SUPREME COURT OF QUEENSLAND

CITATION:	Burtenshaw Super Pty Ltd v De Castro [2023] QSC 60	
PARTIES:	BURTENSHAW SUPER PTY LTD ACN 635 959 572 AS TRUSTEE FOR THE BURTENSHAW SUPERANNUATION FUND
(plaintiff respondent)
v
GUI JORGE DECOSTA NAPOLEAO DE CASTRO
(defendant applicant)	
FILE NO/S:	348 of 2022	
DIVISION:	Trial	
PROCEEDING:	Application	
ORIGINATING COURT:	Supreme Court of Queensland
	
DELIVERED ON:	24 March 2023	
DELIVERED AT:	Cairns	
HEARING DATE:	16 December 2022	
JUDGE:	Henry J	
ORDERS:	1.	The plaintiff’s barrister’s email and annexures of 16 December 2022 is admitted and marked as exhibit 1 in the application.
2.	The defendant’s solicitor’s email and annexure of 19 December 2022 is admitted and marked as exhibit 2 in the application.
3.	Application to set aside default judgment dismissed.
4.		Order 1 of the default judgment of 16 September 2022 is amended by:
(a)	deleting $479,483.85 and inserting $437,704.98; and
(b)	deleting $90,638.37 and inserting $88,757.03.
5.	Order 2 of the default judgment of 16 September 2022 is amended by deleting $98,704.50 and inserting $65,391.89.
6.	The Court will hear the parties as to costs, if costs are not agreed in the meantime, at 9.15am on 26 April 2023.	
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – HARSH AND UNCONSCIONABLE CONTRACTS AND STATUTORY REMEDIES
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCE TO ACTION FOR BREACH – REPUDIATION AND NON-PERFORMANCE 
CORPORATIONS – FINANCIAL SERVICES AND MARKETS – MARKET MISCONDUCT AND OTHER PROHIBITED CONDUCT – MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT
EQUITY – GENERAL PRINCIPLES – UNCONSCIONABILITY – UNCONSCIONABLE DEALINGS AND OTHER FORMS OF EQUITABLE FRAUD – KNOWLEDGE – where defendant’s prospective defence relies on allegations of unconscionable conduct in contravention of ss 20 and 21 Australian Consumer Law (Cth) or s12CA Australian Securities and Investment Commission Act 2001 (Cth) or in equity – whether knowledge of plaintiff of defendant’s alleged special disadvantage is established
PROCEDURE — SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – DEFAULT OF APPEARANCE – POWER TO VARY DEFAULT JUDGMENT – SCOPE OF POWER – where default judgment was granted in favour of the plaintiff – where no notice of intention to defend or defence was filed – where the defendant applies to set aside summary judgment – whether defendant has a prima facie defence on the merits – whether error in interest calculation in summary judgment warrants setting aside the judgment by default or ought result in an order amending it

Australian Consumer Law (Cth) ss 20, 21, 37
Australian Securities and Investment Commission Act 2001 (Cth) s 12CA
Uniform Civil Procedure Rules 1999 (Qld) r 290
Cusack v De Angelis [2008] 1 Qd R 344
Deputy Commissioner of Taxation v Johnston (2006) 230 ALR 575
Jenyns v Public Curator (Qld) (1953) 90 CLR 113
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 
Stubbings v Jams 2 Pty Ltd (2022) 96 ALJR 271
	
COUNSEL:	J Trevino KC for plaintiff respondent
J Seccull for defendant applicant	
SOLICITORS:	MacDonnells Law Pty Ltd for plaintiff respondent
Forbes Kirby Lawyers for defendant applicant	

[1]	Burtenshaw Super Pty Ltd (Burtenshaw Super) lent money to My Two Boys Australia Pty Ltd (My Two Boys), whose sole director and shareholder was Mr Gui De Castro.  Mr De Castro went guarantor on the loan.  My Two Boys fell into default.  Burtenshaw Super filed and served a claim against Mr De Castro for payment of the money owing.  No notice of intention to defend or defence was filed.  Default judgment was given by the Registrar.  Mr De Castro applies to set that judgment aside.
The issues
[2]	Mr De Castro’s application relies upon the exercise of the Court’s discretion under r 290 Uniform Civil Procedure Rules 1999 (Qld) (UCPR) to set aside or amend a judgment by default on terms the court considers appropriate.
[3]	In Deputy Commissioner of Taxation v Johnston Atkinson J identified the three matters which will usually be relevant to the exercise of that discretion, namely:
(1)	whether the defendant has given a satisfactory explanation of the failure to defend;
(2)	whether the defendant’s delay in making the application to set aside precludes it from obtaining relief; and
(3)	whether the defendant has a prima facie defence on the merits.
