Supreme Court New South Wales Medium Neutral Citation: Commonwealth Bank of Australia v Joseph Usalj & Ors [2011] NSWSC 63 Hearing dates: 15 February 2011 Decision date: 17 February 2011 Jurisdiction: Equity Division - Commercial List Before: Einstein J Decision: Judgment to be set aside Catchwords: Application to set aside judgment Legislation Cited: Civil Procedure Act Category: Procedural and other rulings Parties: Commonwealth Bank of Australia (plaintiff) Joseph Usalj (first defendant) Filomena Usalj (second defendant) Dominic Jason Usalj (third defendant) Craig Michael Frankland (fourth defendant) Antoinette Usalj (fifth defendant) Simon Usalj (sixth defendant) Janine Usalj (seventh defendant) Representation: Counsel: Mr J Stevenson SC, Mr S Aspinall (plaintiff) Solicitors: Henry Davis York (plaintiff) Bransgroves Lawyers (first, second, fifth and seventh defendants File Number(s): 2009/00298731 Judgment The notice of motion 1There is before the Court a notice of motion under cover of which the first, second, fifth and seventh defendant's seek to set aside a judgment entered against them on 23 September 2010. There is no application before the Court seeking to set aside the judgments entered against the third, fourth or sixth defendants. The procedural history 2These proceedings were commenced on 8 December 2009. 3The fourth defendant and the sixth defendant have not filed Commercial List responses. Default judgment has been entered against them. 4On 17 March 2010 the first, second, third, fifth and seventh defendants - the father, mother, brother, sister and wife, respectively of the sixth defendant - together, the "remaining defendants" - filed Commercial List responses. 5On 24 May 2010 directions were made, by consent, that the remaining defendants file and serve their evidence by 13 August 2010. 6That direction was not complied with. 7As a result, the plaintiff caused the matter to be restored to the list on 3 September 2010. 8There was no appearance for the remaining defendants. 9Hammerschlag J fixed the matter for final hearing on 23 September 2010. 10On 23 September 2010 the matter was called on for final hearing. 11The remaining defendants appeared by counsel. The third, fifth and seventh defendants were present in Court. 12The remaining defendants, by their counsel, sought an adjournment of the proceedings. McDougall J refused the adjournment. 13His Honour stated: [13] In the present case, there is a strong reason for thinking that, whatever the reason for it, the remaining defendants have done little to perform their duty under s56(3), and have been less than attentive to the performance of the interlocutory activities that were, on their part to be undertaken. [14] I am not satisfied that the affidavit of the employed solicitor [in support of the application for adjournment] shows, in any convincing way, that the remaining defendants have tried their hardest to comply with their obligation, but have been prevented, by factors beyond their control, from being ready for hearing. [15] On the contrary, I think, it is open to infer that the remaining defendants, in effect, chose to put their family concerns ahead of their obligation to the Court. 14On delivery of that judgment, the remaining defendants, and their counsel, withdrew. 15The matter proceeded on an undefended basis in their absence and, in the result, McDougall J entered judgment and made final orders [2010] NSWSC 1105. 16It is common ground that the parties came to an agreement by which the 3 properties in question were not put up for sale in the period pending the hearing of the Motion. The matter before the Court 17The remaining defendants (other than the third defendant) ("the applicants") now move the Court for an order under UCPR Rule 36.16(2)(b). 18That rule gives the Court a discretion to set aside a judgment or order if: 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. The bank's submissions 19The bank submitted and the Court accepts that circumstances in which the exercise of the discretion under this Rule is appropriate can readily be imagined - for example where unexpected illness or misadventure prevents a party appearing, despite having notice of hearing. 20The bank's central submission was that in this case not only did the applicants have notice of the relevant hearing, they appeared by counsel and solicitor and, other than the first and second defendants, were actually present in Court. They were not present when judgment was entered and orders were made because they elected to leave the Court wants the application for adjournment was refused 21The bank further submitted and the Court accepts that : (1)The power under Rule 36.16 is to be viewed in the light of ss 56 and 58 of the Civil Procedure Act ("CPA") and the principles in Aon . Under s 56(2) of the CPA the exercise of the discretion under Rule 36.16 is subject to the "overriding purpose" [To facilitate the "just, cheap and quick resolution of the real issues in the case"] set out in the CPA. (2)It is inconsistent with that purpose for the discretion to be exercised under Rule 36.16 to enable parties who were unsuccessful in obtaining an adjournment of a final hearing simply to withdraw from the matter and then be at liberty to return to the fray at their convenience and, in effect, mount a quasi appeal from the refusal of the adjournment. 22I accept that for those reasons the Court requires to approach the current application with great caution. 23The applicants seek an indulgence from the Court. They carry a heavy onus to show why that indulgence should be granted, to the detriment of other litigants waiting to have their cases heard, who, unlike the Applicants, have complied with their "duty to assist the Court to further the overriding purpose" under the CPA [S56(1) and (3) of the CPA ]. 24In seeking that indulgence, it behoves the Applicants candidly and truthfully to explain the circumstances that resulted in judgment being entered against them. 25The submissions offered on behalf of the applicants state that "the blame for what has occurred would appear to fall squarely on the defendant's solicitors, Clamenz" and upon the sixth defendant. The explanation offered to McDougall 26A different explanation was offered to McDougall J. 27That explanation was contained in an affidavit sworn by Mr Dev Menon (an employee of the applicants' former solicitor) on 22 September 2010. 28The explanation given by Mr Menon in that affidavit for the applicants' failure to comply with the Court timetable, and thus be unprepared for the final hearing on 23 September 2010 was: (1)the first and second defendants' absence overseas; (2)the first and second defendants' inability to speak or understand spoken English; and (3)the lack of funding for the proceedings. 29The true explanation for the position the applicants found themselves in on 23 September 2010 appears to be that set out in an email from Ms Erin Lusby (another employee of the applicants' former solicitors) of 8 September 2010 to the sixth defendant: This situation has arisen because you have left it too late to remedy the situation, when we advised on 8 July 2010 that we were going to cease acting for you. Decision 30The contemporaneous records kept by Mr Clark's firm assists in the Court's assessment of the veracity of the evidence given by the current applicants. In my view, notwithstanding the occasions when the current applicants may have overstated their collections of the events in question, the critical parameter at all material times was the involvement of the sixth defendant in dealing with the solicitors and in endeavouring to obtain funds to continue the proceedings. 31The fact that the first and second defendants were overseas at the time of the hearing is also very important. 32Whilst the evidence given by the current applicants sometimes came extremely close to toying with the truth, they have satisfied the Court that they are entitled to the current relief sought. Orders 33Parties to bring in short minutes of order. ************ 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: 22 February 2011