‘Snapping on’ judgment in default

Update, 1 February 2012: Glen Wright of Tas Legal brought to my attention the case of Gavin Boyle Constructions Pty Ltd v Fabrok Pty Ltd [2011] QDC 214 in which the judge set aside a regularly entered default judgment, but declined to award costs in favour of the plaintiff because it knew, pre-commencement of the proceeding, that the defendant denied liability and failed to enquire of the defendant’s solicitor whether it intended to defend before signing judgment.  His Honour relied on Coburn v Brotchie and s. 5 of Queensland’s Uniform Civil Procedure Rules, which echo the overarching obligations in Victoria’s Civil Procedure Act, 2010.

Original post: I must say I was brought up believing that there was nothing at all wrong with rushing down to the court’s registry and entering default judgment if an appearance, or defence, was not filed by the due date.  Apart from anything else, you force the other side to set out enough on oath about their case to prove an arguable defence, plus you get the psychological advantage of an early interlocutory costs order, even if the judgment is set aside, as it usually is.  But where there is reason to believe that the defendant desires to defend, the practice is frowned upon, especially where the plaintiff is represented by a solicitor who knows who represents the defendant. The duty of professional courtesy comes into play.  The procedure is really there to provide a vehicle for the production of judgments in those many cases which pass quietly through the courts, particularly the Magistrates’ Court, without the defendant participating.  In fact ‘snapping on’ default judgment in bad faith, to use the strangely quaint language of some of the older cases,  is an irregularity entitling the defendant to have the judgment set aside ex debito justitiae as they say in the classics (as of right).  And it generally carries with it a costs sanction.  I was vaguely aware of these authorities, but thought they were less unanimous and less modern than in fact they turn out to be.  I have extracted the relevant bits below.

In Coburn v Brotchie [1890] VLR 6, Hood J said that ‘the plaintiff was wrong in not having communicated with the defendants’ solicitor before signing judgment.’  In that case, the default judgment was set aside.

In Bushby v Mackenzie (1919) NSWSR 104, the plaintiff entered default judgment without notice to the defendant who was four weeks late in defending.  Justice Harvey said:

‘I have frequently pointed out that the proper course in these cases is for the plaintiff to approach the other side before a notice of motion is taken out and find out whether the defendant intends to defend the suit. I have the strongest objection to this rule being taken advantage of, not in any sense for the benefit of the parties, but to enable their legal advisers to obtain an order for payment of costs.  The rule was not passed with any such object.  It confers no vested right upon the plaintiff to obtain the costs of an application to the Court where the defendant is out of time in filing his defence.  There may be exceptional cases in which the plaintiff may be justified in applying for a decree without approaching the defendant before the notice of motion is taken out.  But I intend to lay down the rule that this must be done in ordinary cases, and if this practice is not complied with, the party in default may be ordered to pay the costs of the motion.’

In Pope v Aberdeen Transport Co Pty Ltd [1965] NSWR 1550, Justice Wallace said:

‘the plaintiff signed interlocutory judgment without sending a warning letter to the defendant.  I think that where the party signing judgment does so without giving warning of its intention to do so, such party will generally, though perhaps not invariably, be in difficulties on a summons to set aside the judgment where a defence on the merits is disclosed.’

In Australian Musical Distributors Pty Ltd v Whebell [1969] Qd R 86, solicitors were engaged in correspondence in relation to the claim.  Justice Hart set the judgment aside ex debito justitiae, declining to hear argument in relation to any arguable defence said:

‘any solicitor who received the plaintiff’s solicitor’s letter of June 2 would in the circumstances expect to hear further from them before judgment was signed against their client.  Thus the plaintiff through its solicitors’ action has misled the defendant.  … although judgment may have been entered by a mistake the plaintiff was not acting in good faith.’

In Hogg v J Isherwood-Hicks Pty Ltd (1992) 108 FLR 263, Kearney J of the Supreme Court of the Northern Territory said:

‘where, as here, a solicitor has entered an appearance, the practice of “snapping on” a default judgment, without notice, immediately upon the expiration of a period prescribed by the rules, should be strongly deprecated.  It serves no useful purpose.  It increases the costs of litigation unnecessarily.’

In Total Peripherals Pty Ltd v Microscience Computers Pty Ltd [1998] VSC 48, Justice Beach endorsed Justice Kearney’s comments, and said:

‘Had the judgment in the present case been entered regularly, nevertheless I would have set it aside.  [I do believe that the defendant’s solicitor made a mistake.]  Furthermore, having regard to the history of this litigation I consider Microscience’s solicitor took an unfair advantage of Total Peripherals’ solicitor in entering the default judgment when he did.  It is clear that at all times Total Peripherals intended to defend the proceeding.’

In St George Bank Ltd v O’Reilly, unreported, Higgins J, Supreme Court of ACT, 17 March 1999 (BC9900881), practitioners for plaintiff and defendant were engaged in correspondence.  The defendant’s solicitor asked the plaintiff’s solicitor not to enter default judgment. The plaintiff’s solicitor did not agree not to, but did not give notice before entering default judgment. His Honour said, in setting aside the judgment ex debito justitiae:

‘[31] It was open to [the plaintiff’s solicitor] in replying to the request for particulars to have declined further to extend time for filing a defence.  It was not open to him, however, to simply ignore [his] request for an extension of time.  That would have been both unreasonable and contrary to the usual expectation which [he] was entitled to entertain, that his request, even if not acceded to, would be declined with sufficient notice to apply for an extension of time without his client having to first suffer judgment.

…

[34]  It was for that reason that I ordered the default judgment … set aside.  It was in my view, entered in breach of the usual standards of practice between solicitors and, in that sense, in breach of the requirement of good faith.

[35] As the plaintiff’s solicitors had occasioned an unnecessary application to set aside the judgment, the plaintiff was ordered to pay the defendant’s costs.’

In French v Triple M Melbourne Pty Ltd [2006] VSC 36, Bongiorno J said:

’22 Much time was spent on the hearing of this application in analysing the steps taken (or not taken) by various parties before and after the writ was served. However, it is clear from the material before the Court that the plaintiff’s solicitors knew that the defendants had retained solicitors at the time the writ was issued. They had corresponded with those solicitors prior to filing it. Mr Wilson argued forcefully that the conduct of the defendants and their solicitors which led to no appearance being entered meant that they should, in effect, take the blame for the predicament created by their procedural failure, even to the extent that the defendants be not permitted to defend the action. However, he could point to no particular prejudice to his client’s rights beyond his now having to conduct this defamation suit in the ordinary way.

23 In the circumstances of this case, the entry of a default judgment at the earliest possible opportunity without warning against parties known to the plaintiff’s solicitor to be represented constituted a precipitate and unwarranted, if nonetheless legal, attempt to advance his client’s case by taking advantage of what any reasonable and experienced solicitor should have realised was an oversight or perhaps several oversights by the defendants and their legal advisors. It would be contrary to justice for this Court to allow this tactic to be successful by refusing to set aside the judgment entered by default. Litigation is not a steeple chase nor even a bike race where a fall can determine the outcome. As the High Court made clear in Queensland v J L Holdings Pty Ltd “… the ultimate aim of a Court is the attainment of justice…”: (1997) 189 CLR 146 at 154 per Dawson, Gaudron and McHugh JJ.’