District Court New South Wales Medium Neutral Citation: Horton & Anor v Padoani [2022] NSWDC 27 Hearing dates: 17 February 2022 Date of orders: 25 February 2022 Decision date: 25 February 2022 Jurisdiction: Civil Before: Russell SC DCJ Decision: (1) Vacate the order made on 21 September 2021 that the Defence filed on 18 May 2021 be struck out and judgment be entered for the plaintiffs with damages to be assessed. (2) Set aside the judgment entered on 21 September 2021 in favour of the plaintiffs for damages to be assessed. (3) Order the defendant to pay the costs of the plaintiffs of the Notice of Motion filed by the defendant on 5 October 2021. (4) The parties are at liberty to approach the Registry to obtain a further date for a listing before the Judicial Registrar. Catchwords: PROCEDURE – application to set aside default judgment and reinstate the defendant's defence – whether there is a defence on the merits – whether there is an adequate explanation for delay and default COSTS – where the need for the application was a result of the defendant's former solicitor's conduct – whether costs should be ordered on an ordinary or indemnity basis in favour of plaintiffs – whether costs should be made payable forthwith or at the conclusion of the proceedings Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) rr 12.7, 36.16, 42.7 Practice Note DC (Civil) No. 1B, par 3.6 Cases Cited: Cohen v McWilliam (1995) 38 NSWLR 476 Category: Procedural rulings Parties: Richard Horton (First Plaintiff) Ben Horton (Second Plaintiff) Alida Padoani (Defendant) Representation: Counsel: J Sheller SC (Plaintiffs) A Rogers (Defendant) Solicitors: Secure Legal Pty Ltd (Plaintiffs) Legal One Services Pty Ltd (Defendant) File Number(s): 2021/00090331 Judgment Introduction 1. The plaintiffs and the defendant are next-door neighbours. On 2 November 2019 an altercation occurred between the parties. The defendant made a report to police which resulted in the plaintiffs being charged with criminal offences. The plaintiffs were acquitted of those charges in the Local Court. 2. By a Statement of Claim filed on 31 March 2021 the plaintiffs have sued the defendant for the tort of malicious prosecution. The pleading alleges that the defendant provided false and/or deliberately misleading information to the police. Both plaintiffs claim to have suffered damages as a result of the prosecution brought about by the information provided by the defendant to the police. 3. On the same date that the Statement of Claim was filed the proceedings were activated in the Online Court. Practice Note DC (Civil) No. 1B sets out the purposes of, and the procedures in, the Online Court. Par 3.6 of this Practice Note provides: "Failing to submit requests, responses, counter requests or consents in the OLC in accordance with the timeframes described within this Practice Note or in accordance with timeframes otherwise ordered by the Court will be treated as a non-appearance in the proceedings. Further non-appearance may result in the proceedings being dismissed." 1. A Defence was filed by the defendant on 18 May 2021. 2. The matter was listed several times in the Online Court. The former solicitor for the defendant was dilatory in dealing with correspondence from the solicitor for the plaintiffs and was unfamiliar with the processes involved in a matter being dealt with by the Online Court. He did not inform his client of the directions made from time to time, primarily because he was unaware of those directions, since he did not log on to or join the Online Court. 3. On 13 September 2021 the Judicial Registrar sent an email from the Online Court to the solicitors for both sides. The matter was listed to be dealt with in the Online Court on 14 September 2021 but due to previous defaults by the defendant the Judicial Registrar made the following orders on 13 September 2021: 1. This matter is listed for Status Conference on 21 September 2021 9.30am at Sydney. 2. Vacate Status Conference on 14 September 2021 9.30am at Sydney. 3. Parties to confer and prepare an OLC [Online Court] request, including the defendant responding to the OLC request lodged in July. 4. Should the Plaintiff fail to make an Online Court request, proceedings to be dismissed under r 12.7 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") for failing to follow a direction made in the Online Court under Practice Note 1B. 5. Should the Defendant fail to respond to any Online Court request, defence to be struck out – judgment entered for the Plaintiff under r 12.7 of the UCPR for failing to follow a direction made in the Online Court under Practice Note 1B. 1. Rule 12.7(2) of the UCPR provides: "If the defendant does not conduct the defence with due despatch, the court may strike out the defence, either in whole or in part, or make such other order as the court thinks fit." 1. The email from the Judicial Registrar on 13 September 2021 also contained the following: "Commentary: The parties [sic] inactivity in relation to the listing tomorrow if it continues will result in the proposed orders for dismissal/strikeout being made." 1. The former solicitor for the defendant did nothing in response to those orders or that warning. 2. The Judicial Registrar sent another email from the Online Court dated 20 September 2021, being the day before the next hearing date of 21 September 2021. That email again drew attention to the fact that the matter was listed on 21 September 2021 and that if the defendant did not appear the Defence filed on 18 May 2021 would be struck out and judgment would be entered for the plaintiffs. 3. The former solicitor for the defendant did nothing in response to that email. 