Last Updated: 10 November 2000
CITATION: | UniqueProduct Marketing Pty Ltd v. Bortek Sales Pty Ltd[2000] QDC 314 |
PARTIES: | UniqueProduct Marketing Pty Ltd (ACN 010344742) (Respondent/Plaintiff) v. Bortek Sales Pty Ltd (ACN 055108462) (Applicant/Defendant) |
FILENO/S: | 3261of 2000 |
DIVISION: | |
PROCEEDING: | Applicationto Set Aside Default Judgment |
ORIGINATINGCOURT: | DistrictCourt Brisbane |
DELIVEREDON: | 1November 2000 |
DELIVEREDAT: | Brisbane |
HEARINGDATE: | 28 September 2000 |
JUDGE: | ShanahanDCJ |
ORDER: | Thedefault judgment for the plaintiff entered on 12 September 2000 be set aside |
CATCHWORDS: | QuicksafeFreightlines Pty Ltd v. Shell Co of Australia Ltd(1984) 10 ACLR 161 Re Nicholls Pty Ltd(1982) 7 ACLR 76 Re: Richardson Investments and Dewatering (WA) Pty Ltd(1988) 14 ACLR315 Re: Swiftcrete(1977) 2 ACLR 411 Aboyne Pty Ltd v. Dixon Homes Pty Ltd[1980] Qd R 142 National Mutual Life Association of Australasia Ltd v. Oasis DevelopmentsPty Ltd [1983] 2 Qd.R. 441 Conners v. Acheron Pty Ltd (No.2)[1996] 1 Qd.R. 243 |
COUNSEL: | Mr.D. Bates for respondent/plaintiff Mr. C. Francis for applicant/defendant |
SOLICITORS: | Russell& Company for respondent/plaintiff Bridge Brideaux for applicant/defendant |
[1]This is an application to set aside the default judgment obtained by therespondent/plaintiff on 12 September 2000, and to setaside any enforcementthereof. The applicant also seeks leave (if necessary) to file and serve itsNotice of Intention to Defendand Defence and Counterclaim.
[2]The plaintiff's claim was for contractual debts due and owing. The Claimand Statement of Claim were filed on 11 August 2000. Default judgment wasentered on 12 September 2000. That judgment was in the sum of $114,591.74(being $111,460.90 for the claim,$2,462.74 for interest and $668.10 forcosts).
[3]The applicant submits that the judgment was entered irregularly (becausethe claim was not properly served) and should be setasideex debitojusticiae. Alternatively, if the judgment was regularly entered, it shouldbe set aside under a proper exercise of the court's jurisdiction(r.290 UniformCivil Procedure Rules).
Factual Background
[4]The plaintiff's claim against the defendant is for:
1.The sum of $100,000 being the balance allegedly outstanding pursuant to awritten agreement for the sale by the plaintiff tothe defendant of certainequipment in Indonesia due on 10 June 2000;
2.The amount of $11,460.90 being the alleged outstanding balance of shippingexpenses incurred by the plaintiff payable on or about13 July 2000;
3.Interest on such sums at the rate of 9% per annum.
[5]The Claim and Statement of Claim were filed on 11 August 2000.
[6]The plaintiff's solicitors, Russell and Company, conducted a search of theAustralian Securities and Investment Commission (ASIC)register on 11 August2000 for the registered office of the defendant (affidavit of Paul GeorgeAnthony Betros). That search showedthe registered office of the defendant as"Care of P C Smith & Co (Moorooka), Unit 1, 1106 Ipswich Road, Moorooka,Queensland,4105". A sealed copy of the Claim and Statement of Claim wasforwarded by letter dated 11 August 2000 to that address. A copy ofthe searchis exhibited to Mr. Betros' affidavit (PGB1). The letter enclosing the Claimand Statement of Claim was sent by pre-paidregistered post.
[7]P C Smith and Co were the defendant's former accountants and its practicewas sold to Dowling & Associates and the officeof P C Smith and Co movedto Mr. Smith's house (affidavit B R Welch sworn 27 September 2000). Dowlingand Associates notified theASIC of its withdrawal of consent to act asregistered office of the defendant. Mr. Welch attests that in early August2000 he receiveda letter from the ASIC informing him that Dowling andAssociates had withdrawn their consent to act as the registered office forthedefendant company (affidavit sworn 15 September 2000). Mr. Welch also atteststhat when one Michael Dowling purchased Mr. Smith'spractice, he correspondedwith the defendant seeking to retain the defendant as a client. The defendantdid not engage Michael Dowlingand Associates and they had never acted onbehalf of the defendant or its directors (affidavit sworn 27 September 2000).
[8]Under the heading "Document Details" on the ASIC search (PGB1), the lastentry in point of time appears as "Notification ofWithdrawal of Consent forRegistered Office". It is noted as received on 1 August 2000, processed on 2August 2000 and effectiveon 1 August 2000. However, as noted above, on 11August 2000, the register still displayed the registered office as care of P CSmith & Co at 1106 Ipswich Road.
