Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Violi v Commonwealth Bank of Australia [2015] NSWCA 152 Hearing dates: 6 March 2015 Date of orders: 02 June 2015 Decision date: 02 June 2015 Before: Emmett JA at [1]; Bergin CJ in Eq at [91]; Sackville AJA at [121] Decision: (1)Grant leave to appeal. (2)Allow the appeal. (3)Set aside the orders made by Balla DCJ on 20 December 2013 dismissing Mr Violi's notice of motion. (4)Set aside the default judgment against Mr Violi entered on 9 January 2013. (5)The Bank is to pay Mr Violi's costs of the application for leave and of the appeal. Catchwords: PROCEDURE – application to set aside default judgment – whether the applicant has an adequate explanation for delay – whether the applicant has an arguable defence under the Contracts Review Act 1980 (NSW) PROCEDURE – service of originating process – substituted service – whether orders for substituted service were complied with – whether the application for default judgment satisfied the requirements of the Uniform Civil Procedure Rules 2005 (NSW) – whether, as a consequence, the default judgment was entered regularly Legislation Cited: Contracts Review Act 1980 (NSW), ss 7, 9 District Court Act 1973 (NSW), s 18FB District Court Rules 1973 (NSW), Pt 43A r 1 Uniform Civil Procedure Rules 2005 (NSW), rr 10.1, 10.14, 10.20, 10.21, 14.3, 16.2, 16.3, 16.6, 35.8, 36.15, 36.16 Cases Cited: Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 Arnold v Forsythe [2012] NSWCA 18 Coulton v Holcombe [1986] HCA 33; 162 CLR 1 Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 Simpson v Alexander (1926) 26 SR (NSW) 296 University of Wollongong v Metwally [1984] HCA 74; 158 CLR 447 Category: Principal judgment Parties: Francesco Violi (Applicant) Commonwealth Bank of Australia (Respondent) Representation: Counsel: Mr D Pritchard SC with Mr M Newton (Applicant) Mr P Brereton SC with Mr D Sulan (Respondent) Solicitors: Simmons & McCartney Lawyers (Applicant) K & L Gates (Respondent) File Number(s): 2014/14868 Publication restriction: Nil Decision under appeal Court or tribunal: District Court of New South Wales Date of Decision: 20 December 2013 Before: Balla DCJ File Number(s): 2012/169203 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. EMMETT JA: By summons filed 24 April 2014, Mr Francesco Violi seeks leave to appeal from an order made by a judge of the District Court (the primary judge) on 20 December 2013. By that order, the primary judge dismissed a motion filed by Mr Violi on 21 October 2013 seeking that default judgment entered against him on 9 January 2013 in favour of the respondent, the Commonwealth Bank of Australia (the Bank), be set aside. The application to set aside the default judgment was made under r 36.15(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which relevantly provides that a judgment in any proceedings may, on sufficient cause being shown, be set aside if the judgment was given or entered irregularly. 2. The default judgment was entered following a motion for default judgment filed on behalf of the Bank on 20 December 2012, after Mr Violi failed to file, within the time limited by r 14.3(1) of the UCPR, a defence to a statement of claim (the Statement of Claim) in proceedings brought by the Bank against Mr Violi (the Proceedings). In accordance with an order for substituted service made on 17 October 2012 (the Substituted Service Order), the Statement of Claim was taken to have been served on Mr Violi five days after 8 November 2012. Background 1. At relevant times, Mr Violi and his two brothers, Dennis Violi and Kevin Violi, were the only directors and shareholders of Hillbrook Quest Pty Ltd (Hillbrook). Dennis Violi and Kevin Violi each held six shares in the capital of Hillbrook and Mr Violi held four shares. Hillbrook was engaged in the business of operating a vineyard located at Darlington Point, New South Wales. Hillbrook's operations were conducted by Dennis Violi and Kevin Violi and Mr Violi was not involved in the day-to-day conduct of the operations. 2. However, Mr Violi was connected with two other farming properties. One of the properties is situated at Lake Wyangan, NSW (the Lake Wyangan property) and the other is situated at Whitton, NSW (the Whitton property). Mr Violi resides at the Lake Wyangan property. He works the Whitton property. The Proceedings 1. The Proceedings were commenced on 28 May 2012. The defendants are Hillbrook, Dennis Violi, Kevin Violi and Mr Violi. In the Statement of Claim, the Bank alleged that, on 31 October 2008, the Bank, Hillbrook and the Violi brothers entered into a master agreement (the Master Agreement) that provided that Hillbrook and the Bank would from time to time enter into contracts for finance in connection with the purchase of farming equipment. The Statement of Claim alleged that each of the Violi brothers guaranteed the performance of, and indemnified the Bank in respect of the obligations of, Hillbrook under the Master Agreement and under any contract for finance entered into between Hillbrook and the Bank pursuant to the Master Agreement. 2. The Statement of Claim then alleged that Hillbrook had entered into contracts for finance with the Bank, defaulted in the payment of moneys payable under those contracts and had failed to pay the amounts owing by it to the Bank pursuant to notices of default. The Bank claimed that it had also made demand on the Violi brothers, including Mr Violi, for payment of the amount owing by Hillbrook and that none of them had complied with the demands made on them. The Substituted Service Order 1. On 16 June 2012, 22 June 2012 and 6 July 2012, Mr David Budd attended the Lake Wyangan property with the intention of serving the Statement of Claim on Mr Violi. On each occasion, there was no response to a knock on the front door of the residence on the Lake Wyangan property. On 24 July 2012, Mr Luke Tierney attended at the Lake Wyangan property with the intention of serving the Statement of Claim on Mr Violi. A female answered his knock on the door of the residence. According to Mr Tierney, the female spoke poor English and was evasive. The woman said that she did not know Mr Violi. It may be assumed that Mr Tierney did not give the Statement of Claim to the female who answered the door, since there is no assertion that he did. On two occasions on 18 September 2012 and on one occasion on 19 September 2012, Mr Kerry Hopkins attended at the Lake Wyangan property with the intention of serving the Statement of Claim on Mr Violi. There was nobody at the residence. It may be assumed that Mr Hopkins did not leave the Statement of Claim at the Lake Wyangan property. 2. In the light of that evidence, the Substituted Service Order was made by the District Court on 17 October 2012 dispensing with the requirement for personal service of the Statement of Claim on Mr Violi. Orders 7 and 8 of the Substituted Service Order provided that: 7. Order that service of the statement of claim on [Mr Violi] may be effected by: (a) delivering, in a sealed envelope addressed to [Mr Violi], a sealed copy of the statement of claim and a sealed copy of this order [the Service Documents] to any person over the age of 16 years residing at [the Lake Wyangan property], together with a covering letter addressed to "the Occupier", requesting that the documents be brought to the attention of [Mr Violi] as a matter of urgency; or, if this is not possible, by leaving the documents and the covering letter in the mailbox for [the Lake Wyangan property]; or, if this is not possible, by affixing the documents to the front page [sic] of [the Lake Wyangan property]; and (b) posting the documents by ordinary pre-paid post to [Mr Violi] at [the Lake Wyangan property]. 8. Service of the statement of claim upon [Mr Violi] will be deemed to have been effected 5 days after compliance with orders 7a and 7b. [Emphasis added] 1. Clearly, the reference to "the front page" was an error, and there is a question as to what was intended. It may have been intended to refer to the "front gate" of the Lake Wyangan property. That might follow from the fact that order 3 of the Substituted Service Order also provided for service on Dennis Violi by affixing a copy of the Service Documents to the "front gate" of a property at Carrathool, NSW, where Dennis Violi resides. Alternatively, it may have been intended to refer to the "front door" of the Lake Wyangan property. As will appear below, the latter was the interpretation given to the Substituted Service Order by Mr Hopkins. 2. By an affidavit sworn on 26 October 2012, Ms Maria Maccarrone, who was employed by the solicitors for the Bank, said that, on 25 October 2012, she put copies of the Service Documents as well as a letter from the Bank's solicitors into an envelope, which she sealed and put into the Australia Post box at O'Connell Street, Sydney. The envelope was addressed to Mr Violi as provided for in the Substituted Service Order. That has been accepted as compliance with Order 7(b) of the Substituted Service Order. 3. In an affidavit sworn on 12 November 2012, Mr Hopkins said that, on 8 November 2012, he "served [the Service Documents and a letter from the Bank's solicitors] by personally affixing them to the front door of the premises at the given address", being the address of the Lake Wyangan property. When subsequently cross-examined about that assertion in his affidavit, Mr Hopkins said that he attended at the premises at the Lake Wyangan property at about 4.25 pm and knocked on the door of the premises but nobody answered the door. He said that he put the Service Documents and the letter from the Bank's solicitors in a plain sealed envelope marked "Private and Confidential", which he addressed to the occupier and on which he put the address of the Lake Wyangan property. He said that he attached the envelope to the door of the premises by "wedging it into the door". He agreed that he was unaware as to how many doors there were on the premises, because he did not walk around the Lake Wyangan property. He also agreed that he did not use "a tack or sticky tape or anything like that" to affix the envelope and that it was possible that the envelope could have fallen to the ground when somebody opened the door. Default Judgment 1. No appearance or defence was filed on behalf of Mr Violi. Accordingly, on 20 December 2012, the Bank filed a notice of motion for default judgment against Mr Violi in the sum of $520,871.34. It did so by completing a document in Form 38 prescribed by the Uniform Rules Committee pursuant to the UCPR. The notice of motion was supported by an affidavit of Mr Phillip Andersen, which affidavit was part of Form 38. Mr Andersen, who was an asset finance officer with the Bank, said in the affidavit that the amount owing to the Bank as at 20 December 2012 was $520,871.34. Mr Andersen also said that the Statement of Claim and the Substituted Service Order: were served on [Mr Violi] in accordance with [the Substituted Service Order] on the following dates: (a) 25 October 2012; and (b) 8 November 2012. Mr Anderson said that the source of his knowledge for that assertion consisted of the affidavits of Ms Maccarrone sworn on 26 October 2012 and of Mr Hopkins sworn on 12 November 2012. 