National Australia Bank v Warren Brian McCarthy

This is a notice of motion to set aside a default judgment obtained by the plaintiff on 28 February 2014. The judgment was for the possession of the land and for a debt said to be owed by the defendant to the plaintiff.

An application to set aside the same default judgment was heard by Hall J in November 2014. On 26 November 2014 his Honour dismissed the defendant’s notice of motion that default judgment be set aside: see National Australia Bank v McCarthy [2014] NSWSC 1819.

Hall J’s decision was subject to a proposed appeal to the Court of Appeal but, in circumstances of no present relevance, that appeal was not pursued.

Basten JA made certain orders on 16 March 2015 which facilitated the defendant’s desire to issue a subpoena and allowed the parties to determine whether the best course was to return the matter to the Common Law division for a further application for setting aside of the default judgment. That is in fact what has occurred. The decision of Hall J does not disentitle the defendant from pursuing this application. So much is conceded by counsel for the plaintiff who takes no point in relation to the fact that a previous application was dismissed.

The material that was tendered on the application before Hall J was significantly more extensive than the material before me. In fact the plaintiff elected to present no evidence and relied on what it contends to be the “manifestly deficient” draft defence relied upon by the defendant. It is submitted by the plaintiff that the proposed draft defence discloses no arguable defence and that, in those circumstances, the notice of motion should be dismissed.

The defendant appeared by telephone link from Coffs Harbour. Arrangements for that to occur were made by the Registrar because of difficulties that the defendant had in travelling to Sydney for the hearing. When the matter was called for hearing, the defendant sought an adjournment on two bases. The first basis was that he was under the impression that the matter was only in the list “for directions”. He said that had he known his motion was to be heard, he would have travelled to Sydney. The second basis was that he sought to be represented by a [McKenzie] friend, a man from his church known as Elder John. Elder John was late for personal reasons that I need not disclose.

As to the first basis of the adjournment application, the defendant said that he had an email from the Registrar indicating that the matter was only in the list for directions. I was unable to locate any such email on the file (although it would not necessary exist in paper form) and I asked him to read the email to the Court. The transcript records the content of the email as the defendant read it:

There is no reference to the motion being listed for directions.

The plaintiff opposed the application for an adjournment. In view of history of the case, the fact that the defendant had filed all of the material upon which it relied and the absence of any evidence that suggested that the matter was listed for directions, I refused the adjournment application.

The plaintiff also raised some opposition to the defendant being represented by Elder John. It was asserted that there may be some conflict of interest because the church of which John is an elder lodged a caveat on the land subject to the litigation. The defendant maintained that he wanted Elder John to represent him. He was untroubled by the suggested conflict of interest. I resolved to allow Elder John to act as a McKenzie friend and stood the matter down in the Duty List to await his arrival in Coffs Harbour. He arrived less than an hour later and the matter proceeded

In support of the notice of motion the defendant relies on his affidavit filed on 18 May 2015. That affidavit has annexed to it a number of documents including two documents purporting to be either the proposed defence or a draft defence. I will return to those documents in due course.

The notice of motion sets out the grounds or bases upon which the defendant seeks to have the default judgment set aside. In view of the arguments made at the hearing of the motion, it is necessary to set out the grounds in full:

The affidavit sets out in “Annexure B” a series of propositions which are, in truth, submissions. Indeed, they are couched in terms of submissions. Those matters are as follows:

The material thus articulated does not in my opinion disclose an arguable defence. Whilst it refers to matters such as “fundamental evidence for rebuttal of the plaintiff’s claim” and “further material facts and/or evidence that will be relied on in defence that are fatal to the plaintiff’s claim”, no particulars or evidence upon which such assertions are made are provided. While it is not incumbent upon an applicant seeking to set aside a default judgment to prove its defence by evidence, it is necessary to make clear what facts it asserts and what evidence may be available in a general sense to establish those facts.

The defence which is part of “Annexure E” to the defendant’s affidavit says under the heading Pleadings and Particulars: “the defendant does not admit to the allegations of the statement of claim for reasons ascribed under Annexure ‘A’ of the defence, inclusive of the affidavit attached as Annexure ‘B’”. “Annexure A” is in the following terms:

The draft defence refers to an “Annexure C” which is in the following terms:

I take into account the fact that the defendant is not represented by a legal practitioner. His McKenzie friend was not legally qualified either but he made a reasonable attempt to persuade me that the notice of motion should be granted and the default judgment set aside. However, the oral submissions at no stage articulated the case with any more particularity than the generalisations which are found in the documents and proposed defences to which I have referred.

Reference was made to evidence that had been obtained under subpoena which it was said would provide support for the proposition that the bank had been guilty of charging excessive fees and otherwise acting unconscionably. However no particulars of that evidence were provided.

Even allowing for the fact that the plaintiff and his friend were not legally qualified, I am of the opinion that the material provided on this application is so defective that it cannot be said that it discloses an arguable defence on the merits.

In Magnate Projects Pty Ltd v Youma Constructions Pty Ltd (No 2) [2005] NSWCA 331, Hodgson JA (Campbell AJA agreeing, Handley JA dissenting) observed at [52]:

The reference in that passage to the circumstances referred to by Jordan CJ is a reference to the former Chief Justice’s statement of principle in Vacuum Oil Pty. Co. Limited v. Stockdale (1942) 42 SR(NSW) 239 at 243. His honour there said, amongst other things:

In the present case, no point was taken on behalf of the plaintiff concerning the reasons that default judgment had been entered. In the course of argument, counsel read and relied on an affidavit by the defendant’s previous legal representative. He did this purely to explain the circumstances in which default judgment was obtained but he took no point against the defendant for his initial failure to file a defence. It seems that any failure to file a defence prior to the entry of default judgment was in no way the fault of the defendant. Responsibly, counsel took no point in that regard and only read that part of the affidavit when asked questions by me in the course of oral argument.

Counsel for the plaintiff also made clear that the failure of this application would not prevent the defendant from making a subsequent application if he were able to establish an arguable defence on the merits. Counsel for the plaintiff referred to the cases of National Australia Bank Ltd v McCann [2010] NSWSC 766; National Australia Bank Ltd v McCann (No. 2) [2010] NSWSC 1032 and suggested that the pattern of that litigation supported the notion that a further application could be made provided it was not an abuse of process.

The problem for the defendant at this stage is that he has clearly failed to establish by his proposed pleading or otherwise that he has an arguable case on the merits. In the circumstances, I have no option but to dismiss his notice of motion seeking to set aside the default judgment.

The orders are these: