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Perspective

A Commercial Approach to Regulatory Compliance

In Morris v Whitehorse City Council (2023) VSC 336, Associate Justice Daly considered the defendant’s application to set aside the Plaintiff’s default judgment in circumstances where the Plaintiff s statement of claim was insufficiently pleaded and particularized, such to affect the defendant’s ability to demonstrate that it has a prima facie defence on the merits.

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Mr Morris alleged in his statement of claim that defendants, being the statutory office of the municipal building surveyor and the Whitehorse City Council, gave him negligent advice in relation to the construction of an extension to a deck at his property in Surrey Hills (deck). On or about 21 and 22 January 2022 Mr Morris emailed the building department of the second defendant about whether a building permit would be required for the deck. A Building Surveyor’s Assistant stated that based on the information as to the size and location of the proposed deck, a building permit was not required. The plaintiff subsequently built the deck. On 1 March 2022, following the inspection of the property by a building inspector on 28 February 2022, the plaintiff was served with a “show cause” notice and a Building Notice, both dated 1 March 2022 (‘building notices’) by the Council. The Building Notice was signed by Mr Sean Grogan, the Municipal Building Surveyor. The plaintiff failed to comply with the building notices, and a Building Order was made on 1 June 2022 requiring the plaintiff to remove the deck.

Russell Kennedy Lawyers originally acted for the defendants prior to the defendants insurer appointing their own lawyers in Minter Ellison. During the exchange of the file between law firms, neither Russell Kennedy nor Minter Ellison filed a notice of defence on behalf of the defendants within the time prescribed the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules). In the absence of a defence, the Plaintiff obtained default judgment. The Plaintiff refused to consent to the defendants’ request that the default judgment be set aside in light of the circumstances, requiring an application to set aside the default judgement under rule 21.07 of the Rules (Application).

In support of the Application, the defendants submitted:

  1. there are many problems with the statement of claim, such that the defendants are not able to properly respond to the allegations contained in the statement of claim;
  2. the form and content of the allegedly negligent advice is not clearly set out in the statement of claim;
  3. the defendants deny that any negligent or incorrect advice was provided to the plaintiff. In any event, the advice provided to the plaintiff in the January 2022 emails was qualified by the statement that the advice was “based on the information provided to [it]”;
  4. the information provided by the plaintiff to the Council did not reflect the actual structure that was actually built by the plaintiff;
  5. the plaintiff did not provide information regarding the deck’s location, height, or the total area of the deck. Further, no sketches, illustrations, plans or visual representations were provided, nor did he mention that the deck was subject to overlooking issues;
  6. the plaintiff failed to respond to the building notices and had he done so to the satisfaction of the second defendant, the deck could have remained in place;
  7. the allegations in the statement of claim are intertwined with the judicial review proceeding, and it is likely that the Court will be required to make findings of fact and law in both this proceeding and the related proceeding in relation to the same issues;
  8. the defendants knew that neither of Russell Kennedy or Minter Ellison sought an extension to file a defence. This oversight was on the part of the solicitors and not the defendants themselves, and the defendants should not be shut out from litigating their defence;
  9. the application to set aside the default judgment was made promptly; and
  10. the plaintiff will not suffer any prejudice by the setting aside of the default judgment that could not be met by an appropriate order for costs.

Relevant legal principles

As J Daly considered prior authorities on the exercise of the Court’s discretion to set aside a regularly obtained default judgment, which requires consideration of the explanation for the default, along with the merits of a defence that a defendant puts forward in any affidavit supporting its application.

The Court held that the defendants were able to demonstrate prima facie a meritorious defence to the claim of negligence in particular, in circumstances where the request for advice is at odds with the size and shape of the deck ultimately constructed.

On that basis the defendants’ Application was successful.

Adequacy of pleadings

As J Daly helpfully summarizes the key principles of adequacy of pleadings at order 13 of the Rules at paragraph 41 of the decision:

  1. Order 13 of the Rules set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;
  2. the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;
  3. the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence). The expression “material facts” is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;
  4. as a corollary, the pleading must be presented in an intelligible form – it must not be vague or ambiguous or inconsistent. Thus, a pleading is “embarrassing” within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
  5. the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;
  6. pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);
  7. a pleading which contains unnecessary or irrelevant allegations may be embarrassing – for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;
  8. it is not sufficient to simply plead a conclusion from unstated facts. In this instance, the pleading is embarrassing;
  9. every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));
  10. the effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03);
  11. particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement – namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried;
  12. a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it;
  13. extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible;
  14. in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;
  15. the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown; and
  16. if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.

Key takeaways

  1. If you are unable to file a defence within the prescribed timeframe, take timely action to place the plaintiff on notice that instructions are being sought and request that no adverse action be taken in the meantime. A simple letter can avoid default judgment being obtained and the necessity for an Application which can be both timely and costly.
  2. The Court’s discretion to set aside a default judgment will be enlivened where it can be shown that there exists a prima facie defence on the merits such that the defendant will be prejudiced if disbarred from presenting that defence at trial.
  3. Where the ability of the defendant to demonstrate a defence on the merits is hampered because of a deficiently pleaded statement of claim, the defendant will lose the opportunity to strike out the pleading and/or apply for summary judgment if the default judgment is not set aside, however this issue will be dealt with by an appropriate costs order associated with the amended pleading of the statement of claim.
  4. The Application to set aside default judgment doesn’t require the defendant to demonstrate that their defence will succeed at trial, only that, prima face, the defendant has a defence on the merits.
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