1. On the basis of that material, as well as the affidavits sworn by Mr Hopkins and Ms Maccarrone, default judgment was entered against Mr Violi on 9 January 2013 in the amount claimed by the Bank. The judgment was entered by administrative action within the registry of the District Court. No steps were taken on behalf of the Bank either to notify Mr Violi of the application for default judgment or to notify him that default judgment had been entered. However, in an affidavit of 7 November 2013, Mr Carl Vanjour, a manager of the asset realisations department at the Bank, deposed that he had been informed by Rachel Carter, a solicitor employed by the Bank's solicitors, that on 29 April 2013, Mr Violi was personally served with a bankruptcy notice based on the default judgment. According to the chronology provided by the Bank to this Court, the bankruptcy notice annexed the default judgment. If that is correct, then Mr Violi would have become aware of the default judgment on 29 April 2013. Application to Set Aside the Default Judgment 1. By notice of motion filed on 21 October 2013, Mr Violi applied for an order that the default judgment be set aside. In an affidavit sworn on an unspecified day in October 2013 and filed in support of that notice of motion, Mr Violi said that he had no recollection of having received, or otherwise having seen, a copy of the Statement of Claim prior to July 2013. He explained that, while he and his brothers were directors and shareholders of Hillbrook, he was not involved in the day-to-day running of Hillbrook's operations. 2. Mr Violi said in his October affidavit that, on 31 October 2008, he was on a tractor spraying grapes on the Whitton property when he observed a car drive up to the field in which he was working. The driver of the vehicle was Mr Troy Millard, the manager of the local branch of the Bank. Mr Violi's brother, Dennis Violi, was with Mr Millard in the car. Mr Violi said that Dennis Violi said words to the following effect to him: I have some papers I need you to sign. It is about the purchase of the grape harvesters. Mr Millard put some papers on the bonnet of his car and said words to the following effect to Mr Violi: This is where you need to sign. You are signing for the harvesters. 1. Mr Violi said in his affidavit that neither Mr Millard, nor Dennis Violi, advised him to seek independent legal advice and nobody explained to him that he was potentially liable for an amount of $1,500,000. He said that at no time did either of them explain to him that the document he was signing was a guarantee or explain to him the nature or effect of the document he was signing. He said that, at the time when he signed the guarantee, he was not given a copy of any other document (such as the Master Agreement) to read, or retain. He accepted that the signatures purporting to be his on the guarantee documents relied on by the Bank are in fact his signatures. 2. Mr Violi said that he had previously discussed with his brothers, in general terms, a proposal to purchase grape harvesters for the vineyard operated by Hillbrook. He said that he signed the papers on 31 October 2008 because he believed that he was required to do so as a 25 per cent shareholder in Hillbrook and that he believed that he was simply assisting his brothers to obtain the harvesters. Mr Violi repeated that he had no involvement in the day-to-day operation of Hillbrook and he said that no dividends were paid to him in respect of his interest in Hillbrook. He also said that, from October 2008 up to August 2011, when receivers and managers were appointed to Hillbrook, he did not set foot on Hillbrook's property on more than five or six occasions. 3. Mr Violi also said that, while he was born in Australia, he is of Italian descent and that he spoke mainly Italian until he was ten years of age and that English is his second language. He said that he speaks English fluently and is functionally able to read, although his reading is slow and he does not have a good comprehension of legal or technical documents. 4. Finally, Mr Violi said that he was contacted by his former solicitors in August 2013 and was informed by them that they had been served with a bankruptcy petition seeking the sequestration of his estate. He said that, in late August 2013, he engaged a consultant to negotiate on his behalf with the Bank in an attempt to settle the matter, but that those negotiations were not successful. Then, in mid-September 2013, he engaged another consultant to negotiate with the Bank; although a number of offers were made to settle the matter, the Bank rejected all of them and the last rejection came on 3 October 2013. He then engaged his present solicitors on 8 October 2013. Hearing before the Primary Judge on 12 December 2013 1. Mr Violi's motion to set aside the default judgment came before the primary judge on 12 December 2013. Counsel for Mr Violi referred her Honour to the affidavit of 7 November 2013 sworn by Carl Vanjour. Mr Vanjour set out the procedural history of the Proceedings. 2. The following exchange occurred between counsel for Mr Violi and the primary judge: LEVET: … we don't cavil with that procedural history, that on 28 May 2012 proceedings were commenced in the District Court and on 17 October orders were made for substituted service of the statement of claim on [the three Violi brothers] and that the orders were complied with. HER HONOUR: Were complied with. LEVET: Well, it deposes that they were complied with. HER HONOUR: Right. Yes. Do you dispute that? LEVET: Well, we don't know what the orders were; we don't know what compliance was undertaken. There is simply no deposition to that in the affidavit, but certainly we accept at face value that orders for substituted service were made and that they were complied with. HER HONOUR: That has got to be the first step, does it not? Someone has to show me that has happened. […] SULAN [counsel for the Bank]: … default judgment has been obtained regularly, in my understanding, and I didn't understand that service was an issue. HER HONOUR: I have just been told it is not conceded because they do not know whether it was complied with or not, which is fair enough. SULAN: Well, I will take some instructions and I will read whatever affidavit I can in respect of service, but for my learned friend to stand up and take issue with it without having given notice is unfortunate. HER HONOUR: I suppose it is unusual to get an order for substituted service, so I am not sure if they have to tell you or not. SULAN: Well, we haven't received any notification. At this point it's somehow in issue. […] LEVET: … in fairness to my friend, we are not taking issue with the fact that an order for substituted service has been made – we say this at face value: we accept the assertion that it has been complied with, so to that extent no issue is taken. We don't know how it was effected … [Emphasis added.] 1. Counsel for the Bank then referred to the affidavits of Ms Maccarrone and Mr Hopkins, which, he said, proved service in accordance with the Substituted Service Order. The primary judge pointed out that Mr Violi asserted that he did not receive the Service Documents. It appears that counsel for Mr Violi was then provided with a copy of the Substituted Service Order, together with a copy of the affidavits of Ms Maccarrone and Mr Hopkins. The proceedings were then adjourned for a short time. On resumption, the following exchange took place: LEVET: Your Honour, I am not able to take issue with the things it says to in the affidavits as to the steps taken for compliance with the orders. Its relevance, simply, is this: my friend is, as he rightly points out, in possession of an order. We seek to set it aside. There needs to be some explanation of the failure to file a defence in a timely manner. 1. After a further short exchange, the primary judge then said to counsel for Mr Violi that she needed an explanation as to why Mr Violi did not get the Service Documents that were sent to him at least twice. Her Honour pointed out that Mr Violi did not deny having received them, simply that he could not recall having seen them. Her Honour also observed that Mr Violi did not say that he did not live at the Lake Wyangan property. 2. The primary judge then referred to the affidavit evidence that was on the Court file concerning the attempts to serve the Statement of Claim before the Substituted Service Order was made. Her Honour referred, in particular, to the affidavit of Mr Tierney, saying that Mr Tierney had handed a copy of the Statement of Claim to a female at the address. That may have been a misapprehension, because Mr Tierney did not say that he gave a copy of the Statement of Claim to the female who answered the door (see above at [7]). Her Honour said that the Statement of Claim had actually been "delivered" three times. That, however, was not the evidence of the affidavits referred to above. The evidence of Messrs Budd, Tierney and Hopkins was to the effect that there had been a total of seven occasions on which process servers had attended the Lake Wyangan property with the intention of serving the Statement of Claim on Mr Violi. 3. The primary judge then referred to "conflicting evidence" and said that she had to decide whether to accept Mr Violi's untested explanation for the delay in his filing a defence. Counsel for Mr Violi said that there may be an explanation for Mr Violi saying that he did not recall having seen the Statement of Claim. Her Honour said that she would like to hear "the explanation", in particular, in relation to the copy that was affixed to the front door of the premises on the Lake Wyangan property. Counsel for Mr Violi then said that perhaps the case was one in which a short adjournment should be granted to give Mr Violi the opportunity "to give his explanation". Mr Violi had not been required for cross-examination and was apparently not in Court. Counsel for Mr Violi said that if it was an issue, as it appeared to be, then the appropriate course of action was a "very short adjournment" to have Mr Violi in Court to be cross-examined on the issue. 4. Counsel for the Bank, when invited to address, said that there were two relevant principles as to whether the judgment should be set aside. The first was whether an arguable defence was disclosed. The second was the explanation for delay. He said that the question of whether Mr Violi had received the Statement of Claim could be relevant only to the issue of delay. Counsel for the Bank pointed out that Mr Violi had not proffered any draft defence or draft cross-claim and that Mr Violi's evidence in his October 2013 affidavit did not "rise to the point where there would be an arguable defence". 5. After a further exchange, counsel for the Bank indicated that the Bank would not oppose an adjournment to enable Mr Violi to file an affidavit "explaining the service issue in some more detail" and to file a draft defence and cross-claim. After giving directions for the filing of such material, her Honour adjourned the hearing to 20 December 2013. 6. In a second affidavit sworn on 16 December 2013, Mr Violi described the Lake Wyangan property. He said that it is approximately two kilometres from the nearest post office, which is situated at the town of Lake Wyangan. He said that, since prior to October 2012, there had been no postal delivery service to the Lake Wyangan property and that post is not delivered to his residence there. He said that he does not have, and has never had, either a roadside mail box or roadside mail bag for the Lake Wyangan property. However, he said that he has a post office box address at the Lake Wyangan post office and that he goes to that post office box every few days to empty it. 7. Mr Violi asserted in his second affidavit that the documents described by Ms Maccarrone were not delivered by Australia Post, either to the Lake Wyangan property or to his post office box. He said that he did not receive, see or otherwise become aware of the Statement of Claim or the other documents sent by Ms Maccarrone prior to August 2013, when he was told by his former solicitors that they had been served with a bankruptcy petition seeking the sequestration of his estate. He also said that he did not receive or become aware of any of the documents said to have been served by Mr Hopkins. 