4. The matter was listed in the Online Court on 21 September 2021. There was no appearance for the defendant. On 21 September 2021 the court struck out the Defence filed on 18 May 2021 and entered judgment for the plaintiffs with damages to be assessed. The matter was stood over for a directions hearing on 8 October 2021 to allocate an assessment hearing date. 5. The solicitor for the plaintiffs advised the solicitor for the defendant of these orders by an email dated 22 September 2021. 6. On 5 October 2021 the former solicitor for the defendant filed the Notice of Motion presently before the court. This sought to set aside the judgment entered on 21 September 2021 and the reinstatement of the Defence filed on 18 May 2021. 7. The defendant's Notice of Motion was listed for hearing on 25 November 2021 before Judge Dicker SC. The defendant was not ready to proceed as she had changed her legal representation the day before the hearing date. Judge Dicker SC vacated the hearing date, ordered the defendant to pay the costs thrown away by reason of the adjournment, and made orders for the filing of affidavit evidence in relation to the Notice of Motion. 8. The defendant's Notice of Motion came on for hearing before me on 17 February 2022. Evidence for the Defendant 1. The former solicitor for the defendant swore an affidavit on 1 October 2021 (PX 1). He indicated that he had acted for the defendant and her husband in several pieces of litigation concerning the plaintiffs, including Apprehended Violence Order proceedings in 2015, 2017, 2020 and 2021. He also acted in relation to a dispute concerning damage to a dividing fence in 2017, 2020 and 2021 (good fences do not always make good neighbours). 2. He deposed to the steps which he had taken in these proceedings, which included instructing counsel, filing a Defence, issuing subpoenas and conducting correspondence. 3. The former solicitor for the defendant stated that he was unaware that the matter was before the Online Court on 21 September 2021. He gave evidence that his office had been shut down during the 2021 COVID lockdown and that his clerical staff had been working from home. Some staff had left his employment. He found it difficult working during the COVID lockdown. He suffered from poor health. 4. The former solicitor for the defendant said: "My failure to appear was not a matter for which any blame can be attributed to my client the Defendant." 1. The former solicitor for the defendant swore a second affidavit on 22 December 2021 (DX 2). He said that he was 68 years old and regarded himself as an "old school practitioner". His preference is to review documents in hard copy and speak to clients and counsel in person. He engaged staff to assist him with "computer matters". He said that since this matter came to his attention, he has improved his systems to ensure that he reviews emails daily and reviews current court proceedings with his staff each afternoon. 2. The second affidavit provided some explanation about the delay in providing answers to a request for particulars made by the solicitor for the plaintiffs. Counsel did draft a response to the request for particulars, but the former solicitor overlooked sending the document to the plaintiffs. He acknowledged that he did not respond to correspondence from the solicitors for the plaintiffs, when they were chasing the particulars. 3. The former solicitor for the defendant referred to the Online Court dates of 26 May 2021, 14 September 2021 and 21 September 2021. He had no recollection of receiving the emails sent by the Online Court although he accepted that those emails were received by his firm. At no time did he inform the defendant of the orders made by the Online Court from time to time. 4. The former solicitor for the defendant said that while he had used the Online Court on occasions, his usual practice during his career had been to appear in person at court hearings. He had no specific recollection of why he did not respond to the communications from the Online Court in September 2021. He said that the defendant herself was unaware of his failures to appear in September 2021 until after the orders were made striking out the Defence and entering judgment for the plaintiffs. 5. The former solicitor for the defendant swore a third affidavit on 16 February 2022 (DX 3). This corrected an error in relation to the identity of a paralegal who had assisted him during the relevant months in 2021. 6. The defendant herself did not put on an affidavit in support of her Motion to set aside the judgment and be allowed in to defend. The defendant relied upon an affidavit of her new solicitor, Ms Eid, sworn on 24 November 2021 (DX 4). That affidavit was made on information and belief based upon instructions given by the defendant. Ms Eid took over the matter as a result of a request made on 23 November 2021. The file was collected from the former solicitor for the defendant on 24 November 2021. The file was not complete, as it did not contain a copy of the current Notice of Motion or the affidavit in support. 7. The affidavit of Ms Eid explained the involvement of the defendant in giving instructions to the former solicitor in relation to defending the proceedings and answering the request for particulars. The defendant assumed that having given instructions, her former solicitor would have sent the particulars to the other side. 8. In relation to the striking out of the Defence Ms Eid said: "27. The Defendant has informed me that she kept abreast of the litigation by checking on occasions on the page of the NSW Online Registry which allows general access to the daily court lists. Annexed hereto and marked with the letter 'B' is a copy of the page, accessed yesterday, that the Plaintiff would access for that purpose. By way of example I have annexed a copy showing tomorrow's listing. 