It is not submitted a consideration other than those has material relevance here.
[4]	The first two considerations do not tell materially against Mr De Castro’s application.  At the time of the filing of the application for default judgment, his lawyers were communicating with those of Burtenshaw Super, essentially seeking more time to respond.  Further, there was no significant delay in the filing of the present application subsequent to the default judgment.  
[5]	It follows the application turns on the last of the above three considerations: whether Mr De Castro has a prima facie defence on the merits.
[6]	A subsidiary issue in the application is that there is an error in the interest calculations reflected in the default judgment resulting in a slightly higher monetary order than should have occurred.  Mr De Castro’s counsel contends this is an irregularity of such a nature to of itself justify a setting aside of the default judgment, whereas Burtenshaw Super submit that, at worst, it ought result in an order amending the judgment by default.
[7]	Hence the issues for determination are:
1.	Does Mr De Castro have a prima facie defence on the merits?
2.	If not, should the error in interest calculation result in the setting aside or merely the amending of the judgment by default?
Does Mr De Castro have a prima facie defence on the merits?
How Mr De Castro’s liability arises
[8]	The loan was made pursuant to a so-called Advance Agreement between Burtenshaw Super as “lender”, My Two Boys as “borrower” and Mr De Castro as “guarantor”, executed by Mr De Castro on 19 May 2021.  The agreement provided for the making of a loan from Burtenshaw Super, described as an advance of $450,000, by a so-called drawdown to My Two Boys.  It is common ground that advance was drawn down by My Two Boys by 26 May 2021.  The Advance Agreement required the repayment of the loan and accompanying interest and charges within three months of the drawdown date.  The interest rate was 4 per cent per month and the default interest rate was 6 per cent per month.  It is common ground repayment was due in full prior to 26 August 2021 and that it was not paid.
[9]	Some payments towards the unpaid amount were made, namely $220,000 on 7 January 2022 and $20,000 on 17 February 2022.  Interest owing continued to accrue.  No further payments were made.  My Two Boys was wound up by Court order on 23 May 2022.  
[10]	Mr De Castro became liable to pay the total amount outstanding under the terms of a Deed of Guarantee and Indemnity, executed nearly contemporaneously with the Advance Agreement.  In that deed Mr De Castro acknowledged the plaintiff entered into the Advance Agreement due to Mr De Castro’s granting of the guarantee and indemnity.  The deed provided that, in consideration of the plaintiff’s entry into the Advance Agreement, Mr De Castro agreed he “will be liable for the … payment of all moneys to be paid by [My Two Boys] under the Advance Agreement” and “indemnifies [the plaintiff] … against all … costs … in consequence of any breach or non-observance of the terms of the Advance Agreement”.
[11]	In short, Mr De Castro’s liability to the plaintiff for My Two Boys’ unpaid debt to it is unambiguous on the terms of the Deed of Guarantee and Indemnity.  His only prospect of avoiding that liability is a defence which avoids the operation of the deed.
How Mr De Castro seeks to avoid liability 
[12]	Mr De Castro’s prospective defence is in evidence.  It relies on allegations of unconscionable conduct, in contravention of ss 20 and 21 Australian Consumer Law (Cth) or s 12CA Australian Securities and Investment Commission Act 2001 (Cth) or in equity.  It is alleged Mr De Castro was placed in a position of vulnerability and disadvantage and that Burtenshaw Super procured his guarantee with wilful blindness and contumelious disregard for Mr De Castro’s position of special disadvantage, with the result it would be unconscionable to rely on it.  
[13]	It was asserted in Mr De Castro’s counsel’s written outline of submissions that the default interest rate under the agreement, of 6 per cent per month, was so high as to be a penalty and unenforceable.  That assertion is not alleged in the proposed defence and was not developed as an argument in oral submissions.  Such an interest rate translates to 72 per cent per annum but it is important to appreciate it was set, and agreed to, in the context of a short-term loan which was supposed to be repaid after three months.  It is not apparent on the face of it that a single digit default interest rate calculated monthly was in that context a penalty and unenforceable.  In the absence of any substantive argument or proposed pleading that it was a penalty, the rate’s only present relevance, like all features of the financial risk Mr De Castro was assuming in entering into the agreement and guarantee, is as background potentially informing the assessment of the alleged unconscionability of Burtenshaw Super’s conduct in light of Mr De Castro’s alleged vulnerability and disadvantage.  
[14]	Mr De Castro was a financial advisor and company director who had lawyers acting for him.  He would have understood the simple commercial concept of a loan guarantor becoming personally liable in the event the loan is not repaid by the borrower, just as he would have understood the significance to that liability of the monthly default interest rate.  Furthermore, his role as the borrower, sole director and shareholder left him better placed than anyone to make an informed choice in electing to assume that potential liability.  What then is the vulnerability and disadvantage he was allegedly subject to?