8. Mr Violi said that the sole residents of the Lake Wyangan property prior to October 2012 were himself and his son, Anthony. He said that the only other person who might from time to time have been in his house in his absence was his cleaning lady. He said that at no time did his son, his cleaning lady or any other person indicate to him that any documents had been affixed to the front door of the residence on the Lake Wyangan property or had been otherwise left there with them. 9. Mr Violi annexed to his second affidavit a copy of the defence that he would seek to file if the judgment were set aside. The draft defence is uninformative. It simply asserts that Mr Violi seeks relief under s 7(1)(a) or s 7(1)(b) of the Contracts Review Act 1980 (NSW) (the Contracts Review Act), on the basis that the guarantee contract signed by him was unjust in the circumstances relating to it at the time when it was made. Mr Violi's Written Submissions after the Hearing on 12 December 2013 1. Prior to resumption of the hearing on 20 December 2013, counsel for Mr Violi provided the Court with a written submission on his behalf. The terms of that submission are significant. First, the submission said that Mr Violi sought to set aside the default judgment "which has been regularly entered". He said that it was usual for a defendant, in applying to set aside "a regularly entered judgment", to explain the delay in appearing or pleading and to show a prima facie defence, but that there was no binding rule to that effect. The submission said that, while the discretionary power to set aside a default judgment is not "fetted" [sic], the Court regards certain factors as relevant to the exercise of the discretion, being the defendant's reason for failing to appear or plead, whether there has been undue delay in applying to set aside the judgment, and whether the plaintiff would be prejudiced in a way that could not be compensated in costs. The submission said that a meritorious defence may be the most influential factor in deciding whether to set aside the default judgment. 2. The submission then asserted that there was sufficient material in Mr Violi's October affidavit to conclude that there is a prima facie case for discretionary relief under the Contracts Review Act. The submission then referred to Mr Violi's assertion, in his second affidavit, that he had not received or become aware of the Statement of Claim before July 2013. The submission said that, while there was evidence before the Court that the Statement of Claim had been "regularly served" in accordance with the Substituted Service Order, Mr Violi had given adequate explanation as to why he did not receive the Statement of Claim posted to him by Ms Maccarrone. 3. The submission then asserted that, ultimately, it became a question of credit between Mr Violi and Mr Hopkins as to whether the Court accepted Mr Violi's evidence that he did not receive the Statement of Claim. The submission said that, in the event that the Court was "so satisfied", there was no prejudice to the Bank that could not be cured by an order for costs. That submission is curious. There was no conflict between Mr Hopkins and Mr Violi. Notwithstanding what had been said on 12 December 2012, it was not a question of deciding whether to believe Mr Violi or Mr Hopkins. There was no basis for doubting the veracity of Mr Hopkins's evidence that he had affixed the Service Documents to the door of the residence on the Lake Wyangan property. The only question was whether Mr Violi should be believed in his assertion that the Statement of Claim did not come to his attention before July 2013. Hearing before the Primary Judge on 20 December 2013 1. After cross-examination of Mr Violi and Mr Hopkins, counsel for the parties addressed the primary judge. Counsel for the Bank said that the Bank's evidence consisted of the 12 November 2012 affidavit of Mr Hopkins and his oral evidence. Her Honour then referred to Mr Tierney's affidavit about the female person who was present at the residence on the Lake Wyangan property and said she had assumed that that affidavit had been read, since it had been referred to. The following exchange then took place between counsel for the Bank and the primary judge: SULAN: I'm not sure it really matters because … there's no issue about service. It's just a question of delay, so [Mr Violi] doesn't challenge the proposition that the documents have been duly served – and [his] written submissions … say that in accordance with the substituted service orders, so the only relevance of the service – HER HONOUR: Well the sufficiency of the explanation must depend on whether I accept it; that is, that it never came to his attention before July. SULAN: That will be a matter for submission. HER HONOUR: So it is relevant to that, is it not? SULAN: Yes, it may be. I accept that. So I read the affidavits that were before your Honour on the last occasion regarding service … […] SULAN: … We rely for compliance with the substituted service orders on the affidavits of Ms Maccarrone dated 26 October 2012 and Mr Hopkins's affidavit of 12 November 2012. Counsel for the Bank said that he did not rely on other affidavits for present purposes, and that he did not need to do so, because they were relevant only to the question of delay. 1. Counsel for Mr Violi then addressed the primary judge as follows: LEVET: Your Honour, there are two issues and the first issue is adequate explanation for delay, and the second issue is whether or not there is a reasonably arguable defence. Your Honour, as to the first issue, that is a credit issue. In my respectful submission, for your Honour not to be satisfied as to a reasonable explanation for delay, you would have to disbelieve Mr Violi on his oath that he had not received the document or had it drawn to his attention. If your Honour disbelieves him on his oath, it goes no further. I concede that at that point I am not able to make out a case. […] LEVET: Your Honour, it's a question of whether your Honour disbelieves him. If your Honour doesn't positively disbelieve him then, in my respectful submission, the effect of his evidence, and the effect of both his affidavits and his evidence given in cross-examination is that there is an adequate explanation for the delay. […] LEVET: There is the explanation of my client, both in his second affidavit and in the witness box, to the effect that there is no mail delivery [to the Lake Wyangan property], that he has a post office box number, that from time to time mail addressed to the farm does go missing and is returned to the sender, and/or he receives it some months later. That is an explanation as to how that document, posted by Ms Maccarrone, has not come to his attention. [Emphasis added.] 1. Counsel for Mr Violi then addressed the question of the copy of the Service Documents and the letter from the Bank's solicitors left by Mr Hopkins at the Lake Wyangan property. After referring to Mr Hopkins's evidence, counsel asserted that, if the door was opened, the envelope wedged in the door would fall to the ground, and that that was an explanation as to why the Service Documents and the letter from the Bank's solicitors might not have been drawn to Mr Violi's attention. 2. Counsel for Mr Violi then said the following: LEVET: If your Honour gets past that step and says your Honour is not persuaded on the balance of probability that he has not received it, then your Honour goes to the next step: is there an arguable case? There is some ambiguity about that statement. Counsel presently appearing for Mr Violi, who did not appear for him in the District Court, submitted to this Court that the effect of the double negative is that the submission should be understood as saying that, if the primary judge was persuaded that Mr Violi had received the Statement of Claim, then her Honour should proceed to consider the question of whether there was an arguable case. 1. On one view, that statement is inconsistent with the earlier statement about Mr Violi's not being able to "make out a case". However, that earlier statement was made in the context of submissions about the first of two issues in the proceedings, namely whether there was an adequate explanation for Mr Violi's delay. (There were two relevant delays: in filing a defence and in applying to set aside the default judgment.) The later statement should therefore be understood as saying that Mr Violi would not be able to "make out a case" on the issue of delay if the primary judge disbelieved him on his oath, and not that his application to set aside the default judgment must fail. That interpretation is consistent with the correct legal position: the Court's jurisdiction to set aside a default judgment does not depend solely on an adequate explanation for delay. [1] 2. After addressing the primary judge on the strength of Mr Violi's proposed defence, counsel for the Bank submitted that her Honour had to weigh up the strength of the defence against the issue of delay. Counsel submitted that there was no doubt that Mr Violi had known about the Statement of Claim since July 2013, at which time he should have moved straight away to set aside the judgment. Counsel submitted that her Honour needed to assess whether she was satisfied that the Statement of Claim did not come to Mr Violi's attention at some earlier point. He submitted that her Honour should find, as a matter of fact, that Mr Hopkins actually affixed the Service Documents and the letter from the Bank's solicitors to the door of the residence on the Lake Wyangan property on 8 November 2012 and that it would then be necessary for her Honour to assess whether those documents did in fact come to the attention of Mr Violi at some point between 8 November 2012 and July 2013. He said that her Honour did not need to make an adverse credit finding, but merely had to assess whether or not the Statement of Claim came to Mr Violi's attention at some point earlier than July 2013, and that he had simply not done anything about it or forgotten about it. 3. Counsel for the Bank pointed out that the evidence demonstrated that the Service Documents were posted and were affixed to the door of the residence. There was no evidence from Mr Violi's son or from the cleaning lady as to whether or not either of them had received the Service Documents. Counsel for the Bank invited her Honour to draw an inference that the evidence of Mr Violi's son and the cleaning lady would not have assisted Mr Violi, since there was no suggestion that they were not available to be called. Mr Violi was given the opportunity by the adjournment to adduce evidence that went to the issue of service. Counsel pointed out that the evidence about Mr Violi's son and the cleaning lady was given in the witness box for the first time and not appear in his affidavits. Counsel for Mr Violi had nothing to say by way of reply. Reasons of the Primary Judge 1. In her reasons, given ex tempore, the primary judge said that the application was made under r 36.16 of the UCPR. Rule 36.16(2) provides that "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)". However, the primary judge then said that "the relevant rule permits the setting aside of a default judgment on sufficient cause being shown". That may be a reference to r 36.15(1), which provides that "a judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith". Mr Violi's notice of motion filed on 21 October 2013 did not specify the rule pursuant to which relief was sought. However, the appeal proceeded on the basis that the relevant rule was r 36.15. 2. Her Honour observed that the exercise of the discretion to do so involves looking at the whole of the relevant circumstances and balancing the competing interests of the plaintiff and the defendant to determine whether, in the interests of justice, the defendant should be permitted to contest the plaintiff's claim. Her Honour said that the factors that are relevant to the exercise of that discretion include, first, whether the defendant had shown that there was a prima facie good defence on the merits and, second, whether justice required acceptance of the excuse for failing to file a defence in accordance with the UCPR. Her Honour said that the failure to establish one relevant matter did not lead to the automatic refusal of relief. 