed with or accompanied by a statement of claim under Order 4, rule 5, no further statement of claim shall be delivered unless the Court or Judge otherwise orders." If, on the other hand, the writ of summons was not specially indorsed with or accompanied by a statement of 6. claim under 0.4 r.5, it was necessary for the plaintiff to deliver a statement of claim. Nothing would otherwise seem to turn on the fact that the statement of claim was not delivered within 14 days after the appearance pursuant to 0.24 r.1(1). The question for decision therefore is whether the writ of summons was specially indorsed with or accompanied by a statement of claim under 0.4 r.5. Order 4, r.5 relevantly provides: "S. In actions - (a) where the plaintiff seeks to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising - (i) eee (ii) on a bond or contract under seal for payment of a liquidated amount of money; or (111) under any law where the sum sought to be recovered 1s a fixed sum of money or in the nature of a debt other than a penalty; or (iv) on a guarantee, whether under seal or not, where the claim against the principal is in respect of a debt or liquidated demand; or (D) «ee (c) and in all other actions... the writ of Summons may, at the option of the plaintiff, be specially indorsed with or accompanied by a statement of his claim, or of the remedy or relief to which he claims to be entitled." There are strong authorities of the Supreme Court of the Australian Capital Territory concerning the formal requirements of the summary judgment procedure under 0.15. In Harrison's Timber Pty Limited v. Haster (1974) 3 ACTR 1 Fox J. held that the writ did not bear the indorsement 7. "Statement of Claim", nor did it otherwise indicate with sufficient clarity that it was a statement of claim. He held therefore that 1t could only be considered a simple indorsement and the plaintiff was not entitled to enter judgment in default of defence. His Honour said at p.3: "It 1s now well established under similar rules and un relation to similar forms, that in the absence of the title 'Statement of Claim' the writ cannot be regarded as specially endorsed, with the result that judgment cannot be signed thereon 1n default of defence (Whittlesea Land Co v Ure (1890) 16 VLR 574; Cassidy & Co v M'Aloon (1893) 32 LR Ir 368). It 1s also. necessary that the statement of claim be signed (0 19, r 3 and Form 2) and the absence of a signature has the same effect as the absence of the title (Cassidy & Co v M'Aloon, supra; Howell v Nicholson [1963] SASR 54). I have consulted with the other two judges of the Court and we are agreed that judgment in default of defence should not be entered where either the title or the Signature are lacking." The other two judges of the court to whom Fox J. was referring were Blackburn J., as he then was, and Connor J. To the authorities cited by Fox J. in Harrison's Timber Pty Limited v. Haster, supra, might be added McVean v. Miller (1885) 6 A.L.T. 268 where an indorsement on the writ was not headed "Statement of Claim" and was not signed. Williams J. held it not to be a specially indorsed writ. See also Murray v. Hughes (1892) 14 A.L.T. 165 where an application for summary judgment was refused because the served copy of the specially indorsed writ did not bear the heading "Statement of Claim". Fox J. referred to his earlier decision in Geelong Retreads Pty Limited v. All States Transport Pty Limited (1969) 3 ACTR 5, where he held that the indorsement on the writ was not a statement of claim and he set aside judgment 8. entered in default of a defence, but said that, even if it was capable of the interpretation that it was a statement of claim, no particulars had been provided and that the judgment had been irregularly signed. In F.H. Brunning Pty Limited v. Briarwood Pty Limited (1978) 27 ACTR 45, Blackburn C.J. considered the sufficiency of an iundorsement which was headed "Statement of Claim" and dated and signed as required by the Rules relating to statements of claim. The cause of action was set out in the form of a common money count for goods sold and delivered and did not contain separate allegations of the sale and delivery alleged. His Honour held that there are accepted short forms for making simple claims which suffice as allegations of all the essential facts required to establish a cause of action. While not encouraging the use of the short form of claim for all cases, he held that the words under consideration amounted to a statement of claim and accordingly that the writ of summons had been properly