[15]	In summary, it allegedly arises from him procuring the loan and going guarantor when persons alleged to be agents of Burtenshaw Super, namely Mr Williams and Mr Martino, allegedly knew he was protecting his financial security in that process through a separate alleged financial deal with them.  It is said to be a deal they allegedly did not honour.  Mr De Castro deposes:
“… the plaintiff, through its agents, Mark Williams and Dominic Martino, acted unconscionably and in a misleading and deceptive manner when offering me the loan and having me provide the personal guarantee.”
Knowledge – a critical requirement  
[16]	Proof of liability in a case of alleged unconscionability in equity does not turn upon clearly defined legal categories.  However, it inevitably requires proof that the stronger party knew or ought to have known of the weaker party’s special disadvantage.  That is because it is the stronger party’s appreciation of that special disadvantage, and in turn the likelihood of its serious affects upon the weaker party’s judgment of its best interests, that makes the stronger party’s conduct, in transacting with the weaker party, exploitative or unconscientious. 
[17]	The same principle applies in respect of s 20 Australian Consumer Law and s 12CA Australian Securities and Investment Commission Act, which deal with conduct that is unconscionable within the meaning of the unwritten law.  While s 21 Australian Consumer Law is not limited by the unwritten law relating to unconscionable conduct, per s 21(4), it nonetheless requires at s 21(3)(a) that the court not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention.  For the purposes of a case like the present, the need for circumstances to be reasonably foreseeable works no practical difference from the above discussed requirement that the stronger party knew or ought to have known of the weaker party’s special disadvantage.
[18]	The most significant of many causal voids in the proposed defence is that the separate alleged financial deal founding Mr De Castro’s alleged special disadvantage, had nothing to do with the plaintiff.  There is no evidence it knew or ought to have known of it or that it was reasonably foreseeable to the plaintiff.  
How did Mr De Castro come to be in a position of alleged vulnerability and disadvantage?
[19]	Mr De Castro’s complaint arises out of the financial disadvantage he was allegedly placed under in consequence of Mr Martino not honouring an alleged financial arrangement arising out of a sequence of events with some connection to an earlier series of financial dealings.  
[20]	Those earlier dealings involved a company, Rocky Organics Pty Ltd (Rocky Organics), of which Mr Martino and Mr Williams were then directors.  Mr De Castro deposes that in 2016 money was invested in Rocky Organics by clients of PMM Group Pty Ltd, a company now in liquidation, of which Mr De Castro was a former director.  Mr De Castro deposes that investment was to be by redeemable preference shares and if Rocky Organics had not reached an initial public offering by 1 January 2017, “it would be obliged to repay the investors their initial investment plus 20%”.  He deposes:
“35.  Rocky Organic did not reach IPO by 1 January 2017 or at all.  At this time I received a lot of negative feedback from PMM Group clients relating to their investment in Rocky Organic.
36.  As a sign of good faith and to maintain the relationships between PMM Group and its clients who had invested in Rocky Organic, I personally guaranteed the return of their $1.5 million investment on the basis that I would deal with Rocky Organic and its directors, Mr Williams and Mr Martino, to receive repayment from them.” (emphasis added)
[21]	Exactly what form this personal guarantee took and how it obliged Mr De Castro has not been explained.  Mr De Castro deposes he had made threats of commencing legal proceedings “against Rocky Organic and its officeholders for its failure to honour the redemption notices issued under the Preference Shares and for misleading and deceptive conduct relating to the representations made by Rocky Organic which were relied upon by PMM Group and advising its clients to invest in Rocky Organic”.  That evidence is silent as to when, in what form and to which individuals these threats were made.  
[22]	Nonetheless, Mr De Castro deposes, on the strength of that scant information, that he believes “both Mr Williams and Mr Martino benefited from procuring the plaintiff’s loan pursuant to the Advance Agreement, as it kept me in a state of forbearance from bringing claims against them”.  The foundation for such a belief has not been explained and the causal connection between the ill-fated investments of clients of PMM Group in Rocky Organic, the right of Mr De Castro to make claims in connection with them and the making of the Advance Agreement remains obscure.  
[23]	The void in causal connection infects Mr De Castro’s proposed pleading, which tries to paper over it by blurring the significance of two facts.  
[24]	One fact is that, as it turned out, by the time of the loan and guarantee, Mr Williams was apparently acting as an agent of the plaintiff.  He is director of Future Holdings Pastoral Pty Ltd trading as Rural Resolutions, a business which, through him, assists persons and businesses in the rural sector, including Burtenshaw Super.  He was responsible for Burtenshaw Super’s portfolio when the Agency Agreement and Deed of Guarantee and Indemnity were arranged and was actively involved in that process.  
