Supreme Court New South Wales Medium Neutral Citation: Cronau v Vavakis (No 3) [2018] NSWSC 1973 Hearing dates: 10 December 2018 Date of orders: 10 December 2018 Decision date: 10 December 2018 Jurisdiction: Common Law Before: McCallum J Decision: Pursuant to r 36.16 of the Uniform Civil Procedure Rules, order that the default judgment entered against the defendant on 19 October 2018 be set aside; order the defendant to pay the plaintiff's costs of the application for default judgment; order that the cost of today's motion be costs in the cause. Catchwords: CIVIL PROCEDURE – application to set aside default judgment – where originating process served by substituted service – short period of delay between when defendant learned of proceedings and when default judgment entered – existence of arguable defences Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 36.16 Cases Cited: Cronau v Vavakis [2018] NSWSC 1642 Cronau v Vavakis (No 2) [2018] NSWSC 1644 Dank v Cronulla Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 Dank v Cronulla-Sutherland District Rugby League Football Club (No 3) [2013] NSWSC 1850 Dank v Whittaker (No 1) [2013] NSWSC 1062 Dunwoodie v Teachers Mutual Bank Limited [2014] NSWCA 24 Category: Procedural and other rulings Parties: Christine Cronau (plaintiff) Christopher Vavakis (defendant) Representation: Counsel: A Munro (plaintiff) R Potter (defendant) Solicitors: O'Brien Solicitors Pty Ltd (plaintiff) Wotton & Kearney (defendant) File Number(s): 2018/172522 Publication restriction: None Judgment ex tempore – revised 1. HER HONOUR: These are proceedings for defamation commenced by statement of claim filed 1 June 2018. The plaintiff was unable to serve the originating process on the defendant in person. On 17 August 2018, an order for substituted service was obtained: Cronau v Vavakis [2018] NSWSC 1642. 2. On 19 October 2018, no appearance or defence having been filed, default judgment was entered for the plaintiff and the proceedings were stood over to 23 November 2018 for the assessment of damages: Cronau v Vavakis (No 2) [2018] NSWSC 1644. 3. On 16 November 2018, the defendant filed a notice of appearance and a notice of motion seeking to vacate the hearing date for the assessment of damages and to have the default judgment set aside. This judgment determines that application. For the following reasons, I have determined that the relief sought by the defendant should be granted. 4. The application invokes the Court's authority under r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW). There was no dispute between the parties as to the proper approach to the exercise of that power. The defendant's submissions relied on the decision of McColl JA in Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43] to [46] where her Honour summarised the relevant principles as follows: 43 The Court's jurisdiction to set aside the default judgement is found in the bald terms of Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") 36.16(2)(a), providing 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)". The fundamental (but not the only) principles guiding a court asked to exercise the unfettered discretion UCPR 36.16(2)(a) confers, are whether the applicant has a bona fide ground of defence, an adequate explanation for the failure to defend and the length of any delay: Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503 (at 506) per Hope JA (Glass JA agreeing). In the final analysis, it is necessary to consider whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits: Reinehr Industrial Lease & Finance Pty Ltd v Jordan (New South Wales Court of Appeal, 4 June 1974, unreported) cited with approval by Sackville AJA (Barrett and Leeming JJA agreeing) in Dai v Zhu [2013] NSWCA 412 (at [83]). 44 In Dai v Zhu Sackville AJA also explained (at [89]) that the rationale for the requirement that the applicant for relief demonstrate a bona fide ground of defence is that "in the exercise of its 'unfettered, though judicial, discretion' the Court will consider ...(a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained". His Honour also explained (at [92]) that in "determining whether the defendant has a bona fide defence on the merits, the court does not embark on a hearing of the full merits of the case...[a]ll that is necessary is for the defendant to show that the defence is asserted bona fide and that there is an arguable or triable issue [and] [t]he nature of the evidence required in a particular case may depend on the circumstances, including the cogency of the defendant's explanation for the delay or failure to comply with the orders of the court". 