indorsed. The iundorsement under consideration does not bear the appearance of a statement of claim. It does not bear that title and 1t could be mistaken for an ordinary indorsement. In my view this court should approve of the previous decisions of the Supreme Court of the Australian Capital Territory, particularly as they are decisions relating to the practice and procedure of that court and have the full approval of the resident members of that 9. court, as stated by Fox J. in Harrison's Timber Pty Limited v. Haster, supra. In addition, superior courts have said for over a century that the power to order summary or final judgment 1s one that should be exercised with great care. Admittedly, that was said in the context of the care which needs to be exercised to ensure that every opportunity is given to a defendant to have real questions tried in the ordinary way (see Sinclair v. Sinclair (1909) 8 CLR 185 and, more recently, Fancourt v. Mercantile Credits Limited (1983) 154 CLR 87 and the authorities there cited in the joint judgment of the High Court (Mason, Murphy, Wilson, Deane and Dawson JJ at p.89). In my view, the judgment was entered wrongly and the appellants are entitled to have it set aside. It is unfortunate that the appellants did not take the opportunity to alert the Supreme Court to the defects in the plaintiff's iundorsement as a ground for refusing summary judgment. The point has, however, been adopted in this court and I do not think that the appellants' failure to take the point earlier should influence this court on such an important matter of procedure and practice. Turning to the substantial grounds for setting aside the judgment, in my view the trial judge was clearly wrong in entering judgment for the full amount claimed. The affidavit evidence of the male appellant sufficiently raised an issue of any amount payable under the contract and his Honour should have ensured that that issue was tried in the normal way by refusing to enter summary judgment. 10. The male appellant also deposed to the fact that work under the building agreement had been defectively performed and that it would cost $19,823 to rectify the defects. The trial judge was of the opinion that the cost of rectification of bad workmanship was properly the subject of a counterclaim and did not provide a good defence to the plaintiff's action on the merits pursuant to 0.15 r.1(2). In this respect he was clearly wrong (Mondell v. Steel (1841) 8 M.&W. 858, 1835-1842 All ER 511; Galambos & Son Pty Limited v. McIntyre (1974) 5 ACTR 10; Hanak v. Green (1958) 2 QB 9). Counsel for the respondent accepted that the trial judge was in error in this respect, but contended that the judgment could be supported on the basis that the appellants' evidence was unsatisfactory and found to be so by the judge. I reject that submission. The appellants sufficiently demonstrated a good defence on the merits. The order I propose 1s that the appeal be allowed and that the judgment and orders of the Supreme Court be set aside. I would order that the respondent pay the appellants' costs of the application for summary judgment before the Supreme Court and the costs of this appeal, notwithstanding the appellant's failure to take the procedural point, because the appellants have succeeded on the substantive ground. I certify that this and the 9 precedirg pages are a true copy of the Reasors for Judgment herein of his Honour Mr. Justice Gotlloz Lickel Coaolher Associate Dated: /7,9 $7 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G 99 of 1985 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN : LOUIS JOSEPH ARGENTO and MARTA DOLORIS ARGENTO Appellants AND: COOBA DEVELOPMENTS PTY. LIMITED Respondent CORAM: Fisher, Gallop and Neaves JJ. DATE: 17 February 1987 REASONS FOR JUDGMENT NEAVES J. By writ of summons issued on 1 August 1985 Cooba Developments Pty. Limited ("the respondent") sued Louis Joseph Argento and Maria Doloris Argento ("the appellants") in the Supreme Court of the Australian Capital Territory claiming to recover the sum of $11,143.75 described as being the balance due to the respondent by the appellants pursuant to a building agreement dated 31 January 1985. The amount of the claim was incorrectly stated in the writ, the claim being, in truth, for $11,123.75. 