[25]	The other fact is that Mr Williams was a director of Rocky Organics at the time of the earlier alleged dealings by Rocky Organics.  Mr Martino had asked him to put an “Agri Fund” together for Rocky Organic of which Mr Martino was sole director and Mr Williams became a director of Rocky Organic on 13 April 2016. 
[26]	The causal insignificance of those two facts is exposed by two other facts.  First, by the time of the loan, Mr Williams was not involved in Rocky Organics, having resigned as director on 10 February 2020, well over a year before he was approached as the plaintiff’s agent to assist with the loan.  Second, at the time of the loan, Mr Martino was not involved in the plaintiff company and was not acting as its agent and there is no evidence he ever had been.
[27]	Mr De Castro deposes that Mr Williams and Mr Martino are persons he corresponded with “when applying for the loan”.  Yet on the evidence it was only Mr Williams who corresponded with Mr De Castro on the plaintiff’s behalf.  Similarly, the proposed defence pleads at para 15 that, when negotiating the terms of the Advance Agreement and Guarantee with My Two Boys and Mr De Castro, “the plaintiff acted through its agents”, who are named as being Mr Williams and Mr Martino.  Yet nothing in the identifying particulars pleaded in para 15 or in the filed evidence supports the allegation Mr Martino was an agent of the plaintiff. 
[28]	The filed evidence merely shows Mr Williams worked nearby to and remained in contact with Mr Martino after ceasing as a director of Rocky Organics, sometimes referring prospective borrowers to him for the plaintiff to lend to.  It was in that context that Mr Martino put Mr Williams in contact with Mr De Castro on about 27 April 2021.  On that date Mr De Castro wrote to Mr Williams, saying:
“Appreciate you organising this short-term loan.  Can you let me know the process from here.”
[29]	This is typical of the exhibited contemporary correspondence.  None of it supports the notion Mr Williams was involved in whatever ongoing financial dealings were then occurring between Mr Martino and Mr Williams.  Nor does it support the allegation Mr Martino was acting as an agent of the plaintiff.
[30]	That reality is veneered over in the manner of pleading of Mr De Castro’s proposed defence by its temporal blurring of roles.  Mr De Castro pleads:
“17.  In or around August 2016, Martino and Williams (Promoters) issued a term sheet for converting redeemable preference shares to raise capital for Rocky Organic (Term Sheet) in anticipation of it listing on the Australian Securities Exchange through an initial public offering (IPO).”
[31]	The term “Promoters” is thereafter used in the pleading as an unfounded path to impute the involvement of Mr Williams in the more recent activity of Mr Martino.  For instance, it is pleaded:
“29.  In or around March 2021 and by reason of the matters pleaded in paragraphs 17 to 25 of this Defence, the Defendant was obliged to intervene in the resolution of the Redemption Amounts by entering into an agreement with Rocky Organics and the Promoters (PYX Agreement) whereby:
(a)	Martino would cause 3,750,000 shares in PYX Resources Limited (ACN 073 099 171) (PYX) to be transferred to the Borrower [ie My Two Boys] by 30 June 2021 to constitute security for the Redemption Amounts in exchange for the Defendant and the Borrower assuming liability for the Redemption Amounts in the place of Rocky Organic and the Promoters.
(b)	the Defendant and the Borrower would enter into agreements with the aggrieved PMM Client Investors for payment of the Redemption Amounts on terms agreed between the Borrower and each PMM Client Investor. …” (emphasis added)
[32]	The allegation that the PYX Agreement was entered into by Mr De Castro with Rocky Organic and “the Promoters”, is, in the nomenclature of the proposed defence, inclusive of both Mr Martino and Mr Williams.  Yet, by the time of the alleged PYX Agreement, Mr Williams had not been a director of Rocky Organic for over a year.  Moreover, in neither of subparas (a) or (b) of para 29 is there any reference to Mr Williams doing anything at all.  No particular in the pleading, and no evidence filed in the application supports the allegation that Mr Williams was a party to the so-called PYX Agreement.  That is another causal void in Mr De Castro’s supposed case, because it is on the strength of the PYX agreement that he purportedly decided to enter into the loan agreement and guarantee.  
[33]	Other difficulties abound.  
[34]	There is no evidence of a concluded PYX Agreement.  Mr De Castro deposes in connection with the loan amount under the Advance Agreement:
“I intended to pay out the Loan Amount through realising shares in a listed company, which shares were promised to be transferred to me by Mr Martino by 30 June 2021 (Share Transfer), well before the Repayment Date.”
[35]	Paragraph 29 of his proposed defence pleads the particulars of that “promise” or “agreement” in the following terms:
“Particulars.