45 In elaboration of the last proposition it is necessary to explain that the court considering the application to set aside a default judgment is not trying the issues of fact arising upon the defence advanced, but must be satisfied that the defence is "fairly arguable in law or fact" and that the applicant is bona fide in seeking to rely upon that defence: Reinehr Industrial Lease & Finance Pty Ltd v Jordan per Street ACJ (Glass JA agreeing). 46 Finally, it should be observed that the application of these principles is subject to the provisions of the Civil Procedure Act 2005 (NSW): Dai v Zhu (at [93]); Richards v Cornford (No 3) [2010] NSWCA 134 (at [98]ff) per Allsop P (McColl JA agreeing)." 1. I would only add that, in my view, in determining whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits, it is appropriate for the Court to consider the relative weight of each of the individual considerations of the strength of any defence, the adequacy of the explanation for the failure to defend the proceedings and the length of any delay. So that, for example, although the Court does not embark upon a hearing of the full merits of the case, the existence of what would appear to be a strong defence would warrant a more indulgent approach regarding the adequacy of the explanation for the failure to defend. That consideration is important in the present case, for reasons I will explain. 2. The relevant chronology of events in the commencement of the proceedings may be summarised as follows. 3. On 18 January 2018, the plaintiff sent a concerns notice which was delivered to the address of the defendant's parents in Western Australia. It is clear that that notice came to the attention of the defendant because, in due course, solicitors retained by him responded to the notice (on 1 February 2018) and negotiations between the parties ensued. 4. On 11 April 2018, a new firm of solicitors, Moray & Agnew Lawyers, began to act for the defendant and further negotiations were conducted. 5. On 1 June 2018, being concerned about the approaching expiration of the limitation period, the plaintiff filed a statement of claim. 6. Between 27 June and 6 July 2018, attempts were made to effect personal service of the originating process at the address to which the concerns notice had been sent (and successfully brought to the attention of the defendant). 7. On 12 July 2018, those attempts at personal service having been unsuccessful, the plaintiff's solicitor asked the second firm that had acted for the defendant, Moray & Agnew Lawyers, whether they had instructions to accept service. They did not. 8. Further attempts were made to communicate with the defendant via Facebook Messenger and a business website apparently operated by him. Those attempts were relied upon as the basis for the substituted service application granted by me on 17 August 2018. 9. On 3 October 2018, a solicitor from Moray & Agnew, who no longer acted for the defendant, made an enquiry as to the progress of the proceedings as a result of which, on 7 October 2018, they contacted the defendant and made him aware of the fact that an application was to be made for default judgment. 10. The plaintiff has put on evidence on the present application (in an affidavit sworn by his solicitor on information and belief) that that was the first date on which he became aware of the fact that an order for substituted service had been made and of the existence of the proceedings. 11. It is accepted on behalf of the defendant that he should have taken prompt steps at that stage to enter an appearance and defend the proceedings before default judgment was entered. He did not and, as already stated, the default judgment application proceeded on 12 October 2018 and was determined by me on 19 October 2018. 12. The plaintiff relies on a number of curious features of the evidence regarding that history to support a submission that the Court should infer that the defendant was actively and consciously avoiding service of the originating process. In particular, it was noted that there is no direct evidence from the defendant, no specific evidence as to when he ceased accessing his Facebook Messenger account and ceased using his business website (to which information was also sent); no specific information as to when he was last able to access those sites and a curiosity in the fact that, whereas an earlier message to the Facebook Messenger account had received no reply, later messages sent via that platform received a reply to say that the person in question was unable to be contacted via that method. 13. The plaintiff submitted, and there is some force in the submission, that there was no proper explanation of those matters. I accept that some features of the defendant's explanation are such as to give rise to a suspicion that he was avoiding contact from the plaintiff. However, I would not go so far as to find, on the balance of probabilities, that he did so in circumstances where he had an awareness that proceedings had in fact been commenced. I do not think I can conclude that he was actively and consciously avoiding service of the originating process or that he was aware of the existence of the proceedings any earlier than 7 October 2018. 