2. An appearance was entered on behalf of the appellants on 15 August 1985 and on 25 October 1985 the respondent delivered a statement of claim. Two days earlier, on 23 October 1985, the respondent had caused a summons to be issued pursuant to Order 15 of the rules of that Court for liberty to enter judgment for the amount of $11,123.75 and for interest thereon calculated from 12 June 1985. The summons was heard on 15 November 1985. In support of the summons, the respondent relied on an affidavit sworn by Brian Lee Grosse, the managing director of the respondent, on 23 October 1985. Mr Grosse deposed that on 31 January 1985 the parties had entered into an agreement requiring the respondent to carry out certain building work for the appellants. A copy of the agreement was annexed. Mr Grosse also said (par.3) that in the period 31 January to 21 June 1985 the respondent carried out the building work pursuant to the terms of the agreement but the appellants failed to pay the respondent the full value of that work. Particulars of the amount claimed were given as follows: Contract price $83,000.00 Plus prime cost adjustments and builder's mark up $4,318.38 Extras, deletions and savings $4,605.37 8,923.75 Amended contract price 91,923.75 Less amount paid 80,800.00 Balance due and owing $11,123.75 It was asserted that on or about 12 June 1985 the appellants entered into occupation of the house being the building work referred to and did so without the express authority of the 3. respondent. The deponent stated his belief to be that there was no defence to the action. The appellants opposed the application and sought leave to defend the claim brought against them and to bring a counter-claim against the respondent. The appellants relied upon two affidavits sworn by the appellant Louis Argento sworn respectively on 6 and 15 November 1985. Paragraph 5 of the affidavit sworn on 6 November 1985, so far as it was admitted into evidence, and par.6 thereof were in the following terms: "5S. As to the matters alleged in paragraph 3 of the said Affidavit I refute that the plaintiff carried out the said building work im accordance with or as required by the terms of the alleged or any agreement between us .... 6. In support of the foregoing matters I refer to and rely upon the report of Jg.8. Mangion & Co. dated the 30th July 1985 a copy of which is annexed hereto and marked with the letter 'A'." The reference in par.5 to "the said Affidavit" was a reference to the affidavit sworn by Mr Grosse on 23 October 1985. The report of J.S. Mangion & Co. referred to in par.6 set out the findings reached as a result of an inspection of the building work for defects on 19 July 19385 and gave an. estimate of $19,823 as the cost of rectification where rectification was possible and, where it was not, of the compensation which the appellants should receive. 4. The affidavit sworn on 15 November 1985, so far as admitted into evidence, referred to the circumstances in which the building agreement was entered into, to the defects in the building work alleged by the appellants and to certain conversations between the appellants and Mr Grosse concerning the building work. Annexed to the affidavit was a report dated 24 April 1985 prepared by ACT Architectural Services Pty. Limited concerning defects in the work. Also annexed was a three page document dated 24 June 1985 setting out a calculation made by the appellant Louis Argento of the adjustments to the contract price which he considered appropriate by reason of extras, savings and variations to the building work as required by the contract and estimating that, on balance, an amount of no more than 54,983 was owing by the appellants to the respondent. This calculation took no account of any claim for damages which the appellants might have against the respondent for defective workmanship. The deponent was not cross-examined upon either of his affidavits. On 15 November 1985, at the conclusion of the hearing of the summons, the Supreme Court ordered that the respondent have judgment for the sum of $11,123.75 and, save as to $4,983.00 thereof, execution be stayed until further. order of the Court. From that judgment the appellants have appealed to this Court. In his reasons for judgment, the learned primary judge stated that the appellants' denial that they were 5. liable to pay the amount claimed by the respondent was based on two assertions, namely that the sum claimed had been miscalculated and, secondly, that the respondent was substantially in breach of its obligation to carry out the work under the contract in a proper and workmanlike manner. His Honour also referred to a submission on behalf of the appellants that the respondent was indebted to them "in respect of causes of action arising out of trespass and what has been described as economic coercion". To