A.	The PYX Agreement was partly in writing and is partly to be inferred.
B.	Insofar as the PYX Agreement was in writing, it was constituted by the following documents:
(1)	Email from Martino to the Defendant dated 16 March 2020 (12:57 pm).
(2)	Email from Mr De Castro to Mr Martino dated 16 March 2020 (1:23 pm).
(3)	Document titled “Provision of Security Agreement” (Security Agreement) between the Borrower [ie My Two Boys] and Guangzhou Financial.
(4)	Email from Martino to Mr De Castro dated 23 March 2021 (8:13 am).
C.	Insofar as the Agreement is inferred, the matters relied upon by the Defendant for the inference include the facts pleaded in paragraph 32 in this Defence.”
[36]	Such evidence as has been filed in support of those particulars does not support the existence of a concluded agreement.
[37]	The email of 16 March 2022 at 12.57 pm from Mr Martino to Mr De Castro stated:
“Here is the draft of the brief agreement.  Let me know any amendments and we can finalise sign and transfer the shares.”
[38]	The response from Mr De Castro to Mr Martino at 1.23 pm that day was:
“Marked changes are in respect to the correct spelling of My Two Boys (Aust) Pty Ltd vs Two Boys Pty Ltd.
I’m ok to sign the Security Agreement.”
[39]	The Security Agreement to which those emails referred and, it may be inferred, was attached to them, was not exhibited.  Mr De Castro did exhibit what he described as “a true and correct copy of the Security Agreement between the Borrower [ie My Two Boys] and Guangzhou Financial”.  Even assuming this document is a version of the document which was the subject of the above email exchange, its evidentiary value is not apparent.  It is undated and unsigned.  It is said to be between Guangzhou Financial Pty Ltd named as “Party A” and My Two Boys named as “Party B”.  Its preamble records the PMM Group has several clients who have invested in Rocky Organic to an aggregate sum of $1.5M and that Party B has agreed to act on behalf of these parties to hold security against these investments on behalf of the clients of PMM up to the amount of $1.5M.  The shares which are described as the security to which the document refers are not described as being owned or provided by any party, save that they or some of them may eventually be returned to or transferred back to Party A.  
[40]	As to the security, it is described in the following terms:
“Security provided is 3,750,000 shares in Pyx Resources Ltd (NSX: PYX).  (The security shares) Pursuant to the PYX prospectus for the raising of $14 million at 40 cents per share these shares are provided as security for $1.5 million.  These shares are held in escrow pursuant to the NSX escrow requirements until 28 February 2020.”
The reference to the shares being held in escrow until 28 February “2020”, a date which had long passed, should presumably read 2022, consistently with a latter reference to them in the document.  As will become apparent, the quantum of those shares, let alone their description, does not match any reference to assets or means of repayment mentioned by Mr De Castro to Mr Williams in procuring the loan from the plaintiff. 
[41]	As to the email of 23 March 2021 from Mr Martino to Mr De Castro, it forms part of a series of emails that day.  At 10.55 am that day Mr De Castro emailed Mr Williams as follows:
“As discussed and agreed to yesterday, please email me confirmation that you will complete the transfer of 3,750,000 PYX shares to IOC account held in name of My Two Boys (Aust) Pty Ltd on or before 30 June 2021.  Also, please confirm that each off-market share transfer will be for nil consideration.
If you can direct Enrico to email through off-market transfer form for the first 500,000 PYX shares today for nil consideration.”
[42]	Mr Williams’ reply email to Mr De Castro at 11.13 am (which is evidently the “8.13am” email referred to in para 29B(4) of the proposed pleading) was as follows:
“Yes I will have Enrico email you the transfer for 500,000 shares.  There is no consideration (nil consideration) for these to you as they are being used as security which you will liquidate (as mutually agreed) to repay investments to your clients that have invested in Rocky Organic.  Specifically these 500,000 shares are enough for you to organise and repay the three Gavin Money clients so that we have no more owing to the Gavin Money clients.  Only to you and PMM from them.  Please confirm that by return email.
If we are unable to repay from other sources I will endeavour to have the balance of 3,250,000 shares as security transferred to you by the 30th June 2021.” (emphasis added)
[43]	This email exchange does not support Mr De Castro’s assertion that he intended to pay out the loan amount through realising shares in a listed company which were promised to be transferred to him by Mr Martino by 30 June 2021.  On his own evidence there was not a concluded agreement of the scale pleaded.  Such promise as was given in the email trail is that there would be a transfer of 500,000 shares.  As for the balance of 3,250,000 shares, the high point was that Mr Martino indicated he would “endeavour to have” them transferred to Mr De Castro by 30 June 2021.  That is not a concluded agreement to transfer that greater amount.  
