Atlanta Building Pty Ltd v Abela (No 2)

1. [1]

   On 19 August 2019, the plaintiff, Atlanta Building Pty Ltd (the “Builder”), entered into a contract with the defendants, Mr David Abela and his then spouse, Ms Rebecca Amos, to construct a dwelling on a property owned by Mr Abela and Ms Amos at Bangalow.

2. [2]

   The Builder purported to terminate the contract on 20 August 2021 and now brings these proceedings against Mr Abela and Ms Amos to recover the amount it contends to be due under the contract.

3. [3]

   On 13 September 2024, I struck out Mr Abela’s List Response and his Cross Summons and Cross List Statement and entered judgment in favour of the Builder against Mr Abela in the sum of $830,154.04.

4. [4]

   I granted Mr Abela liberty to apply to set aside those orders, with such liberty to be exercised no later than 5pm on 27 September 2024.

5. [5]

   Mr Abela has exercised that liberty and, on 26 September 2024, applied to set aside the orders.

6. [6]

   I have heard extensive argument about whether my orders should be set aside.

7. [7]

   There were half-day hearings on 23 and 29 October 2024 at which a four-volume court book, comprising some 2,655 pages, was tendered, together with a further tender bundle comprising some 250 pages of documents produced on subpoena.

8. [8]

   I have now received 45 pages of submissions from the parties.

9. [9]

   At the hearing on 29 October 2024, Mr Fernon SC, who appeared with Mr Klooster for the Builder, accepted that Mr Abela had an “arguable defence” to the Builder’s claim.

10. [10]

    The Builder’s application to strike out Mr Abela’s List Statement and Cross Summons was based on a single event of default by Mr Abela.

11. [11]

    That evident of default was Mr Abela’s failure to serve his evidence by 30 August 2024, as required by an order made by the Court on 18 April 2024.

12. [12]

    The Builder’s Notice of Motion seeking to strike out Mr Abela’s claims was filed on the second business day after the due date for the service by Mr Abela of his evidence: Tuesday 3 September 2024.

13. [13]

    The Builder’s solicitors served that Notice of Motion at 5:27pm that day by delivery to an identified email address of Mr Abela (the “Abela Email Address”).

14. [14]

    The following day, Wednesday 4 September 2024, the Court issued a notice of listing, stating that the Builder’s Notice of Motion of 3 September 2024 would be heard in the motions list on Friday 13 September 2024.

15. [15]

    For reasons unexplained in the evidence, it was not until Wednesday 11 September 2024 that the Builder’s solicitors sent to the Abela Email Address notification that the Builder’s motion was listed in the 13 September 2024 motions list.

16. [16]

    The following day, Thursday 12 September 2024, the day before the Builder’s motion was listed before me, the Builder’s solicitors sent to the Abela Email Address an affidavit of the Builder’s solicitor, Mr Amirbeaggi, dated 12 September 2024. That affidavit and its exhibit comprised over 200 pages. It had been filed at 8:35pm that day.

Uniform Civil Procedure Rules 2005 (NSW)

1. [17]

   Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 18.4, requires notices of motion to be served at least three business days before the date fixed for the motion.

2. [18]

   UCPR r 3.9 provides:

3. [19]

   UCPR r 3.9 does not specify by what time service of such notice of listing is to occur but, when read in conjunction with UCPR r 18.4, should be seen as requiring that such notice of listing also be served three business days before the date listed for hearing of the motion.

4. [20]

   That was not done in this case. This, itself, is a factor pointing in favour of setting aside the orders I made on 13 September 2024.

Principles

1. [21]

   There was no dispute before me as to the relevant principles.

2. [22]

   They were summarised in the submissions of Mr Fernon and Mr Klooster on behalf of the Builder as follows:

Mr Abela’s explanation

1. [23]

   In an affidavit made on 8 October 2024, Mr Abela said that:

2. [24]

   Earlier in that affidavit, Mr Abela deposed that after his company 3 Degrees Marketing Pty Ltd was placed into liquidation on 12 August 2024:

3. [25]

   At the hearing on 29 October 2024, Mr Abela said that he wished to correct what he had said in his 8 October 2024 affidavit, as set out at [23] above, and that the paragraph should have stated that until 20 September 2024, he had not “read” the 3 September 2024 email.