this latter aspect it 1s unnecessary to refer further. His Honour referred to the document dated 24 June 1985 ain which the appellants had calculated that, having regard to the variations to the contract, they still owed the respondent $4,983 and to the claim they subsequently made, based on the report of J.S. Mangion & Co., that it would cost $19,823 to rectify the work which had been incorrectly done. His Honour then expressed the conclusion that "the cost of rectification is properly the subject of a counter claim and does not provide a defence at all". In so concluding his Honour was, with respect, clearly in error. By virtue of Order 15, sub-rule 1(2) of the rules of the Supreme Court, the judge hearing an application under sub-rule 1(1) of that Order for liberty to sign judgment may make an order empowering the plaintiff to enter such judgment as is just, having regard to the nature of the remedy or relief claimed, "unless the defendant satisfies him that he has a good defence to the action on 6. the merits". Order 23, sub-rule 3(1) of the rules of that Court provides: "(1) A defendant in an action may, subject to Order 25, rule 15, set-off, or set-up by way of counter-claim, against the claims of the Plaintiff, any right or claim, whether such set-off or counter-claim sounds in damages or not, and such set-off or counter-claim shall have the same effect as across action, so as to enable the Court to pronounce a final judgment in the same action, both on the original and on the cross claim." Order 25, r.15 is not of relevance in the present context. The effect of the above rules is that, in an action in the Supreme Court for money alleged to be due and owing under a contract requiring work to be done, a claim for damages for failing in part to perform the contract or for defective performance may be raised by way of defence. In this connection reference may be made to the decision of Woodward J. in Galambos v. McIntyre (1974) 5 A.C.T.R. 10 where relevant authorities are discussed. Counsel for the respondent did not seek to support the contrary view but submitted that the judgment appealed from could be supported on other grounds. The first of these grounds was that the appellants made a very limited attempt before the Supreme Court to quantify in a coherent way the various matters on which they wished to rely by way of set-off. Secondly, reliance was placed upon a clause in the building agreement, clause 18, which, it was submitted, had the effect of precluding the appellants from conterding 7. that the building work had not been satisfactorily completed. Thirdly, it was submitted that it was a proper exercise of the discretion vested in the Supreme Court to decline to allow the appellants in to defend the action. I am unable to accept any of those submissions. Upon a consideration of the material adduced before the Supreme Court on behalf of the appellants, I have no doubt that the matters upon which the appellants wish to rely in defence of the respondent's claim were alleged with sufficient particularity to satisfy the requirement that the defence had substance warranting the issues going to trial. Similarly, there is a serious question to be tried as to the effect of clause 18 of the building agreement. Again, once it is recognised that a claim for damages for defective workmanship may be raised as a defence to the respondent's clain, there were, in my opinion, no circumstances warranting an exercise of discretion adversely to the appellants. There is a further ground on which, in my opinion, it was inappropriate for the Supreme Court to give liberty to the respondent to sign judgment for the full amount claimed. This arises from the circumstance that the. appellants had placed before the Supreme Court material sufficient to raise a question whether, ignoring for this purpose any claim for damages for defective performance of the work, the amount properly due and payable under the building agreement was the amount claimed ($11,123.75) or 8. the lesser sum of $4,983. There being a real dispute whether the difference between these amounts was due and payable, it was not appropriate to give the respondent liberty to sign judgment for the larger amount. For these reasons T am of opinion that the appellants should have been given liberty to defend and that the appeal should, accordingly, be allowed. Before parting with the matter, however, I should advert to a question raised for the first time when the appeal came on for hearing. Before the Supreme Court the hearing of the summons proceeded on