[44]	As to particular C of para 29, it cites para 32 of the pleading, which alleges that on 24 March 2021 Mr Martino transferred 500,000 PYX shares to an account of My Two Boys as part payment under the PYX Agreement.  That does not establish there was a concluded agreement to transfer the greater amount either.
[45]	A further difficulty is that the premise of the provision of the PYX shares was that Mr De Castro would use them to repay the PMM Group clients that had invested in Rocky Organic.  It is not apparent on what legal basis Mr De Costa would be able to divert the value of those shares from the PMM Group clients they were supposed to repay and instead pay back the loan by the plaintiff to My Two Boys. 
[46]	Mr De Castro provides no other documentary evidence beyond the aforementioned email chain in support of what he now says was the means by which he intended to pay the loan.  This leads to yet another problem for the proposed defence.  On 28 April 2021, over a month after the above-mentioned email trail but still prior to entering into the Advance Agreement and Deed of Indemnity and Guarantee, Mr De Castro informed Mr Williams that he planned to “sell down marketable securities valued at AUD $4 m post listing in London” to pay off the loan.  It has not been demonstrated how the plaintiff or its agent Mr Williams should have appreciated that, according to what Mr De Castro’s proposed defence alleges, there was a different plan for repayment in play.
[47]	That there was no connection between the plaintiff and Mr Williams with the alleged arrangement with Mr Martino is further demonstrated by the communications which followed Mr De Castro informing Mr Williams on 28 April 2021 of his plan to sell down $4M worth of marketable securities. 
[48]	On 6 May 2021 Mr Williams wrote to Mr De Castro requesting various information including Mr De Castro’s solicitor’s contact details and an updated asset and liability statement.  In response, on 7 May 2021, Mr De Castro emailed Mr Williams an assets and liability schedule headed “Balance Sheet for Gui De Castro and related entities”.  It listed the assets and liabilities of Mr De Castro and My Two Boys, the only related entity mentioned in the document.  It calculated a total net assets estimate of $5,749,616.  Nothing was specified which would have informed Mr Williams’s or Burtenshaw Super of the asset which Mr De Castro effectively pleads the alleged PYX Agreement would give him, to divert from the use of his PMM Group clients, to repay the loan to My Two Boys.  
[49]	Indeed, in an email to Mr Williams of 8 May 2021 Mr De Castro, after indicating his income was “a combination of salary and through the family trust (My Two Boys”), wrote “I’ve got other structures that I prefer not to disclose”.  His choice not to disclose his other financial structures to Mr Williams and the plaintiff cannot conceivably found a conclusion Mr Williams or the plaintiff ought to have known of his contemporary dealings with Mr Martino, particularly bearing in mind the substantial net assets position Mr De Castro chose to disclose in the aforementioned balance sheet.
[50]	 It is apparent from Mr De Castro’s text messages to Mr Williams that he had wanted the loan urgently.  For instance, on 10 May 2021, nine days before he signed the Advance Agreement, his texts included:
“I’m being issued a writ from Stirling tomorrow.  I need this process to avoid this.”
and:
“If you can advance $100k ahead of settlement it would help me immensely.  If you can, my bank details are below.”
[51]	In a later text to Mr Williams, apparently around when he signed the Advance Agreement and Deed of Guarantee and Indemnity, Mr De Castro wrote:
“Signed the docs.  Lawyer sending. … It would be a big help to me mate if you can advance $50 k to My Two Boys. …”
[52]	Two months later, on about 18 July 2021, Mr De Castro wrote a lengthy text to Mr Williams about his commercial aspirations and added the following in respect of Mr Martino, whose first name is Dominic:
“FYI – going to issue a number of stat demands to Rocky Dominic and Indian Ocean stealing those PYX shares and interfering with contacts and term sheet for Rocky is fraud.  Stay away from Dom mate he’s going to go through some serious hurt.” (Emphasis added)
[53]	Such an email is at odds with the pleaded implication – of which there is no evidence – that Mr Williams was involved with Mr Martino in Mr Martino’s contemporary financial dealings with Mr De Castro.  Similarly at odds with that implication is that, on 27 August 2021, by which time the loan should have been but was not repaid, Mr De Castro had a variety of text exchanges with Mr Williams but none attributed any blame for Mr De Castro’s financial difficulty to Mr Williams.
[54]	A further affidavit by Mr De Castro filed at the hearing of the application exhibited some other documents including other email exchanges between Mr De Castro and Mr Martino.  Those materials provide some greater detail about the communications which occurred between Mr De Castro and Mr Martino in March 2021 but none of them suggest Mr Williams was involved in the March 2021 discussions between Mr De Castro and Mr Martino about a share transfer.