3. In dealing with the question of a defence, the primary judge considered that the draft defence proposed by Mr Violi raised issues that were relevant to a defence under the Contracts Review Act. Her Honour found that, when the proposed defence was read with Mr Violi's affidavits, it set out an arguable defence to the Bank's claim. 4. In relation to Mr Violi's explanation for the failure to file a defence in accordance with the UCPR, her Honour observed that it was common ground that the Statement of Claim had not been served personally. Her Honour found, however, that the Bank had complied with the Substituted Service Order by sending the Service Documents by ordinary post and by fixing a copy to the front door of the residence on the Lake Wyangan property. Her Honour did not accept Mr Violi's evidence that he had not received the Statement of Claim until July or August 2013. Her Honour was satisfied that he did not have a reliable recollection of when and how he was first made aware of the Proceedings. Her Honour said that there was conflicting evidence from him in relation to that issue. 5. The primary judge accepted that a copy of the Statement of Claim had been affixed to Mr Violi's front door. While Mr Violi said that he did not receive a copy and that his son and the cleaning lady had told him that they had not seen the documents, there was no evidence from either the son or the cleaning lady, despite the adjournment of the proceedings to enable Mr Violi to put on further evidence in relation to his explanation. The failure to call evidence from Mr Violi's son and the cleaning lady was not explained. Her Honour therefore inferred that their evidence would not have assisted him. 6. The primary judge then said that counsel for Mr Violi conceded that, if her Honour "made such a finding", Mr Violi's application must fail. That must be understood as a reference to a finding that her Honour did not believe Mr Violi that he did not receive the Statement of Claim before July or August 2013. Her Honour did not accept Mr Violi's excuse for not having filed a defence in time. Her Honour was therefore satisfied that he had not shown sufficient cause for the making of an order to set aside the default judgment. Issues before this Court 1. In his proposed notice of appeal, Mr Violi has foreshadowed that the grounds upon which he will rely, if leave were to be granted, are that the primary judge erred in: 1. finding that he had been served in accordance with the Substituted Service Order; 2. failing to find that the evidence did not establish that it was not possible to deliver the Service Documents to a person over the age of 16 years, as was required by the Substituted Service Order; 3. failing to find that the evidence did not show when and how the Statement of Claim was served, as required by r 16.6(2)(f) of the UCPR; 4. failing to find that Mr Violi was entitled to have the default judgment set aside ex debito justitiae; 5. failing to find that the default judgment had been given or entered irregularly; 6. determining the application to set aside the default judgment on the basis of a misunderstanding of a concession made by counsel. The draft notice of appeal also asserts that the primary judge's exercise of discretion miscarried in that her Honour erred in: determining the application upon the basis of a misunderstanding of a concession by counsel; disposing of the application to set aside the default judgment on the basis that it must fail in the absence of an explanation for the non-filing of a defence; finding that Mr Violi did not have an explanation for the non-filing of a defence merely because he did not have a reliable recollection of when and how he first became aware of the proceedings. 1. The Bank contended that, since none of those matters was raised before the primary judge, it is not open to raise them before this Court. In addition, the Bank has foreshadowed that, if leave were to be granted, it would rely on a notice of contention. It will contend that the decision of the primary judge should be affirmed on the ground that her Honour erred in: 1. holding that Mr Violi had disclosed a reasonably arguable defence; 2. failing to hold that several matters particularised by the Bank meant that Mr Violi did not have a reasonably arguable defence; 3. failing to hold that the merits of the defence, when combined with the delay in seeking to set aside the default judgment, did not warrant the setting aside of the default judgment. 1. The President has directed that all argument in support of the appeal and the notice of contention, assuming that leave to appeal were granted, is to be heard concurrently with the application for leave to appeal. The Court has now heard argument and has had the assistance of written submissions on behalf of Mr Violi and the Bank. Legislative Framework 1. Under r 10.1(1) of the UCPR, a party that files a document must, as soon as practicable, serve copies of the document on each other active party. Under r 10.20(2)(a), except as otherwise provided by the UCPR, an originating process in the District Court must be personally served. Rule 10.21(1) provides that personal service of a document on a person is effected by leaving a copy of the document with the person or, if the person does not accept the copy, by putting the copy down in the person's presence and telling the person the nature of the document. Clearly, there was no personal service on Mr Violi. 2. Rule 10.14 deals with substituted and informal service. Rule 10.14(1) provides that, if a document that is required to be served on a person cannot practicably be served on the person or cannot practicably be served on the person in the manner provided by law, the court may order that, instead of service, such steps be taken as are specified in the order for the purpose of bringing the document to the notice of the person concerned. An order under r 10.14(1) may direct that the document be taken to have been served on the person concerned on the happening of a specified event or on the expiry of a specified time. Service in accordance with r 10.14 is taken to constitute personal service. 3. Under r 14.3 of the UCPR, the time limit for a defendant to file a defence is 28 days after service on the defendant of the statement of claim, or such other time as the court directs for the filing of a defence. Rule 16.2(1)(a) provides that a defendant is "in default" for the purposes of Pt 16, which deals with default judgment, if the defendant fails to file a defence within the time limited by r 14.3 or within such further time as the court allows. 4. Under r 16.3(1), if a defendant is in default, the plaintiff may apply for judgment to be given under Pt 16 against the defendant in default. Under r 16.3(1A), an application under r 16.3(1) may be dealt with in the absence of the parties and need not be served on the defendant. Under r 16.3(2), unless the court otherwise orders, an application for judgment to be given under Pt 16 must be accompanied by: * an affidavit of service of the statement of claim; and * an affidavit in support of the application. The essence of Mr Violi's complaint is that the affidavit of service and the affidavit in support relied on by the Bank in its application for default judgment did not satisfy the requirements of the UCPR. 1. Rule 16.6(1) of the UCPR provides, relevantly, that if the plaintiff's claim against a defendant in default is for a debt or liquidated claim, judgment may be given for the plaintiff against the defendant for a sum not exceeding the sum claimed, as well as for interest up to judgment and costs. Rule 16.6(2)(f), which is critical for present purposes, provides that the affidavit in support must state "when and how the originating process was served on the defendant". The UCPR prescribes Form 38 for use in connection with r 16.3 and r 16.6. Form 38 is a form of notice of motion, which includes the form for the affidavit in support. The form of affidavit in support addresses six matters as follows: 1. the capacity of the person making the affidavit; 2. the source of the deponent's knowledge of the matters contained in the affidavit concerning the debt; 3. service of the statement of claim; 4. the amount owing to the plaintiff at the time of the commencement of the proceedings; 5. whether payments have been made since the commencement of the proceedings; and 6. the amount owing to the plaintiff at the date of swearing the affidavit. 1. Paragraph 3 in the form of affidavit which is part of Form 38 is as follows: The statement of claim was served on the [#first] defendant [specify mode of service (eg #personally #by post #by the registry by post #in accordance with the order for substituted service)] on [date]. [#The source of my knowledge is the affidavit of service of (name and date).] The source of the irregularities alleged by Mr Violi appears to have been the suggested manner of completion of the affidavit contained in Form 38. The reference to "in accordance with the order for substituted service" was not intended as suggested wording for the affidavit. Rather, it was intended to indicate to the drafter that the affidavit should assert facts that demonstrated that an order for substituted service had been satisfied. 1. Rule 35.8 of the UCPR deals with affidavits of service. Under r 35.8(1), an affidavit of service of a document that has been served must clearly identify the document, but must not annex a copy of the document unless the document has not been filed. Under r 35.8(2), an affidavit of service must contain a statement as to when, where, how and by whom service was effected. In addition, it must contain a statement as to what, if anything, the person to whom the process was delivered said on the occasion of service concerning the service or the subject matter of the proceedings. Whether Mr Violi May Raise the Irregularities Relied on by Him 1. Mr Violi contends, through senior counsel, that there were three irregularities in the obtaining of the default judgment: 1. The affidavits do not satisfy the requirement of r 16.6(2)(f) of the UCPR that the affidavit in support must state when and how the originating process was served on the defendant, or the requirement of r 35.8(2)(a) that an affidavit of service must contain a statement as to when, where, how and by whom service was effected. 2. The affidavit of Mr Phillip Andersen, the affidavit of Ms Maria Maccarrone and the affidavit of Mr Kerry Hopkins, even coupled with Mr Hopkins's oral evidence, do not in fact establish (as required by the Substituted Service Order) that it was "not possible" to deliver the Service Documents to a person over the age of 16 years residing at the Lake Wyangan property and that it was "not possible" to leave the Service Documents in the mailbox for the Lake Wyangan property, so as to trigger the possibility of affixing the Service Documents to the "front page" of the property, or the front door, if those words are be construed in that way. 3. In any event, there was a failure to comply with the prerequisite of the Substituted Service Order that the Service Documents be affixed to "the front page", on the basis that that phrase should be construed as a reference to the front gate, in the light of the reference to "the front gate" in order 3(a) of the Substituted Service Order concerning service on Dennis Violi. 