28. The Defendant informs me that in the weeks prior to 21 September 2021, she became aware that the matter was listed in the Court. She cannot presently recollect if the matter was listed on 21 September or some other date in September 2021. She recalls that the matter appeared to have a large number of listings related to subpoenas at about that time. She did not know what the precise purpose of the listing was. 29. She informs me that she was unaware of the directions made in the week or so prior to 21 September 2021. 30. As indicated above the Defendant also informs me that she was unaware that her Defence had been struck out and remained unaware of that fact until it was disclosed in conference on the evening of 23 November 2021 in the first of the conferences referred to above. 31. The Defendant advises me that she was aware that the matter was listed in Court for some purpose on 25 November 2021 but had not been informed, and did not know, that a Notice of Motion had been filed to set aside the judgment in the proceedings and allow her in to defend. 32. The Defendant informs me that until 23 November 2021 the Defendant believed that the matter was progressing through the Court system in the ordinary way." 1. Ms Eid was not cross-examined on her affidavit. Cross-Examination of the Former Solicitor for the Defendant 1. The former solicitor for the defendant was cross-examined upon his affidavits. He said that he had consulted his work diary for 21 September 2021 but it had no entry in it against that date. He acknowledged that a text message at 7.58am on 21 September 2021 (discussed below) was "highly likely" to be a message about the directions hearing. 2. The former solicitor for the defendant agreed that he had been "generally unresponsive" in relation to the conduct of the proceedings. He denied that he had been instructed by the defendant to be unresponsive. He said that he had a lack of knowledge about the Online Court system, problems with COVID and problems caused by staff leaving. He said "any delay rests on my shoulders". 3. The former solicitor for the defendant gave some confusing evidence as to whether he was actually aware of the Online Court date of 21 September 2021. He acknowledged that his office would have received notice of that date but he could not say when he became aware of the date. Nor could he state when he first became aware that he had failed to attend the Online Court on 21 September 2021. Evidence for the Plaintiffs 1. The solicitor for the plaintiffs swore three affidavits on 12 October 2021 (PX 1), 19 November 2021 (PX 2) and 22 November 2021 (PX 3). These affidavits provided a detailed history of the conduct of the proceedings. They catalogued the inaction and the defaults by the former solicitor for the defendant. As set out above, that solicitor admitted that he had been dilatory in conducting the matter, particularly in relation to failing to attend time after time at the Online Court. 2. Some of the material in PX 2 formed part of the basis for cross-examination on the former solicitor for the defendant. The solicitor for the plaintiffs had obtained the telephone records of the defendant and the defendant's former solicitor. These showed the following in relation to 21 September 2021: 1. There was a text message sent by the defendant to her solicitor at 7.58am on 21 September 2021. 2. This text message was also tendered (part of PX 4). It contained observations made by the defendant about her next-door neighbours and concluded as follows: "He must be very nervous about this morning's meeting." 1. There was a telephone call made by the former solicitor for the defendant to his client at 8.29am on 21 September 2021. The call lasted 39 seconds. 2. There was a telephone call at 8.31am on 21 September 2021 made by the defendant to her former solicitor. The call lasted for 105 seconds. 1. The plaintiffs also tendered extracts from the defendant's personal diary for September 2021. There is an entry for 21 September 2021 as follows: "9.30 Online Court for SUING." 1. There is an entry for 14 September 2021 (being the previous date of the Online Court hearing) as follows: "9.30 Online Court for hearing." 1. I am unable to make a finding as to whether the defendant informed herself of these two court dates by her own online searches or whether she was informed about them by her former solicitor. Nevertheless, she knew about them. However, there was nothing in the entries to suggest that she knew any more than the bare fact that the matter was listed in court on each of those mornings. 2. These diary entries, the text message and the two telephone calls on 21 September 2021 cast doubt upon the assertion made by the former solicitor for the defendant that he was not aware of that court date. I accept that the former solicitor for the defendant has no present recollection of whether or not he was aware of the court date. I also find that if he was so aware (even if only because he had a conversation with his client early that morning), he did not appreciate the need to appear at the Online Court. In this regard I accept the evidence given by the former solicitor for the defendant that he had little familiarity with the Online Court and that his non-attendance in the Online Court on 21 September 2021, and on the prior occasions, was the result of ignorance rather than any deliberate decision or deliberate instructions given by the defendant. 3. There is no evidence that the defendant herself became aware of the orders made on 13 September 2021 which alerted anyone who read them to the intention of the court to strike out the Defence and enter judgment on liability for the plaintiffs. 