Supreme Court New South Wales Medium Neutral Citation: McDonagh v Huxley (No 2) [2018] NSWSC 1317 Hearing dates: 20 August 2018 Date of orders: 20 August 2018 Decision date: 20 August 2018 Jurisdiction: Common Law Before: Lonergan J Decision: Notice of motion dismissed Catchwords: CIVIL PROCEDURE – application to set aside default judgment – where hearing complete – where applicant aware of proceedings at time of hearing – unexplained delay Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) rr 30.1, 36.16 Cases Cited: McDonagh v Huxley [2018] NSWSC 1316 Category: Procedural and other rulings Parties: Sharon McDonagh (First Plaintiff) McDonagh Management Pty Ltd (Second Plaintiff) Gregory Huxley (First Defendant) Vanessa Huxley (Second Defendant) Adam Huxley (Third Defendant) Rory McDonnell (Fourth Defendant/Applicant) DIB Lawyers Pty Ltd (Fifth Defendant) James Edward Spencer (Sixth Defendant) Jeffrey Dougal Dawson (Seventh Defendant) Vangory Holdings Pty Ltd (Eighth Defendant) Vangory Services Pty Ltd (Ninth Defendant) Benitch Investments Pty Ltd (Tenth Defendant) Ghassan Dib (Eleventh Defendant) Representation: Counsel: R Goodridge (Plaintiffs) K Nunn, solicitor (Third, Fifth and Eleventh Defendants) Fourth Defendant/Applicant (self-represented) R Kent, solicitor (Seventh and Tenth Defendants) Solicitors: Firths The Compensation Lawyers (Plaintiffs) JML Rose (First, Eighth and Ninth Defendants) Mullane & Lindsay Solicitors (Third, Fifth and Eleventh Defendants) Fourth Defendant/Applicant (self-represented) Kent Attorneys (Seventh and Tenth Defendants) File Number(s): 2014/311738 EX TEMPORE Judgment 1. The applicant, Rory Joseph McDonnell ("McDonnell"), was named as fourth defendant to proceedings brought by Sharon McDonagh and her superannuation company as set out in McDonagh v Huxley [2018] NSWSC 1316, a judgment regarding an adjournment application made today that I have refused. 2. McDonnell was one of a number of defendants to proceedings commenced by statement of claim in 2013, alleging that he and the other defendants were involved in a series of events and transactions that resulted in the plaintiff being, in effect, duped and relieved of $600,000. 3. The proceedings contained within the statement of claim (and amended statement of claim) have a number of counts forming the bases of the plaintiff's causes of action against the defendants. 4. The plaintiff claims damages in the sum of $600,000 plus interest and costs, as well as exemplary damages in the sum of $250,000 payable to each plaintiff. Initially there were also some restraining and other orders sought which by the time the matter proceeded to hearing before me in March and April 2018, were no longer pressed. 5. Default judgment was entered against McDonnell in February 2016 as there was no appearance and no defence ever filed on his behalf, and apparently no appearance on behalf of him at any of the listings of the matter over the period between service of the statement of claim upon him on 13 November 2014 and the date of entry of the judgment in February 2016. 6. McDonnell's notice of motion was filed on 20 June 2018 by a solicitor, Michael Foley, who at that time was apparently acting on behalf of McDonnell. That Notice of Motion sought 13 separate orders including that the whole proceeding be reopened and that he be given leave to file a defence, serve evidence, file cross-claims and add unidentified additional parties. On inquiry with McDonnell, who appears for himself today, the orders that are pressed are only orders 2, 3 and 9. Those orders seek the following: 2. That judgment entered against the fourth defendant on 16 February 2016 be set aside. 3. That costs order made against the fourth defendant on 16 February 2016 be set aside and, 9. That the Court grant a stay of the enforcement of the default judgment against the fourth defendant in this matter until this application to set aside the default judgment is heard and decided. 1. Unfortunately, a timetable set down by the Registrar on 28 June 2018 which included orders as to the dates by which affidavits must be filed and served, was not complied with by McDonnell. 2. This failure is against a background of McDonnell being aware, because he was sitting in court while this was occurring, that a hearing on the merits of all of the causes of action against the defendants was proceeding between 26 March the 6 April 2018. 3. Regardless of this, the evidence purported to be in support of the notice of motion prepared by McDonnell arrived in the email inbox of my chambers and those of the various solicitors acting for the parties in these proceedings, at between 3.12 and 3.25am this morning. 4. The notice of motion was filed after 4.10pm on 20 June 2018 after oral submissions were completed and judgment reserved. 5. This application, being made so late, and without appropriate evidence, has had the effect of further delaying completion of the matter. 6. I rejected the tender of the affidavit executed on 19 August 2018 because it was filed almost 1 month later than the date ordered by the Registrar. 7. I rejected the attempt to tender another affidavit dated 20 August because it was not sworn. It was accompanied by a folder of material, the relevance of which is unclear. 8. I received into evidence on the application a document headed "Defence" which is 25 pages long and was verified by McDonnell. That Defence was largely incomprehensible and included no less than six pages of material regarding a completely unrelated matter. The Defence does not make clear what defence McDonnell has, although oral submissions made by him suggest that his defence would be that he was merely "brokering" the transaction, not recommending the transaction nor attending settlement and not giving advice on the documents the plaintiffs signed. 