No prima facie case
[55]	The upshot is an absence of evidence that Mr Williams and, by extension, the plaintiff knew or ought to have known of the long shot gamble that, via an unperfected agreement, Mr De Castro could access and appropriate the benefit of PYX shares to the use of My Two Boys to be able to pay off the loan he was seeking.
[56]	Mr De Castro’s proposed defence and the evidence filed does not expose a prima facie defence on the merits.  
[57]	I record for completeness that during oral submissions Mr De Castro’s counsel suggested there may be other defences available under the Australian Consumer Law such as false or misleading representations about business activities contrary to s 37 thereof.  If such a defence was to be relied on in this application it should have been identified in the proposed defence.  Furthermore, it would be unsustainable given the absence of evidence of involvement by Burtenshaw Super or Mr Williams in the contemporary business activities between Mr De Castro and Mr Martino or in any representation made in that context by Mr Martino.
Should the error in interest calculation result in the setting aside or merely the amending of the judgment by default?
[58]	It remains to consider the topic of the interest calculation error and its consequence.  
The error
[59]	Mr De Castro submits the calculation of monetary amounts in orders 1 and 2 of the default judgment of the Registrar of 16 September 2022 involved error.  The error relates to the calculation of interest.
[60]	The error is said to be that interest was calculated as compounding instead of simple interest.  It is a matter which the Advance Agreement was arguably unclear about.  For instance, on the one hand it described “outstanding principal” as the aggregate of the advance drawdown which remained unpaid and provided at clause 5.1(a) that interest was to be paid on the outstanding principal.  On the other hand at clause 5.2 it provided that interest will “accrue from day to day”.
[61]	Without formally conceding error, the Burtenshaw Super’s pragmatic approach was to proceed as if there was an error and consent to an amendment of the orders premised upon interest being calculated as simple rather than compounding.  Its solicitor filed an affidavit in the present application, setting out at para 7 an alternate set of calculations to those used to secure the default judgment, premised upon interest being calculated as simple rather compounding.
[62]	The parties were each requested by the Court at the hearing to provide after the hearing a draft order reflecting the amounts they contended should have been ordered according to their calculations applying simple interest.  The emails received will be admitted and marked as exhibits in the application.  
[63]	Burtenshaw Super’s counsel’s email to my associate on 16 December 2022 attached a proposed draft order.  It was consistent with the aforementioned content of para 7 of Burtenshaw Super’s solicitor’s affidavit.  Mr De Costa’s solicitor’s email to my associate on 19 December 2022 advised that Mr De Costa “adopts and agrees with the plaintiff’s calculation of the judgment sum as set out in paragraph 7 of the affidavit of” Burtenshaw Super’s solicitor.  Curiously though, the attached draft order still contained a substantial difference in quantum.  
[64]	The equation now presenting itself is best explained by tabulating the relevant amounts as per the orders made in the default judgment and as now calculated by each side, underlining the current discrepancy:
Orders made	Amounts as now calculated by Burtenshaw Super	Amounts as now calculated by Mr De Costa	
1.	The Defendant pay to the Plaintiff the amount of $479,483.85 including $90,638.37 interest to the date of filing of the claim and statement of claim.	“… the amount of $437,704.98 including $88,757.03 interest …”	“… the amount of $348,947.95 including $88,757.03 interest …”	
2.	The Defendant pay to the Plaintiff interest in the amount of $98,704.50 from the date of filing of the claim and statement of claim to the date of judgment.	“… interest in the amount of $65,391.89 …”	“… interest in the amount of $65,391.89 …”	
[65]	As that table shows, the total interest owing as now calculated by each side is the same but there is a discrepancy in the overall amount now calculated for order 1.  The discrepancy appears to be the product of a slip in the manner of calculation by Mr De Castro’s side.  Its total of $348,947.95 equals $437,704.98 (the total calculated by Burtenshaw Super’s solicitor) minus $88,757.03 (the interest amount each side calculates).  Yet if the interest figure is deducted, rather than added to that total of $348,947.95, it would give a principal sum according to Mr De Costa’s side’s draft order of only $260,190.92.  That is clearly wrong.  
[66]	The principal sum was $450,000.  By the time $220,000 was paid back on 7 January 2022, the interest owing would have accumulated to $118,947.95 with the consequence that the payment, after covering the interest owing, could only have reduced the principal by $101,052.05 to $348,947.95.  The interest on that amount owing would have grown to $28,221.76 by the time the only other repayment, of $20,000, was made on 17 February 2022, leaving $8,221 interest still owing and not reducing the remaining principal owing of $348,947.95 at all.  After that, the interest owing of $8,221 would then have grown to $88,757.03 by the time the claim was filed.  That amount, added to the remaining principal, gives a total for order 1 of $437,704.98, the amount now calculated by Burtenshaw Super.  Its calculation is correct.