14. On that basis, in my view, the explanation for the failure to defend the proceedings, although wanting in some respects, is adequate in the circumstances. 15. It is particularly important in my determination of this application to consider the apparent strength of any defences. Mr Potter, who appears for the defendant, addressed the topic of defences in his written submissions and expanded upon those submissions in oral argument this morning. Perhaps the most acute consideration is the issue of publication concerning the first matter complained of. The publication as pleaded in the statement of claim is a newspaper article that appeared in The Daily Mail headed "Students and dieticians PROTEST a controversial nutritionist advocating "high-fat, low-carb diet" speaking at a university" (emphasis in original). 16. The article reported that students and dieticians were protesting the plaintiff's appearance as a guest speaker hosting a seminar at a Perth university. It included a quote attributed to the defendant in the following terms: "'The crux of my concern is that a ketogenic diet (very low carbohydrate) or a low carbohydrate/high fat diet is promoted by Christine Cronau as a one-size fits all curative solution to any health solution her followers may have,' Mr Vavakis said. 'One of the most reckless recent cases involved her providing medical advice to a member of her Facebook page who was undergoing treatment for breast cancer. She claimed in the Post that a ketogenic diet in combination with something she describes as pH balancing (a debunked concept) had the potential to cure cancer.' 'Ms Cronau is no better than Belle Gibson as she is recklessly promoting a false cancer cure that could kill.'" 1. As submitted by Mr Potter, in circumstances where there is no suggestion that the defendant, Mr Vavakis, had any editorial control in respect of the publication of that material in The Daily Mail, there may be a real issue as to whether he is liable for publication of the whole of the article on the strength of principles considered by me in Dank v Whittaker (No 1) [2013] NSWSC 1062 at [26]; applied in Dank v Cronulla-Sutherland District Rugby League Football Club (No 3) [2013] NSWSC 1850 at [17]-[22]; upheld by the Court of Appeal in Dank v Cronulla Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 at [137]. 2. Other potential defences are also adverted to in the submissions. It is clear enough that, in some instances, there is a real contest as to whether the imputations pleaded are capable of being carried in the natural and ordinary meaning of the matter complained of. The plaintiff has pleaded a number of imputations by reference to the fact that the articles compare her with Belle Gibson. For example, the imputation pleaded in respect of the first matter complained of is that she engages in serious and substantial fraudulent conduct comparable to that of the renowned and proven fraudster Belle Gibson. 3. As noted by Mr Potter, Belle Gibson is renowned for a wide range of conduct and it is by no means clear that the matter complained of would convey to the ordinary reasonable reader who did not know a particular fact about Ms Gibson the kind of conduct attributed to her. Further, there is a potential issue about the imputation as to whether it is adequately specific. The article itself is more specific than the imputation, specifying that the comparison with Belle Gibson is based on a contention that she recklessly promoted a false cancer cure that could kill. 4. Mr Vavakis also raises the prospect of an honest opinion defence in respect of that particular imputation which could well have merit. 5. In my assessment, there is the potential in these proceedings for great injustice to be done to the defendant if the default judgment is not set aside because it is clear enough that there are real issues that might appropriately be the subject of a contested hearing. 6. I have also had regard to the fact that the period of delay is short. As already noted, it is accepted that the defendant ought to have reacted when he became aware of the existence of the proceedings and the impending default judgment application on 7 October 2018 but the period of delay between then and the entry of default judgment was short and he acted promptly after that; filing his notice of appearance and the present application on 16 November 2018. 7. For those reasons, I am persuaded that it is appropriate to make the order sought that pursuant to r 36.16 of the Uniform Civil Procedure Rules, the default judgment entered against the defendant on 19 October 2018 be set aside. ********** 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: 17 December 2018