4. [26]

   At the hearing, Mr Fernon cross-examined Mr Abela in relation to a number of emails that had been sent to Mr Abela at the Abela Email Address and had been sent by Mr Abela from that email address throughout August 2024 and, in particular, on 3 September 2024.

5. [27]

   On 3 September 2024, Mr Abela had an exchange of emails with business colleagues within half an hour of receipt at the Abela Email Address of the Builder’s solicitor’s email serving the Notice of Motion.

6. [28]

   Mr Abela’s explanation for this was:

7. [29]

   The “Family Court Orders made on 9 May 2024” to which Mr Abela referred were orders made in that Court resolving an evidently contentious dispute between Mr Abela and Ms Amos.

8. [30]

   On this application, Mr Abela has produced evidence from his treating psychologist, Dr Marcus Squirrel.

9. [31]

   Dr Squirrel said he had been treating Mr Abela since July 2020.

10. [32]

    In a report prepared for the purpose of this application, Dr Squirrel said:

11. [33]

    This evidence was not challenged.

12. [34]

    I have received detailed submissions on behalf of both the Builder and Mr Abela as to Mr Abela’s capacity to engage in these proceedings to the point where I made the orders on 13 September 2024 and as to the truthfulness of the explanation he has given for not engaging with the proceedings sufficiently to serve his evidence in accordance with the 14 April 2024 orders, and for not reading the Builder’s solicitor’s 3 September 2024 email.

13. [35]

    I am not persuaded that I should find that Mr Abela has given deliberately false evidence in support of this application, nor that I should reject his evidence that, although he sent and received emails on 3 September 2024 from the Abela Email Address, he could not bring himself to read the critical email attaching the Builder’s Notice of Motion.

14. [36]

    Indeed, the lucidity of Mr Abela’s email communications later on 3 September 2024 suggests to me that it is likely, as Mr Abela said, that he did not read the email from the Builder’s solicitor as, had he done so, he is unlikely to have ignored it.

15. [37]

    In those circumstances, and in the light of the swiftness with which the Builder moved following Mr Abela’s failure to serve evidence by 30 August 2024, the belated delivery to the Abela Email Address of the notice of listing and the evidence in support of that motion, and, perhaps most importantly, the Builder’s acceptance that Mr Abela has an arguable basis upon which to defend these proceedings, I am persuaded that I should set aside my orders of 13 September 2024.

16. [38]

    One further matter should be mentioned, and that is that on 3 October 2024, Mr Nick Mellos from Grant Thornton was appointed as Mr Abela’s controlling trustee pursuant to s 188 of the Bankruptcy Act 1966 (Cth).

17. [39]

    A meeting of Mr Abela’s creditors was convened on 13 November 2024 and has now been adjourned to 10 December 2024.

18. [40]

    Mr Mellos has said he will be circulating a report to creditors concerning his investigation and recommendations by 27 November 2024.

19. [41]

    In written submissions, Mr Fernon and Mr Klooster contended that, should my orders of 13 September 2024 be set aside, the Builder would not be able to prove in Mr Abela’s Personal Insolvency Agreement.

20. [42]

    That submission was not developed and appears to be incorrect. The Controlling Trustee will be obliged to adjudicate on the Builder’s proof of debt in the usual course in accordance with his duties under the Bankruptcy Act. If the Builder is dissatisfied with the Controlling Trustee’s determination, it can make an application to review same under s 90-15 of Sch 2 to the Bankruptcy Act for a review of the adjudication.

21. [43]

    In any event, faced with the Builder’s claim, it would have been open to Mr Abela to appoint a controlling trustee at any time, and whether or not the Builder had obtained the orders of 13 September 2024.

22. [44]

    I set aside the orders I made on 13 September 2024 striking out Mr Abela’s List Response, Cross Summons and Cross List Statement and entering default judgment against him.

23. [45]

    I will hear the parties as to the terms which I should attach to the making of those orders, and as to costs.