1. The Bank objects to those contentions being raised in the light of the concessions made before primary judge. It says that the regularity of the entry of judgment was conceded and that service in accordance with the Substituted Service Order was also conceded. The Bank also says that, even if this Court were satisfied that it is open to Mr Violi to raise irregularity in the entry of the default judgment, and even if there was in fact an irregularity, there is still a residual discretion under r 36.15(1) of the UCPR, which contemplates, relevantly, that a judgment may be set aside "on sufficient cause being shown" if the judgment was given or entered irregularly. It says that, in circumstances where the further evidence demonstrates that there was in fact no irregularity because there was compliance with the Substituted Service Order, the Court would, in the exercise of its discretion, decline to set the default judgment aside. 2. A party will be bound by the way in which the party's case is conducted. Except in the most exceptional circumstances, it would be contrary to principle to allow a party, after a case has been decided against that party, to raise a new argument that, whether deliberately or by inadvertence, the party failed to put during the hearing, having had the opportunity to do so. [2] 3. A party who seeks to advance for the first time on appeal a new ground that was not taken at trial will be precluded from doing so if the new ground could possibly have been met by calling evidence at the hearing. Further, if the respondent might have conducted the case differently at trial, had the new ground been raised below, the appellant will also be precluded from advancing the new ground. A party does not have a right to insist that a new point be decided on appeal simply because all of the facts have been established beyond controversy or the point is one of construction or of law. Rather, it remains a question of whether the appellate court considers that it is expedient, and in the interests of justice, to entertain the new point. [3] 4. It would not be in the interests of justice to permit Mr Violi to repudiate, on appeal, the stance that he adopted, through his counsel, at the hearing of the proceedings in the District Court. The interests of justice will not normally permit a party who has elected to fight on one basis, and lost, to be allowed to fight on another basis on appeal. The Bank may well have been able to adduce further evidence on the question of whether the prerequisites for substituted service in the Substituted Service Order were satisfied. Having regard to the concession made by counsel for Mr Violi in the proceedings in the District Court, he should not now be permitted to raise in this Court the question of whether or not, as a matter of fact, the prerequisites of the Substituted Service Order were satisfied. 5. While the affidavits relied on by the Bank in support of the application for the Substituted Service Order are before this Court, the motion seeking that order is not. The inference to be drawn is that the form of the Substituted Service Order was proposed on behalf of the Bank. Whatever the source, the form of the Substituted Service Order is to be deplored. The cascading nature of the orders (in particular, the uncertainty inherent in the words "if this is not possible") is such that it would be indeed impossible to determine whether the requirements for substituted service have been satisfied. 6. Nevertheless, irrespective of the form of the Substituted Service Order, counsel for Mr Violi unequivocally accepted before the primary judge that there had been service in accordance with it. If that concession had not been made, it may have been open to the Bank to adduce further evidence as to whether it was "not possible" to serve a person over the age of 16 years residing at the residence of the Lake Wyangan property and whether it was "not possible" to leave the Service Documents in the mailbox for the Lake Wyangan property. There may also have been evidence to enable meaning to be given to "the front page" as being applicable to the front door, rather than the front gate. Misunderstanding of the Concession 1. As I have said above (at [39]), the concession made by Mr Violi's counsel should be understood as saying that, if the primary judge disbelieved him on his oath, then he would not be able to make out a case on the issue of delay. The primary judge therefore misconstrued that concession when her Honour described it as conveying that "if I made such a finding [namely, that Mr Violi had not provided an adequate explanation for delay], [Mr Violi's] application must fail". That interpretation of the concession was critical to the primary judge's conclusion that the default judgment should not be set aside, such that the primary judge's misconstruction of the concession caused her Honour to fall into error. For that reason, and for the further reasons given below, this Court should re-exercise the discretion whether to set aside the default judgment. Judgment was Entered Irregularly 1. The question of whether or not there was any irregularity in the entry of judgment, by reason of the failure to satisfy rr 16.6(2)(f) and 35.8(2)(a) of the UCPR, involves a pure question of law. Accordingly, Mr Violi should be permitted to raise that matter as a relevant irregularity. 2. Mr Andersen purported to comply with r 16.6(2)(f) by saying that the Service Documents were served on Mr Violi "in accordance with the order for substituted service on … 25 October 2012 and 8 November 2012". Mr Andersen said that the source of his knowledge of that assertion was the affidavit of Ms Maccarrone of 26 October 2012 and the affidavit of Mr Hopkins of 12 November 2012. 3. Mr Hopkins's affidavit of 12 November 2012 deposed as follows: 4. On 8 November 2012 at 4.25 pm, I served [Mr Violi] with the following documents: ● letter from [the Bank's solicitors] dated 25 October 2012 addressed to the Occupier …; ● Statement of Claim …; ● [the Substituted Service Order]. 5. I served the documents by personally affixing them to the front door of the premises at the given address of [the Lake Wyangan property] … The affidavit does not attempt to deal with the requirements of the Substituted Service Order that it not be "possible" to deliver the Service Documents to a person over the age of 16 years residing at the Lake Wyangan property or to leave the Service Documents in the mailbox for the Lake Wyangan property. 1. Rules 16.6(2)(f) and 35.8(2)(a) of the UCPR require that the affidavit in support of an application for default judgment and the affidavit of service state facts that demonstrate that service has been effected, either in accordance with the UCPR or in accordance with an order for substituted service. Neither the affidavit of Mr Andersen, nor the affidavit of Mr Hopkins, satisfies that requirement. The language of r 16.6(2)(f) and r 35.8(2)(a) requires a statement of facts, not a legal conclusion. The stated facts must demonstrate that the Statement of Claim was served on Mr Violi in accordance with Pt 10 of the UCPR. 2. Asserting that the Statement of Claim and the Substituted Service Order were served on Mr Violi "in accordance with the order for substituted service" does not state when and how those documents were served on Mr Violi. Mr Andersen says that the source of his knowledge that those documents were served in accordance with the Substituted Service Order was, relevantly, the affidavit of Mr Hopkins. However, that affidavit does not establish that the documents were served in accordance with the Substituted Service Order. Mr Hopkins simply asserts that he served the documents by affixing them to the front door of the residence on the Lake Wyangan property. That was not service in accordance with the Substituted Service Order unless it was first shown that it was not possible to deliver the Service Documents in a sealed envelope to a person over the age of 16 years residing at the Lake Wyangan property and that it was not possible to leave the Service Documents in the mailbox for the Lake Wyangan property. 3. There is good reason for requiring that information. The entry of default judgment under the relevant provisions of the UCPR is a purely administrative function. It is essential that the officer of the court exercising that function be satisfied that there has been service in accordance with the UCPR. The UCPR requires either personal service, in the way described above, or service in accordance with an order for substituted service. Merely asserting personal service or service in accordance with a substituted service order does not establish that there has in fact been service in accordance with the UCPR. The material relied on by the Bank for the entry of default judgment did not satisfy the requirements of the UCPR. Accordingly, the judgment was entered irregularly. Strength of the Proposed Defence 1. In his proposed defence, Mr Violi relies on various matters as entitling him to relief under the Contracts Review Act. Before stating those matters, it is desirable to say something about the Contracts Review Act. 2. Section 7 of the Contracts Review Act provides that, where the court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the court may, if it considers it just to do so, do one or more of the following: * refuse to enforce any or all of the provisions of the contract; * make an order declaring the contract void, in whole or in part; * make an order varying, in whole or in part, any provision of the contract. Under s 9, in determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the court is required to have regard to the public interest and to all the circumstances of the case. 1. More particularly, the court must have regard, to the extent that they are relevant to the circumstances, the matters set out in s 9(2), including, relevantly for present purposes, the following matters: 1. whether or not there was any material inequality in bargaining power between the parties to the contract; 2. whether or not, prior to or at the time the contract was made, its provisions were the subject of negotiation; 3. whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract; 4. whether or not any party to the contract was not reasonably able to protect his or her interests because of his or her age or the state of his or her physical or mental capacity; 5. the relative economic circumstances, educational background and literacy of the parties to the contract; 6. whether or not, and when, independent legal or other expert advice was obtained by the party seeking relief under this Act; 7. the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect; and 8. whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act by any other party to the contract, by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract. 1. In his proposed defence, Mr Violi relies on the following circumstances as entitling him to relief under the Contracts Review Act: 1. there was a "material irregularity" [sic] between the bargaining power of Mr Violi and the Bank; 2. prior to and at the time it was signed, the guarantee had not been and was not the subject of negotiations between Mr Violi and the Bank; 3. in the circumstances in which the guarantee was signed, it was not reasonably practicable for Mr Violi to negotiate for the alteration of, or to reject any of, the provisions of the guarantee; 4. at the time he signed the contract, Mr Violi was not reasonably able to protect his interests by reason of his educational background and literacy; 5. independent legal or other expert advice was not obtained by Mr Violi prior to entering into the guarantee; 6. the provisions of the guarantee and their legal and practical effect were not fully or accurately explained by any person to Mr Violi at or before the time he signed the guarantee and he did not fully understand the provisions and their effect; 7. undue influence, unfair pressure and unfair tactics were exerted on or used against Mr Violi by the Bank in that the guarantee was brought to him by a servant or agent of the Bank accompanied by his brother in a field of the Lake Wyangan property whilst he was engaged in farming work and he was required by the Bank to sign the document instanter. 