Malak v Pepsico Australia Pty Limited [1999] NSWSC 85

New South Wales Supreme Court CITATION : Malak v Pepsico Australia Pty Limited [1999] NSWSC 85 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 20166/98 HEARING DATE(S) : 17 February 1999 JUDGMENT DATE : 17 February 1999

SARA MALAK (Plaintiff/Respondent) PARTIES : PEPSICO AUSTRALIA PTY LIMITED (Defendant/Applicant) JUDGMENT OF : Master Harrison

Mr Cleary (Plaintiff/Respondent) COUNSEL : Mr N A Confos (Defendant/Applicant) Mr T Barakat of Keddies (Plaintiff/Respondent) SOLICITORS : Ms K A Sibley of A O Ellison & Company (Defendant/Applicant) CATCHWORDS : Part 40 r 9(2) ; Set aside default judgment DECISION : (1) The default judgment entered on 3 December 1998 is set aside. (2) The plaintiff's costs be costs in the cause.

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THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MASTER HARRISON

WEDNESDAY, 17 FEBRUARY 1999

20166/98 - SARA MALAK v PEPSICO AUSTRALIA PTY LIMITED

JUDGMENT (Part 40 r 9(2) - Set aside default judgment)

1 MASTER: By notice of motion filed 24 December 1998 the defendant seeks that judgment entered on 3 December 1998 be set aside. The defendant relied on the affidavit of Kerry Sibley sworn 23 December 1998. The plaintiff did not rely on any affidavit evidence. 2 The relevant part of s 40 r 9(2) of the Supreme Court Rules provide: "(2) The Court may set aside or vary a judgment - ….. (b) where the judgment has been entered after judgment has been given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the judgment." 3 In determining whether default judgment should be set aside Priestley JA in Cohen v McWilliam (1995) 39 NSWLR 476 at 481 stated: "It is, however, another question whether concern about the extent of delays, either in a particular case or generally, should, in the absence of prejudice in the particular case, be taken into account in exercising a discretion to set aside default judgment. The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only on the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct." 4 For the defendant to succeed in its application to set aside default judgment it must give an adequate explanation for the delay in filing its defence and show that it has a defence on its merits, or as often expressed a bona fide defence. However, as Priestley JA said in Cohen it is a fundamental duty of the court to do justice between the parties. 5 There were prior contested workers compensation proceedings between these parties which have been finalised. After those proceedings were completed the defendant's solicitor returned her client's documents to her client. 6 On 2 June 1998, the plaintiff filed a statement of claim in this court. The plaintiff alleges that on 31 August 1995 the plaintiff in the course of her employment at the defendant's premises attempted to walk into the kitchen whilst carrying bags of flour. The floor of the kitchen was wet. The plaintiff stepped in soapy water on the kitchen floor and slipped and fell. On 6 July 1998, the defendant filed a notice of appearance and requested further and better particulars from the plaintiff. Those particulars were not answered for about 4 months after they were requested. The defendant received the answers to particulars on 12 November 1998. Meanwhile, the defendant's solicitor had arranged for the plaintiff to be medically examined. The defendant served medical reports on the plaintiff's solicitor in August, September and October 1998. It is clear that the defendant had always intended to defend this matter. 7 In relation to delay, the solicitor's explanation is that she was not in a position to file a defence at the time she filed a notice of appearance. She asked her client to forward the file to her. She sent a reminder letter to her client. She did not obtain the complete file from her client until 24 November 1998. She says that due to an oversight she did not file a defence when the information became available. She says that had the plaintiff given an indication that she intended to file for default judgment she would have filed a defence notwithstanding that it would have required amendment. In cross examination she admitted that she did not know the actual time limited for filing a defence. 8 No warning was given by the plaintiff's solicitor that she intended to move for default judgment. On 3 December 1998 default judgment was entered. On 4 December 1998, the plaintiff served a copy of the judgment on the defendant. Between 9 and 11 December 1998, the parties exchanged correspondence concerning the setting aside of default judgment. On 24 December 1998, the plaintiff filed a notice of motion to set aside default judgment. There was minimal delay between the time the defendant's solicitor became aware that default judgment had been entered and the filing of the notice of motion to set judgment aside. The defendant's solicitor has provided a satisfactory explanation for delay. 9 When the plaintiff was obtaining default judgment in accordance with the Rules, after taking 4 months to answer particulars and having been served with medical reports, it would have been courteous to notify the defendant's solicitor that if she did not file a defence shortly, the plaintiff would move for default judgment. This was not done. 10 In relation to whether there is a bona fide defence, the defendant's solicitor says that she has been instructed that the cleaning was performed by contract cleaners and that the cleaning of the floors was done at close of business each evening. Accordingly there would be no soapy water on the floor at 8.00 am. It is my view that the defendant has a bona fide defence. 11 The plaintiff submitted that it has suffered prejudice as she was unaware that the defendant used contract cleaners and now will be statute barred in relation to joining the cleaners as a defendant. However there was no evidence as to the plaintiff's solicitor's lack of knowledge concerning the contract cleaning. In the conduct of this litigation, the plaintiff cannot be said to be acting expeditiously. She filed a statement of claim about 2 months before the limitation period expired. She has not taken steps to file DCM documents so that active case management can commence and orders could have been made for the filing of a defence. 12 It is my view that the defendant's solicitor's oversight cannot be considered misconduct. In any event there was no evidence given by the plaintiff on the issue of prejudice. Any prejudice the plaintiff suffers came about largely due to the delay in her camp. There has been a satisfactory explanation for delay and there is a bona fide defence. It is my view that the default judgment obtained on 3 December 1998 should be set aside. 13 In relation to costs, the plaintiff submitted that as she had done what she had been entitled to do, she should receive the benefit of a costs order and had the defendant agreed to pay her costs of obtaining default judgment she would have consented to the setting aside of the default judgment. The defendant submitted that the conduct of the plaintiff's solicitor was unreasonable and costs should either be costs in the cause or the plaintiff's costs in the cause. It is my view it is unfortunate that due to the lack of co-operation between the parties the matter had to be argued in court. However, the plaintiff acted in accordance with the Rules, albeit without first advising the defendant of her intention to enter default judgment when it was clear that the defendant intended defending these proceedings. In these circumstances it is my view that the appropriate order for costs is that the plaintiff's costs be costs in the cause. 14 The orders I make are: (1) The default judgment entered on 3 December 1998 is set aside. (2) The plaintiff's costs be costs in the cause.