9. The email addressed to my chambers and the parties accompanying the Defence outlines an argument that McDonnell holds a belief that judgment was entered by order of the Registrar in circumstances where he did not have delegated power to assess damages under UCPR 30.1, and that from the quantum of judgment, it seems that exemplary damages were included, and that is not a liquidated claim so the judgment is irregular and it should be set aside as of right. 10. Tendered on the application for my assistance is an Affidavit of the plaintiff's solicitor, which sets out the circumstances in which the default judgment was obtained. I have referred to this in my judgment regarding adjournment sought today (McDonagh v Huxley [2018] NSWSC 1316). There is nothing on the face of the affidavit of the plaintiff's solicitor or on the basis of the papers and orders on the Court file, that suggest to me that the judgment was irregularly obtained. 11. If it is the fact that Registrar Bradford did not have power to assess damages under UCPR 30.1, this would be a matter for judicial review and this is not a matter or issue before me on this application. 12. The chronology of the proceedings have been set out McDonagh v Huxley [2018] NSWSC 1316 and I will not repeat them for the purposes of this application. However, I note that the orders now sought by McDonnell as confirmed by him today in argument, are more limited and do not now involve any application to re-open the proceedings that I heard in March, April and June this year. 13. The bases upon which default judgment ought to be set aside requires the evidence demonstrate an arguable defence to the claim, provides an explanation for the default, provides an explanation for any delay in applying to set aside the judgment and satisfies the Court that its discretion should be exercised in favour of setting that judgment aside. 14. I have no evidence before me that provides an explanation for the default or for the delay in this application being made. On the contrary, what I have is evidence, and confirmation by McDonnell, that he was present in court while the hearing was proceeding before me in late March 2018 with full awareness that a default judgment had been entered against him in respect of his asserted role in this matter. 15. Between that time and 20 June 2018, it appears some effort was made to retain a solicitor. However, on the 20 June, Mr Foley said on record that he was "urging" McDonnell to prepare his affidavit as soon as possible, and that he expected an affidavit to be available from McDonnell later this morning (T482.11-13). 16. No affidavit from McDonnell arrived. Indeed no affidavit from McDonnell at all arrived until this morning shortly after 3am, two months later. 17. The affidavit proffered by Mr Foley on 20 June 2018 purportedly in support of the application, did not address any of the matters that would need to be considered before a default judgment could be set aside. Nothing was said about an arguable defence. Nothing was said about default or delay. Accordingly, that affidavit has been put to one side. 18. I permitted the draft Defence to be tendered on the application in an effort to understand and assess whether there was an arguable defence. The draft Defence demonstrates a lack of focus and no relevant identifiable substantive defence. It simply denies a number of the allegations and introduces confusing and apparently irrelevant material in respect of others. 19. In oral submissions, McDonnell said that, in broad terms, while he was a "business associate" of Mr Huxley (the first defendant), he had nothing to do with giving anybody advice. He was not asked to give advice; he simply brokered some aspects of the transaction without recommending any of it. He said that he had no role in respect of registering the financial dealings document, and he denies he was involved in any fraud or unconscionable conduct, and, in short, it was "other people" who "did not do what they were supposed to do". 20. He denied having been given any notice of the proceedings, however, as set out in the affidavit of the plaintiff's solicitor, there was proof before the Registrar on 19 February 2016 that McDonnell at the very least received the statement of claim which was personally served upon him in November 2014 at the address to which other notices from the court, in October 2014 and April 2015 were directed. 21. Part 36 Rule 16(2)(b) gives the Court power to set aside or vary a judgment or order, even after it has been entered, if it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order. To exercise that power I do, however, need to be satisfied of the matters I have referred to in [19] of this judgment. 22. There is no evidence that McDonnell took any steps to appear or file a defence. I am not persuaded that the judgment was entered irregularly. I take into account the inexcusable delay in filing the application between late March 2018 and 20 June 2018 despite the applicant being aware judgment was entered against him and the trial against the other defendants was being heard. There was then further delay between 20 June 2018 and 20 August 2018 before any attempt to file any affidavit material. 23. On 25 July 2018 an email forwarded to my chambers by McDonnell showed awareness of the orders that required that he file and serve affidavit evidence, and stating an intention to address that, and an undertaking to attend to that within 24 hours, but that just did not occur. 24. In all the circumstances, I find no basis to set aside the default judgment entered on 19 February 2016. 25. I dismiss the notice of motion. 26. I order that the fourth defendant/applicant pay the costs of the notice of motion. ********** 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: 31 August 2018