1. Under r 36.15(1) of the UCPR, the Court has a discretion, notwithstanding that a judgment was entered irregularly, as to whether or not to set the judgment aside. As the case was conducted in the District Court, there were two questions involved in the exercise of that discretion. The first was whether there was any explanation for the delay in moving to set aside the judgment. The second question was whether the defendant has a reasonably arguable defence. Those two matters must be weighed in the balance to determine whether the merits and strength of the proposed defence outweigh any explanation for the failure to file a defence in time and for any delay in applying to set aside the default judgment. Ultimately, the question is whether it is in the interests of justice to allow the party seeking to set aside the default judgment to be permitted to defend the proceedings on the merits. [4] 2. In the present case, the trial judge rejected the explanation proffered by Mr Violi for failing to file a defence and for delaying in making an application to set the default judgment aside. Accordingly, if this Court is to re-exercise the discretion under r 36.15(1), it must do so on the basis that there has been no satisfactory explanation for failing to file a defence and for delaying in making an application to set the default judgment aside. 3. The material presently before the Court, in the light of the rejection of Mr Violi's evidence by the primary judge, indicates that it is more probable than not that the Statement of Claim came to Mr Violi's attention on or shortly after 8 November 2012, after Mr Hopkins affixed the envelope to the front door of the residence on the Lake Wyangan property. Mr Violi must be taken to have ignored the Statement of Claim when it came to his attention. 4. As referred to above (at [13]), there is also material before the Court indicating that, in April 2013, Mr Violi was personally served with a bankruptcy notice, which would have disclosed to him that judgment had been entered against him in the District Court. The evidence was hearsay, but it was not objected to and was not contested. A bankruptcy notice calls for payment of a judgment debt. However, Mr Violi was not cross-examined about receipt of a bankruptcy notice. In any event, Mr Violi himself accepted in his affidavit that he became aware of the default judgment when he was informed about a bankruptcy petition seeking the sequestration of his estate in July or August 2013. Even then, he waited until 21 October 2013 before filing his notice of motion seeking to have the default judgment set aside. It is true, however, that Mr Violi deposed that he engaged consultants between August and October 2013 to pursue a possible settlement with the Bank, which evidence the primary judge did not refer to. 5. Nonetheless there is no adequate explanation for the delay on Mr Violi's part in taking steps to have the default judgment set aside, once he became aware of it. At worst, the delay was from April to October. In the absence of any other evidence, an inference must be drawn that he was aware of the judgment from about April 2013. However, he did not move for the judgment to be set aside until October of that year. Even taking into account his engagement of consultants in August 2013, his delay in applying to have the default judgment set aside was at least four months. 6. It is also relevant to have regard to any explanation for failure to file a defence. This Court must proceed on the basis that Mr Violi has proffered no explanation for his failure to file a defence, in circumstances where the trial judge concluded that she did not believe his evidence that he had no recollection of having received or otherwise having seen a copy of the Statement of Claim prior to July 2013. In the absence of such evidence, the inference is open that Mr Violi became aware of the Statement of Claim shortly after it was attached to the front door of his residence. There has been no explanation as to why no defence was filed. 7. In circumstances where there is no adequate explanation for the failure to file a defence or the delay in seeking to have default judgment set aside once it came to the attention of Mr Violi, the interests of justice require that he demonstrate a defence that has reasonably strong prospects of success. The question is whether the merits and strength of the proposed defence outweigh the absence of an adequate explanation for the failure to file a defence in time and for the delay of at least four months after the default judgment came to Mr Violi's attention before applying to set it aside. 8. The form of guarantee signed by Mr Violi is headed "Signature of Guarantors". It has a box marked "IMPORTANT" which says "BEFORE YOU SIGN: READ OUR USUAL TERMS AND CONDITIONS, INCLUDING ALL THE GUARANTEE PROVISIONS". In the box it is also stated that "THINGS YOU MUST KNOW" include that you "[u]nderstand that, by signing this guarantee, you may become personally responsible instead of, or as well as, the Debtor [Hillbrook] to pay amounts which the Debtor owes". Mr Violi also signed a document addressed to the Bank in which he acknowledged that the Bank has granted, or may grant from time to time, accommodation to Hillbrook not exceeding an aggregate amount of $1,500,000 plus all other liabilities under the Master Agreement against the security of "my GUARANTEE". 9. In evidence before the trial judge, Mr Violi accepted that no one had forced him to sign the guarantee, that he had previously guaranteed obligations of Hillbrook and that he from time to time signed documents as a director of Hillbrook in order to help his brothers. Further, he also accepted that he had previously had legal advice as to the nature of a guarantee and understood the concept of a guarantee, that he had numerous commercial and property interests and that he was a director of numerous companies, many of which had been set up by his accountant. 10. The circumstances deposed to by Mr Violi in his first affidavit must be accepted, for the present purposes, at face value. That is to say, the documents that he signed were presented to him while he was working in his vineyard. He had no opportunity at that time to obtain legal advice. He had no opportunity to reflect on the obligations that he would be undertaking by signing the documents. Nobody explained to him that he was potentially liable for an amount of at least $1,500,000, although he signed a document that unequivocally disclosed that fact to him. 11. While Mr Violi was not involved in the day-to-day operation of Hillbrook, the discussion that he deposed to suggests that the acquisition of harvesters by Hillbrook came as no surprise. Thus, he said in his affidavit that Mr Millard said words to the effect that: "You are signing for the harvesters." He also said that he believed that he was simply assisting his brothers "to obtain the harvesters". Thus, Mr Violi did not assert that he knew nothing about the proposal for Hillbrook to acquire harvesters with finance obtained from the Bank. While he was not involved in the day-to-day operation of Hillbrook, he was a 25 per cent shareholder of the company. 12. In all of the circumstances, I do not consider that Mr Violi has shown that he has reasonable prospects of success in his defence. On the other hand, had there been a good explanation for his failing to file a defence and for the delay in seeking to set aside the default judgment after he became aware of it, it may have been appropriate for him to be afforded the opportunity of raising the defence. However, in the absence of any adequate explanation for those matters, I do not consider that the interests of justice require that the default judgment be set aside. Conclusion 1. Mr Violi accepted that, if leave were to be granted and the appeal allowed, the only relief that should be granted would be to set aside the decision of the primary judge and substitute an order that the judgment entered on 9 January 2013 be set aside. He accepted that, since the matters on which he sought to rely in this Court had not been ventilated before the District Court, this Court should not interfere with the orders for costs made against him by the District Court. 2. The application for leave to appeal was filed out of time. The Bank does not oppose the extension of time for filing the application for leave to appeal. In the light of the issues raised by Mr Violi, leave to appeal should be granted and Mr Violi should be directed to file, within seven days, a notice of appeal in the form of the amended draft notice of appeal contained in the application book. 3. However, for the reasons indicated above, I would dismiss the appeal. I would order Mr Violi to pay the Bank's costs of the application for leave and of the appeal. 4. BERGIN CJ in Eq: I have had the benefit of reading Emmett JA's draft judgment in this matter. I agree with his Honour's conclusion (and the reasons therefor) that the default judgment entered against Mr Violi was entered irregularly. I respectfully disagree with Emmett JA's conclusions in respect of the outcome of the appeal for the reasons that follow. The issue of delay 1. The first aspect of the issue of delay with which I should deal is whether there was a concession that service of the Statement of Claim had been effected in compliance with the Substituted Service Order. 2. Emmett JA has concluded that Mr Violi's counsel unequivocally accepted that there had been service in accordance with the Substituted Service Order (the Order) (at [64]). The first extract of counsel's statements (at [21]) includes an acceptance "at face value" (whatever that might mean in the circumstances) that the Order had been complied with. The primary judge interpreted this statement to mean that Mr Violi did not concede "service" because the method of compliance with the Order was not known. The primary judge said that this was "fair enough" [White 61]. The repetition by Mr Violi's counsel that "at face value" there was an acceptance that there was "an assertion" that the Order had been complied with and "to that extent no issue is taken" in relation to service was rather unhelpful. Clearly Mr Violi was claiming that he had not been served with the Statement of Claim. To concede or accept that there is no issue that an assertion was made that compliance had occurred is very different to a concession or acceptance that there is no issue that service had been effected in compliance with the Order. It was the former rather than the latter that was conceded. In my view there was some equivocation as to whether there had been service in accordance with the Order. In any event, the primary judge did not refer to any concession in this regard and found that service was effected in accordance with the Order [White 7]. 3. The second aspect of the matter was the nature of Mr Violi's counsel's concession in respect of the outcome of the application to set aside the default judgment if the primary judge did not accept Mr Violi's explanation. 4. There were two relevant explanations in respect of delay. One was the explanation for not filing a Defence within 28 days of the service of the Statement of Claim. The other was the explanation in respect of the delay in bringing the application to set aside the default judgment. 5. The explanation in respect of the failure to file a Defence was based on Mr Violi's evidence that he had not been served with the Statement of Claim. The primary judge did not accept Mr Violi's evidence in relation to "not having received the documents until July or August 2013" [White 8]. Her Honour was satisfied that Mr Violi did not have a "reliable recollection" of when and how he was first made aware of the proceedings. Her Honour did not accept Mr Violi's "excuse for not having filed a defence in time" [White 8]. However her Honour did not make positive findings as to when and how service was effected. 