WHY YOU MUST FILE A DEFENCE TO A CLAIM

As real property is regarded as a good investment, many people decide to purchase a property with family members or friends. What happens if two or more co-owners of a property fall out? If they can’t agree to dispose of the property and they are not in a position to buy out the one who wants to sell, then problems can arise. In such cases, the Courts will step in. In those situations your lawyer will usually make an application to the Court under the Property Law Act (Qld) to appoint trustees to market and sell the property. Once the property is sold and debts paid, then the balance is divided among the coowners. This is usually what happens with urban real property. In certain circumstances, an application to partition the property can be made as an alternative to a sale where it can be shown that partition is “more beneficial” to the majority of co-owners. This is usually considered in farming properties where it is possible to give each co-owner a part of the land. If it is not possible to achieve a precise result which is fair to each co-owner, then the Court can order a monetary adjustment.  In these situations, a sale or partition can result in financial loss if the market is in decline. That is why, if someone wants out of co-ownership, the remaining owners need to be realistic and commercial in dealing with the issue. Simply saying “No” to a proposed sale is not a solution; it will simply take away your ability to negotiate the best settlement and put it in the hands of the Court. If you are involved with others in ownership, contact me for legal advice as to the best way to handle it.

Lawyers often come across disputes between beneficiaries as to the costs that the executor has run up in finalising the estate. The Succession Act provides that the executor can pay “proper and reasonable expenses”. What does that mean? It is well settled that where someone has paid funeral expenses he/she is entitled to reimbursement. However, reimbursement of extravagant expenses is not allowed and, where there is a dispute, the Courts have looked at the circumstances of each case. The Courts acknowledge that funeral practices vary depending on the deceased’s wealth, cultural and religious obligations. In a recent Cairns case, an extraordinary claim was made for funeral costs of almost $224,000.00, including $25,000.00 for “cultural grievance”, $35,000.00 for “contributions to relatives” and $20,250.00 for “stress”. The argument was that such costs were culturally appropriate for a Torres Strait Islander man who died.  The Court had no trouble in deciding that “funeral expenses” is confined to actual costs such as the preparation of the body, burial plot, public notification of the death and the actual burial or cremation. It does not include every expenditure associated with the funeral such as mourning rites.

Often community groups are upset at planning applications which will change their area, such as commercial development in a residential zone. There is understandably an expectation that the existing zoning is sacrosanct and no departure should be allowed. It doesn’t quite work that way. The Courts have held that zoning should be construed broadly as best achieves the planning objectives. Just because there is a conflict, that does not rule out a particular proposal. So any developer can make an application, but has to show some need or special circumstances. It is no answer to show that alternative sites for the proposed development are available; the Courts consider only the suitability of the subject site. If a Council has approved a development which upsets the community, the only recourse is an appeal to the Court. Courts deal in evidence and legal argument, not emotion. There is no room for well-intended amateurs hoping that the Court will be sympathetic because they are not commercially motivated. Remember that the iconic Australian movie, The Castle, is fiction! Therefore anyone seeking to appeal a Council decision needs to marshal evidence to have any hope of success. Usually that is expert evidence from town planners, traffic engineers etc. It is an expensive business, but you get only one shot at it. The best case has to be presented. It is a new hearing, so the Court doesn’t consider how the Council arrived at its decision. Another matter to be aware of is what happens if you lose? The Court can order you to pay the legal costs of the other side. Usually, if the appeal was well-founded (even though unsuccessful) the Court will order that each party pays its own costs. However, that is up to the Judge in each instance.  So appealing a Council decision is not for the faint-hearted. Considerable time and money must be committed.

Here is a common scenario. You have been served with a Claim issued by a Court. It says on it that you have 28 days to file a defence. You are in ill-health and cannot afford to pay a lawyer, so you do nothing. After the 28 days have passed, the plaintiff enters judgement by default against you. The first time that you become aware that you are in trouble is when you are served with a bankruptcy notice. What can you do? They only thing you can do (if you can’t pay the debt) is to apply to the Court to set aside the judgement. The first thing that the Court considers is whether the judgement was regularly entered. At one time, ‘regularity” was confined to whether notice was properly served or that the time limits and other procedural steps had been complied with. However, recently “irregularity” has been extended, if for example, judgement was entered for too great an amount. Then there are 3 further things that the Court considers in deciding whether a judgement should be set aside: a) Whether you have given a satisfactory explanation why you did nothing (incidentally, being unable to afford a lawyer won’t wash). If you say it was illhealth, there will need to be strong medical evidence of serious and continual ill-health to convince the Court. b) Whether too much time has elapsed before you applied to set aside the judgement. Often this depends on whether the plaintiff has corresponded with you advising that judgement has been entered. Or perhaps you changed address and letters to you were returned. Some good explanation is required. c) Finally, whether you even had a defence to the Claim. There is a duty on you to convince the Court that, had you defended the Claim, you had a reasonable chance of winning. In effect, you have to provide the Court with a draft statement of defence, showing that the defence is plausible.  Finally, usually the Courts require that if the judgement is set aside, you have to pay the judgement debt into Court or provide security for the debt, unless you can show that you simply cannot raise the amount. The Courts are receptive to an argument that if they imposed such a condition then you would be unable to defend the Claim. The lesson therefore is that you must file a defence within the 28 day period after you have been served with the Claim.