4. I accept the submission made by counsel for the defendant that it is unlikely in the extreme that, given the history between these parties, and the enmity between them, the defendant would have knowingly allowed her Defence to be struck out and a judgment to be entered in favour of her next-door neighbours. Principles: Setting Aside a Default Judgment 1. Rule 36.16 of the UCPR provides: "36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if-- (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order." 1. To set aside a default judgment pursuant to r 36.16 of the UCPR, a defendant must establish that there is a defence on the merits and an adequate explanation for default and delay – Cohen v McWilliam (1995) 38 NSWLR 476. 2. In the present case there is a dramatic factual contest concerning what happened in the backyards of the parties on 2 November 2019. There is also a real issue about the accuracy or otherwise of the account of events given by the defendant to the police, which led to the plaintiffs being prosecuted. I find that there is an arguable defence on the merits. No submission to the contrary was put. 3. I also find that there is an adequate explanation for delay and default. I accept the evidence of the defendant's former solicitor that due to a combination of circumstances (unfamiliarity with the Online Court; the Covid lockdown in Sydney between late June and early November 2021; and the departure of staff) he did not properly attend to conducting the defendant's case. The failure to attend on 21 September 2021 was just one event in a litany of failures to properly represent the defendant. Criticism was made by senior counsel of the explanation provided by the defendant's former solicitor. True it is that there were gaps and flaws in his recollection, but the explanation has to be adequate, not perfect. 4. There is no evidence that the defendant herself knew of the terms of the orders made by the Judicial Registrar on 13 and 21 September 2021. Indeed the defendant had the date of 14 September 2021 in her diary, but of course that date was vacated on 13 September 2021. The text from the defendant on 21 September 2021 surmising that the plaintiffs must be concerned about the hearing that morning, when the plaintiffs were in the box seat to obtain judgment, is further evidence that the defendant did not deliberately allow the Defence to be struck out with judgment to be entered for the plaintiffs. There was no prospect whatsoever that this defendant would have given an inch to these plaintiffs. 5. I find that the reason why there was non-compliance with the orders of the Online Court, which resulted in the judgment for assessment of damages being entered in favour of the plaintiffs, lies entirely at the feet of the defendant's former solicitor. In those circumstances it is appropriate to set aside the judgment, reinstate the Defence, and allow the matter to proceed to trial on the merits. Costs 1. The defendant has succeeded on this application. Counsel for the defendant submitted that the plaintiffs should be ordered to pay the costs of the defendant, or in the alternative, that the plaintiffs' costs of the Motion should be their costs in the cause. I do not accept either submission. 2. The defendant has come to court seeking an indulgence, the need for which has been caused entirely on her side of the record. Had there been proper attention paid by her former solicitor to the orders made by the Online Court and to the emails sent by the Judicial Registrar, her Defence would not have been struck out. The plaintiffs were perfectly entitled to defend the Motion. The full explanation was only provided in dribs and drabs by affidavits, some of which were served late and in breach of court orders. The plaintiffs' solicitor provided by his affidavits a full history of the litigation, which was a necessary step, but a time-consuming and expensive exercise. In those circumstances the plaintiffs should have an order for their costs. 3. Senior Counsel for the plaintiffs also submitted that costs should be awarded on an indemnity basis and should be payable forthwith. I do not propose to make either order. Ms Eid since her appointment has attended to the matter with due despatch and set out in her affidavit her instructions to the effect that the defendant herself was ignorant of the threatened strike out of the Defence. Costs of the vacated hearing of the Motion have already been ordered by Judge Dicker SC, such costs being on the ordinary basis. Once the defendant's former solicitor fell on his sword, in his affidavit sworn on 22 December 2021 (DX 2), it was plain enough that the fault lay with him and not with the defendant personally. The costs payable should be on the ordinary basis. 4. In accordance with r 42.7(2) of the UCPR such interlocutory costs should be payable at the conclusion of the proceedings. To make an order that costs be payable forthwith would raise yet another obstacle to the proper consideration which should be given by both sides to settlement of these proceedings. 5. Given the history of these warring households and noting that their issues are not confined to this litigation, it is to be hoped that they could attend a mediation to sort out all of their differences and find a modus vivendi. Orders 1. My orders are: 1. Vacate the order made on 21 September 2021 that the Defence filed on 18 May 2021 be struck out and judgment be entered for the plaintiffs with damages to be assessed. 2. Set aside the judgment entered on 21 September 2021 in favour of the plaintiffs for damages to be assessed. 3. Order the defendant to pay the costs of the plaintiffs of the Notice of Motion filed by the defendant on 5 October 2021. 4. The parties are at liberty to approach the Registry to obtain a further date for a listing before the Judicial Registrar. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 February 2022