The consequence of the error
[67]	While Burtenshaw Super is content for there to be an amendment of the default judgment to reflect the aforementioned calculations premised upon simple rather than compounding interest. Mr De Castro’s counsel contends the consequence of the error is more far reaching.  He submits the error means the judgment was irregularly entered and that Mr De Castro is therefore entitled to have it set aside as of right.  That submission cannot be accepted.
[68]	In Cusack v De Angelis Muir JA, with whom McMurdo P and Lyons J agreed, acknowledged the concept of an “irregularly entered” judgment may extend to one which has been entered for too large an amount.  His Honour explained that while it has long been accepted a defendant is entitled to have an irregularly entered judgment set aside as of right, there are two important exceptions to which that right is subject.  One is the exercise of a power of amendment and the other is the futility of setting aside the judgment if a subsequent application for summary judgment would be bound to succeed.  Both exceptions apply here.
[69]	Firstly, as to the power of amendment, r 290 UCPR provides:
“The court may set aside or amend a judgment by default under this division, and any enforcement of it, on terms, including terms about costs and the giving of security, the court considers appropriate.”  (emphasis added)
[70]	Muir JA explained in Cusack that the authorities, as well as the language of r 290, support the view that r 290 permits a default judgment to be varied whether or not it was irregularly entered or resulted from accidental slip or omission.  
[71]	Rule 290 does not proscribe the circumstances under which the discretion to amend should be exercised.  Muir JA observed in Cusack that there is good reason to regard r 290 as empowering a court to do whatever is necessary to achieve justice between the parties and to avoid unnecessary delay and expense.  The exercise of the discretion will of course turn upon the nature of the case, including, in a case like this, the nature of the error.
[72]	Cases in which default judgments have been held to be irregular are “ones in which there was either some deficiency in the steps prerequisite to the entering of default judgment or an abuse of process or something akin to it resulting from the plaintiffs obtaining a judgment to which the plaintiff knew or ought reasonably have known he or she was not entitled”.  There is no suggestion of abuse of process or bad faith occasioning the error in the amounts ordered here.  
[73]	The monetary difference between what was ordered and the amount now conceded is not minor.  Considering that material difference and the context that this was an ex parte application, which would necessarily deprive Mr De Castro of the chance to argue for a more favourable approach to the calculation of quantum, the ideal course in hindsight was to seek judgment on the calculation most favourable to the absent party.  As against this the interpretation on which the calculation was based was reasonably arguable on the terms of the Advance Agreement.  Further, the monetary relief sought and given by the default judgment was adequately exposed by the statement of claim, which had been served on Mr De Castro.  He was well positioned to know his alternative interpretation would give rise to a lesser amount than that sought.  Yet, despite various communications by his solicitors with Burtenshaw Super’s solicitors between service of the claim and the obtaining of default judgment, neither his alternative interpretation nor his calculation of the correct monetary relief was communicated.  Against this background it cannot be said Burtenshaw Super ought reasonably to have known it was not entitled to pursue judgment in the amounts sought.
[74]	The nature of the case thus strongly supports the exercise of the discretion to amend the judgment amounts.  I am fortified in reaching that conclusion by the conclusion reached below in respect of the second exception.  
[75]	The second exception is that it would be futile to set aside the judgment because a subsequent application for summary judgment would be bound to succeed.  To establish he had a prima facie case for the purposes of the present application, Mr De Castro necessarily filed evidence of the same kind as would be filed in response to an application for summary judgment made after filing of the prospective defence.  For the reasons already explained he has no prima facie case in defence of the claim and thus no prospect of successfully defending the summary judgment application which would inevitably follow if the existing judgment was set aside rather than merely amended.
[76]	The circumstances compel the conclusion that the default judgment should be amended, varying the judgment amounts to those identified above.
Orders
[77]	Mr De Castro’s application to set aside the default judgment has failed but he has enjoyed success to the extent that the orders will reduce the quantum of the default judgment.  Given that mix of events it will be necessary to hear the parties as to costs, if costs are not agreed.
[78]	The orders are:
1.	The plaintiff’s barrister’s email and annexures of 16 December 2022 is admitted and marked as exhibit 1 in the application. 
2.	The defendant’s solicitor’s email and annexure of 19 December 2022 is admitted and marked as exhibit 2 in the application.
3.	Application to set aside default judgment dismissed.
4.	Order 1 of the default judgment of 16 September 2022 is amended by:
(a)	deleting $479,483.85 and inserting $437,704.98; and
(b)	deleting $90,638.37 and inserting $88,757.03.
5.	Order 2 of the default judgment of 16 September 2022 is amended by deleting $98,704.50 and inserting $65,391.89.
6.	The court will hear the parties as to costs, if costs are not agreed in the meantime, at 9.15am on 26 April 2023.