6. The explanation of the delay in filing the application to set aside the default judgment was based in part on the same evidence (that he had not been served with the Statement of Claim). However it was also based on other evidence about what happened in August and September 2013. Mr Violi's unchallenged affidavit evidence was that he employed consultants (Mr Jay in August 2013 and Mr Prestia in September 2013) to negotiate with the Bank and that those negotiations were not concluded until 3 October 2013 [White 37]. The application was made by Notice of Motion dated 15 October 2013. 7. It is helpful to set out the relevant passage of the judgment in which the primary judge refers to the concession. It is as follows [White 8]: I do not accept the evidence of the fourth defendant in relation to not having received the documents until July or August 2013. I am satisfied that he does not have a reliable recollection of when and how he was first made aware of these proceedings. There is conflicting evidence from him in relation to this issue. In his first affidavit the fourth defendant said that he did not recall having seen or received the statement of claim before July 2013. In his second affidavit he said he first became aware of the statement of claim in August 2013 when he was contacted by his previous solicitor. In cross-examination he said he did not recall how he had received the statement of claim. He thought it might have been through his brother, Dennis, who is the second defendant to these proceedings. As I have said, one copy of the statement of claim was affixed to his front door. He lives with his son and has a cleaning lady. He says he did not receive that copy, and his son and the cleaning lady have told him that they have not seen the documents. However, despite this matter having been adjourned today to enable the fourth defendant to put on evidence in relation to his explanation, there is no evidence from either of them and the failure to call that evidence has not been explained. I infer the evidence would not have assisted the fourth defendant. Counsel for the fourth defendant conceded that if I made such a finding the fourth defendant's application must fail. I do not accept the fourth defendant's excuse for not having filed a defence in time. I am satisfied that the fourth defendant has not shown sufficient cause for the making of the order and I declined to set aside the default judgment. [Emphasis added] 1. It is appropriate to say something about the adverse inference the primary judge drew against Mr Violi which appeared to be pivotal to her Honour's reasoning in not accepting his explanation of delay (his denial that he had been served with the Statement of Claim). The adverse inference was drawn because of the absence of evidence from the cleaning lady and Mr Violi's son. 2. Mr Violi's affidavit of 16 December 2013 included evidence that neither his son nor his cleaning lady "or any other person" had indicated to him that any documents had been "affixed to the front door" [White 42]. This evidence was not objected to by counsel for the Bank [White 70]. Counsel for the Bank elicited additional evidence in cross-examination from Mr Violi in respect of these matters. Mr Violi was asked what was said by the cleaning lady and what was said by his son [White 85-86]. Mr Violi said that the cleaning lady was only present for two hours per week and had said that no one had ever come to the farm while she was there and "no paperwork's ever been left here" [White 86]. Mr Violi was cross-examined about the conversation with his son as follows [White 86]: Q. What about your son? Did you make inquiries of him? A. Yes, I asked him; yes. Q. What did he -- A. He's always with me. We leave for work together because our properties where we work are 30 kilometres away. We go to work and we come home together. Q. What did he say to you about -- A. He said he's never seen any documents or he's never seen anyone that's come up to the house. 1. Although counsel for the Bank suggested to Mr Violi that he had not put the conversation with the cleaning lady in his affidavit it was not suggested to Mr Violi that the evidence that had been elicited from him in cross-examination was inaccurate or false [White 86]. In the circumstances it is understandable that such additional evidence was not led. However there was no submission on this appeal that her Honour fell into error in drawing this adverse inference. Rather the focus was on the nature of the concession made by counsel for Mr Violi and the submission that the primary judge misconstrued it. 2. The passage of the transcript in which counsel made the concession is as follows [White 94]: Your Honour, there are two issues and the first issue is adequate explanation for delay, and the second issue is whether or not there is a reasonably arguable defence. Your Honour, as to the first issue, that is a credit issue. In my respectful submission, for your Honour not to be satisfied as to a reasonable explanation for delay, you would have to disbelieve Mr Violi on his oath that he had not received the document or had it drawn to his attention. If your Honour disbelieves him on his oath, it goes no further. I concede that at that point I am not able to make out a case. [Emphasis added] 1. At this point counsel was dealing with the issue of whether there was an adequate explanation for delay. The concession was that if her Honour did not accept Mr Violi's evidence in respect of that issue, counsel could not make out a case that there was a proper explanation for delay. This interpretation of the concession is supported by a statement made by counsel shortly thereafter that [at White 95]: If your Honour gets past that step and says your Honour is not persuaded on the balance of probability that he has not received it, then your Honour goes to the next step: Is there an arguable case? 1. I agree that there is possible ambiguity in this statement. However the interpretation is consistent with the correct legal position. The fact that the primary judge might not believe Mr Violi's evidence that he did not receive, or become aware of, the Statement of Claim until July 2013 does not mean that her Honour did not have to deal with the question of whether there was an arguable defence. 2. It is true that the two types of delay (in filing the defence and in seeking to set aside the judgment) were conflated in the evidence. Once the primary judge found that she did not accept the explanation for "failing to file a defence in time", her Honour did not go on to consider whether there was an explanation for the delay in seeking to set aside the default judgment. Her Honour made no mention of Mr Violi's unchallenged evidence that his consultants were negotiating with the Bank between August and October 2013 or the fact that it was only when those negotiations broke down that the application to set aside the default judgment was made. That was some evidence of the steps that Mr Violi took which went to the question of delay in bringing the application. However having regard to her Honour's rejection of the explanation of the delay in filing the defence "in time", that leaves the delay between January and August 2013 without a proper explanation. 3. There was still the question of whether in all the circumstances and having regard to the proposed defence, notwithstanding the absence of a proper explanation of the delay, the judgment should have been set aside. It is necessary to consider whether it is in the interests of justice to allow the party seeking to set aside the default judgment to be permitted to defend the proceedings: Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43]. However her Honour did not proceed to consider this matter because of her reliance on what she apprehended Mr Violi's counsel had conceded. 4. I agree with Emmett JA that the concession made by Mr Violi's counsel was limited to the issue of delay. I am satisfied that the primary judge misconstrued the concession made by counsel for Mr Violi. The proposed defence 1. The primary judge dealt with the question of whether there was an arguable defence before dealing with the explanation of the delay. Her Honour found that the draft pleading, read with Mr Violi's affidavits in support set out an arguable defence [White 7]. 2. Emmett JA has concluded that Mr Violi had not shown that he has reasonable prospects of success in his proposed defence (at [87]). I respectfully disagree with this conclusion. On such an application the Court is not required to embark upon the determination of the truth or otherwise of the issues of fact arising under the proposed defence. The test is whether the facts as sworn to by the defendant, if established at trial, would afford a defence as pleaded: Simpson v Alexander (1926) 26 SR (NSW) 296 at 301; Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 at 507. 3. The documents that Mr Violi was presented with for signature on the bonnet of the Bank Manager's motor vehicle out in the paddock appear to have been the signature page for guarantors, being "page 3 of 3" to the Master Agreement and an acknowledgement addressed to the Bank [White 250 and 253] (the Guarantee). Each of the signatures of the guarantors was witnessed by the Bank Manager. The acknowledgement signed by Mr Violi recorded that the Bank had "granted or may be granting from time to time" accommodation to Hillbrook Quest Pty Limited of amounts not exceeding an aggregate of $1.5 million against the security of Mr Violi's guarantee. 4. It was not suggested to Mr Violi that he had been provided with the "Usual Terms and Conditions" in respect of the Master Agreement and the guarantee. The guarantee is dealt with in clauses 35 and 36 of those Usual Terms [White 261-263]. The page of the Master Agreement in respect of the signature of the guarantors included a box entitled "Important" in which the guarantor is advised to do certain things before the guarantee is signed. Those things include reading the Usual Terms and Conditions; reading all other provisions of the Master Agreement and any Schedule; reading the information about "What it means to be a guarantor" in clause 36 of the Usual Terms; and obtaining independent legal advice and financial advice. That box also included a section entitled "Things You Must Know" which was in the following terms [White 250]: ● Understand that, by signing this guarantee, you may become personally responsible instead of, or as well as, the Debtor to pay amounts which the Debtor owes and our reasonable expenses in enforcing the guarantee. ● If the Debtor does not pay you must pay. This could mean you lose everything you own including your home. ● You may be able to withdraw from all the guarantee or limit your liability. Ask your legal advisor about this before you sign this guarantee. ● Your liability as guarantor extends to every contract we enter into with the Debtor. Those contracts may be made without further reference to you. This may increase the amount secured by the guarantee. However it will not increase the guarantee limit set out in clause 4 of this agreement. That guarantee limit can only be increased if you agree to the increase in writing. [Emphasis in original] 1. Although Mr Violi was cross-examined in relation to his evidence regarding the guarantee, it was not suggested to him that the evidence that he gave in his affidavit was inaccurate or false. That affidavit evidence was [White 35]: 6. On or about 31 October 2008 I was on a tractor at my own farm at Whitton spraying grapes. I observed a car drive up to the field in which I was spraying grapes. I observed two people get out of the car. The driver was Troy Millard the Manager of the local branch of the Commonwealth Bank of Australia. The other was my brother Dennis, the Second Defendant. 