the basis, accepted sub Silentio by the parties and by the Court, that the writ of summons issued on behalf of the respondent was "specially indorsed with or accompanied by a statement of claim under Order 4, rule 5" of the rules of the Supreme Court, that being a necessary condition prescribed by Order 15, r.1 of those rules to the making of the application by the respondent for liberty to enter judgment. The notice of appeal did not include any ground going to that question but the matter was raised by the Court. When the matter was so raised, counsel for the appellants applied for and was granted leave to amend the notice of appeal by adding an. * appropriate ground of appeal. The statement of claim delivered by the respondent on 25 October 1985 did not accompany the writ of summons within the meaning of Order 4, r.5 and, if the writ is to be 9. regarded as "specially indorsed", it must be because of the indorsement which it bore. That indorsement was in the following terms: "INDORSEMENT OF CLAIM The plaintiff claims the sum of $11,143.75 being the balance due to the plaintiff from the defendant pursuant to a building agreement dated 31 January 1985. AND the plaintiff claims the sum of $11,143.75. AND the plaintiff claims the sum of $252.00 for costs. If the amount claimed is paid to the plaintiff or its solicitor or agent within 8 days, further proceedings will be stayed. DATED this lst day of August 1985. (Sgd) Vandenberg Reid Pappas & MacDonald Solicitors for the plaintiff" Because of the circumstances in which the question was raised, neither counsel for the appellants nor counsel for the respondent was in a position to present a prepared argument on the point. Reference was, however, made to Order 4, rr.5 and 6 of the rules of the Supreme Court and to Geelong Retreads Pty. Ltd. v. Allstates Transport Pty. Ltd. (1969) 22 F.L.R. 255, Harrison's Timber Pty. Ltd. v. Haster (1974) 22 F.L.R. 258 and F.H. Brunning Pty. Ltd. v. Briarwood Pty. Ltd. (1978) 27 A.C.T.R. 45. It may be noted that what Order 4, r.5 of the rules of the Supreme Court requires, inorder that awrit of summons be specially indorsed, is that the writ be "specially indorsed with or accompanied by a statement of his Ci.e. the plaintiff's] claim, or of the remedy or relief to which he claims to be entitled" (emphasis added). Order 4, sub-rule 6(1) relates 10. to acase where the plaintiff's claim is for a debt or liquidated demand only. In 'such a case - "the indorsement, besides stating the nature of the claim - (a) shall state the amount claimed; (b) shall state a specific amount claimed for costs and disbursements or state that the plaintiff claims taxed costs; and (c) shall state that upon payment, within the time allowed for appearance, of the amount claimed, together with the specific amount (if any) claimed for costs and disbursements, Further proceedings will be stayed." In my opinion, the question whether the writ of summons issued in this matter is properly to be regarded as having been specially indorsed as required by Order 4, rr.5 and 6 of the rules of the Supreme Court is an arguable one. As the question was not the subject of full argument before us and as its resolution is not necessary in order' to dispose of the appeal, I think it undesirable to express any definitive opinion upon it. I should say, however, that, notwithstanding the cases referred to above, I doubt whether Order 4, r.5, on its proper construction, requires the indorsement to accord with the ordinary rules for the pleading of a claim and, in particular, to satisfy the requirements of Order 24 relating to statements of claim: see Robson v. Scott (1962) V.R. 540 at p.542. I would allow the appeal with costs. The judgment of the Supreme Court should be set aside and, in lieu : ll. thereof, it should be ordered that the summons dated 23 October 1985 for liberty to enter judgment be dismissed with costs and that the appellants have leave to defend the proceedings commenced by writ of summons issued on 1 August 1985. The matter should be remitted to the Supreme Court for the giving of such further directions for the trial of the issues between the parties as may be necessary. I certify that this and the preceding 10 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves. Associate Dated: 17 February 1987 Counsel for the appellants : Mr P.L.R. Sheils Q.C. and Mr G.J. Lunney Solicitors for the appellants Crowley & Chamberlain Counsel for the respondent Solicitors for the respondent Mr P.L. Dodson Vandenberg Reid Pappas & MacDonald Date of hearing 10 July 1986