7. Dennis said to me "I have some papers I need you to sign. It is about the purchase of the grape harvesters" or words to that effect. I had previously discussed with my brothers in general terms a proposal to purchase grape harvesters for the Dunvarleigh property, although I cannot now recall the precise words that were used in such discussion. Troy Millard had some papers with him. He put them on the bonnet of his car and said "This is where you need to sign. You are signing for the harvesters." or words to that effect. 8. I cannot recall all of the words used in the conversation. However, I do recall that neither Troy Millard nor my brother advised me to seek independent legal advice. Nobody explained to me that I was potentially liable for an amount of $1,500,000. At no time did either of them explain to me that this was a guarantee. Neither of them explained to me the nature or effect of the document. I signed the document because I believed I was required to do so as a 25% shareholder in the First Defendant. I believed I was simply assisting my brothers to obtain he [sic] harvesters. 9. When I signed the papers, I was not given a copy of any other documents to read or to retain. I was not given a copy of the master agreement at that time. 1. In cross-examination Mr Violi agreed that he could read English [White 75]. However he said that his English was not "that good" [White 81]. He gave the following evidence in cross-examination [White 81-83]: Q. And if you had appreciated it was a guarantee at this time that you had been presented with it, you would have signed it. Correct? A. Well, I only had a minor share. I didn't have an equal share in the property, so if I was signing anything I would have always assumed that I am signing my share, 25%. Q. Yes, but you would be prepared to guarantee matters that were assisting your brother and his farm. Correct? A. Only for my share. Q. But you were prepared to sign guarantees in respect of that farm. That's right, isn't it? A. Well, it depends what they are. If they're explained to me, you know? You know, I've signed them before so -- Q. You've signed other guarantees before, have you? A. I've signed other guarantees at the bank but, or at the solicitor – not in the paddock. I've never signed documents in the paddock. Q. You understand what a guarantee is? A. I've gone to the solicitors in the past and they've gone through it, and explained it to me but every guarantee is different, of course. Q. But you've had advice -- A. I've learnt a lot since. I've learnt that there's joint and several, you know, is different to a personal guarantee. I mean, I'm learning a little bit as I go along. Q. When did you first have a guarantee explained to you by a solicitor? A. Who knows? 20 years ago maybe. Q. So you've understood the concept of a guarantee. A. Yes, but there's different guarantees. Q. What do you understand a guarantee to mean? A. Well, now I've learnt that joint and several means that if one partner doesn't pay, the other one has to. That's only something I've learnt in the last three months. Q. What did you learn 20 years ago when you were advised by a solicitor what a guarantee was? A. I can't recall that now. Q. Well, you can recall 20 years ago you were told by a solicitor what a guarantee was? A. Yes, I can recall that I was told but I can't remember what it was now. I can't explain it to you, what a guarantee is. Q. You can't do that now? A. No, I can't. Q. But you just told her Honour about joint and several -- A. I've learnt what joint and several is, what it means. Q. So you understand that concept? A. Joint and several I understand now, yes. 20 years ago I didn't understand either. 1. On the evidence presented in Mr Violi's application before the primary judge, there was clearly no explanation of the guarantee given to him as he paused from his labour in the paddock to sign "the papers" on the bonnet of the Bank Manager's car. There was no opportunity for Mr Violi to take independent legal advice or independent financial advice. There was no opportunity for Mr Violi to read the Usual Terms and Conditions of this particular guarantee. There was no opportunity for Mr Violi to seek to limit his liability as suggested in the section under the heading "Things You Must Know" on the signature page for guarantors on the Master Agreement. It is also clear that the Bank Manager knew that Mr Violi's brother had simply asked him to sign "some papers" about the purchase of the grape harvesters with no mention of a guarantee. 2. Clearly the Bank was concerned to caution prospective guarantors about the matters contained in the box headed "Important". If these facts are established at trial it would not be a situation of a mere oversight in explanation. It would appear to be a serious departure from the Bank's accepted practice. 3. In my view if these facts are established at the trial, they will afford Mr Violi a defence. Conclusion 1. I am satisfied that the primary judge erred in her interpretation of the concession made by Mr Violi's counsel and in the result failed to properly consider whether the default judgment should be set aside under UCPR 36.15(1). 2. The fact, if it were established at trial, that a Bank Manager would have such important documents executed on a car bonnet in a paddock without any proper explanation is a significant matter in determining whether there is "sufficient cause" to set aside the default judgment of over half a million dollars. Another matter of significance in this regard is the fact that the orders for substituted service were so deeply flawed. It is also appropriate to take into account the fact that the judgment was entered irregularly. 3. I am satisfied that it is in the interests of justice to allow the defendant in to defend the case on the merits. There is sufficient cause to set aside the default judgment. 4. The orders I propose are: 1. Grant leave to appeal. 2. Allow the appeal. 3. Set aside the orders made by Balla DCJ on 20 December 2013 dismissing Mr Violi's Notice of Motion. 4. Set aside the default judgment against Mr Violi entered on 9 January 2013. 5. The Bank is to pay Mr Violi's costs of the application for leave and of the appeal. 1. SACKVILLE AJA: I have had the advantage of reading in draft the judgments of Emmett JA and Bergin CJ in Eq. I am grateful to their Honours for setting out the history of the litigation and identifying the issues raised on the application for leave to appeal (argument on the appeal being heard concurrently with the leave application). I agree with much of what Emmett JA has written, but I agree with Bergin CJ in Eq that leave to appeal should be granted and the appeal allowed. In what follows, I use the same abbreviations as Emmett JA. 2. The proceedings demonstrate two matters in particular. The first is that care must be taken to frame orders for substituted service clearly and precisely. I agree with Emmett JA's observation (at [63]) that the form of the Substituted Service Order in the present case is to be deplored. The language used in the Order is imprecise and a recipe for uncertainty and disputation. 3. The second is that a plaintiff applying for judgment against a defendant in default must comply meticulously with the requirements of the UCPR. The reason for insistence on meticulous observance of those requirements, quite apart from the language of the relevant rules themselves, is that an application for default judgment under UCPR r 16.3(1) may be dealt with in the absence of the parties and need not be served on the defendant: UCPR r 16.3(1A). The requirement, for example, that a plaintiff seeking a default judgment on a claim for a debt or liquidated amount file an affidavit in support that complies with UCPR r 16.6(2) is intended to ensure that the officers of the court responsible for processing the application can ascertain that all preconditions for a default judgment have been satisfied. (See District Court Act 1973 (NSW) s 18FB; District Court Rules 1973 (NSW) r 43A.1) 4. The precise import of the concession made by Mr Violi's counsel in the District Court proceedings is not clear. I prefer the view that Mr Violi's counsel was conceding that service of the Statement of Claim had been effected in accordance with the Substituted Service Order and that, if Mr Violi's evidence as to when he first became aware of the Statement of Claim was not accepted, there was no reasonable explanation for his delay either in filing a defence or in filing an application to set aside the default judgment. That, however, does not put an end to Mr Violi's application for leave to appeal. 5. I agree with Emmett JA that it is open to Mr Violi in this Court to contend that the default judgment was obtained irregularly and thus it is open to the Court to set aside the default judgment pursuant to UCPR r 36.15(1). Mr Violi's contention is that the affidavit in support of the application for a default judgment did not comply with UCPR r 16.6(2)(f), which requires the affidavit to state when and how the originating process was served on the defendant. The argument was not advanced on Mr Violi's behalf in the District Court, but as it involves a pure question of law the principles stated in Coulton v Holcombe [1986] HCA 33; 162 CLR 1 at 8 (Gibbs CJ, Wilson, Brennan and Dawson JJ) do not prevent him relying on the argument in this Court: see Arnold v Forsythe [2012] NSWCA 18 at [88(vi)] (Sackville AJA, McColl and Young JJA agreeing). 6. Emmett JA has explained (at [68]-[70]) the respect in which the affidavit in support of the application for a default judgment failed to comply with UCPR r 16.6(2)(f). It follows that the default judgment is liable to be set aside pursuant to UCPR r 36.15(1), since it was given or entered irregularly: Arnold v Forsythe at [88(i)]. Since the discretion conferred by UCPR r 36.15(1) has been enlivened (albeit on a ground not put to the primary Judge) it falls to this Court to exercise the discretion afresh. 7. The absence of a satisfactory explanation for the delay in filing an application to set aside the default judgment counts heavily against making an order to set it aside. However, I respectfully agree with Bergin CJ in Eq that this Court should not set aside the primary Judge's finding that Mr Violi had made out an arguable defence to the claim advanced by the Bank. 8. There may be grounds for some scepticism about Mr Violi's evidence as to the circumstances in which he came to execute the guarantee on which the Bank relies. But although he was cross-examined, his evidence on these matters was not challenged. If that evidence were accepted at a trial, Mr Violi might well be able to make out a case for relief under the Contracts Review Act 1980 (NSW). Accordingly, in my opinion, he has shown that he has an arguable defence or at least an arguable claim for relief that would effectively prevent the Bank relying on the guarantee executed by Mr Violi. 9. The absence of a satisfactory explanation for delay does not necessarily preclude a defendant from obtaining an order setting aside a default judgment. In the final analysis, the question is whether it is in the interests of justice to allow the party seeking to set aside a default judgment to defend the proceedings on the merits: Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43]-[44] and cases cited there (McColl JA). While this is not a clear-cut case, on balance I think it is in the interests of justice that Mr Violi should be given an opportunity to defend the Bank's claim. 10. I agree with the orders proposed by Bergin CJ in Eq. I note that those orders do not disturb the costs order in the Bank's favour made by the primary Judge. ********** Endnotes 1. See Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43]-[44]. 2. See University of Wollongong v Metwally [1984] HCA 74; 158 CLR 447 at 483. 3. See Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645. 4. Dunwoodie v Teachers Mutual Bank Ltd at [43]. 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: 02 June 2015