[9]Mr. Welch swears that on 16 August 2000 he took delivery of the Claim andStatement of Claim of the plaintiff. The documentswere delivered to him athis home by registered post. They were in an envelope from the plaintiff'ssolicitors. He had examinedthe signature of the addressee or agent in adocument headed Australia Post Delivery Confirmation - Advice Receipt (documentBIW2to affidavit of Bridget Isobel Walker) and was of the view that itappeared to be "Michael Dowling" (affidavit BR Welch sworn 15September 2000).When he accepted the document on 16 August 2000, there was no covering letter,memorandum or note from Dowling andAssociates indicating that the documentshad previously been received by them.
[10]Mr. Welch believed service had been effected on the defendant on 16 August2000. On 17 August 2000 he contacted the defendant'ssolicitors (BridgeBrideaux) and attended their offices on 22 August 2000. He was informed by hissolicitors that the defendanthad 28 days from 16 August 2000 to file a Noticeof Intention to Defend and Defence (i.e., by 13 September 2000). He gaveinstructionsto prepare a Notice of Defence and Counterclaim. On 11 September2000 he perused a draft defence and counterclaim and some amendmentswere made(affidavit B R Welch sworn 15 September 2000).
[11]Mr. R A Brideaux of Bridge Brideaux Solicitors swears that on 17 August2000 he received a phone call from Mr. Welch. Mr.Welch attended on 22 August2000 and, on his instructions, Mr. Brideaux commenced to prepare a Notice ofIntention to Defend, Defenceand Counterclaim. He believed that Mr. Welch hadbeen served on 16 August 2000 and Mr. Brideaux calculated that the defendanthaduntil 13 September 2000 to file its Notice of Intention to Defend andDefence. On 12 September 2000, he telephoned the plaintiff'ssolicitors toinform them that the documents would be filed and served on 13 September 2000.He was informed that default judgmenthad been obtained on 12 September 2000and that service had been effected by registered post on 14 August 2000(affidavit R A Brideauxsworn 15 September 2000).
[12]On 13 September 2000, Mr. Brideaux conducted a search of the ASICregister. That search showed the registered office of thedefendant to be 182Fort Road, Oxley, 4075 as at 2 August 2000 (document RAB1 to affidavit of R ABrideaux sworn 15 September 2000). That address is the address of bothdirectors of the defendant as shown in the search conducted by Mr. Betros on 11August 2000(PGB1).
Was The Judgment Entered Irregularly?
[13]The answer to this question depends on whether the service of theoriginating process by registered mail sent on 11 August2000 to the address asdisclosed in the ASIC register was regular service. It is apparent from theAustralia Post Delivery Confirmation- Advice Receipt (document BIW2 toaffidavit of B I Walker) that the item was delivered on 14 August 2000,apparently to Mr. Dowling.
[14]It is submitted on behalf of the applicant that until 2 August 2000 theregistered office of the applicant was care of "P CSmith & Co (Moorooka),Unit 1, 1106 Ipswich Road, Moorooka, Queensland, 4105." When Dowling andAssociates purchased the practiceof P C Smith and Co, Dowling and Associateswithdrew its consent to act as registered office for the applicant on 28 July2000, andnotified the ASIC of that withdrawal. It is submitted that effectivefrom 2 August 2000, the applicant's registered office revertedto 182 FortRoad, Oxley, Queensland, 4075, the director's home address. For some reason,the change in the registered office wasnot recorded by the ASIC when thesearch was conducted on 11 August 2000. However, the lodgment of thenotification of the withdrawalof consent was recorded.
[15]It is submitted that service of the claim was not properly affected at theregistered office of the applicant as required bythe Uniform Civil ProcedureRules and the Corporations Law. It is submitted that the ASIC search conductedby the respondent's solicitorson 11 August 2000 showed that the notificationof withdrawal of consent for registered office had been lodged and waseffective from1 August 2000. It is submitted that the respondents were thusaware of that document which was a public document.
[16]It is submitted that as at 11 August 2000 the correct registered office ofthe applicant was the Oxley address by reason ofthe lodgment of thenotification of withdrawal of consent, and s.142(3) and s.143 of theCorporations Law. It is submitted thatthe notification of withdrawal ofconsent operated as a change of registered office, effective seven days afterits lodgment, notwithstandingthat the actual change had not been recorded. Itis submitted that a document which was publicly available to the respondentsindicatedthat the registered office of the defendant had been (or would soonbe) changed, effective from 1 August 2000 and the respondentdid not make anyfurther inquiries. It is submitted that in view of the notification ofwithdrawal of consent, it would have beenprudent for the respondent to haveserved the applicant at the Oxley address as it was entitled to do pursuant tos.109X of the CorporationsLaw, and which had been used by the respondent inprevious correspondence with the applicant. Because service was not properlyeffected,it is submitted that judgment has been irregularly entered.
[17]It is submitted on behalf of the respondent that a notice of withdrawal ofconsent does not have the same impact under theCorporations Law as a notice ofchange of address. It is submitted that the notice of withdrawal of consentform simply starts aprocess whereby the ASIC eventually does change theaddress, but the form in itself does not change the address. It is submittedthat as at 11 August 2000, when the proceedings were posted, the registeredoffice was that as recorded on the ASIC register. Thepublic was fullyentitled to conduct a search, ascertain what was recorded as the registeredoffice and make service under s.109of the Corporations Law. It is submittedthat the judgment based on that service was regularly entered.
[18]Rule 107 Uniform Civil Procedure Rules provides that a claim to be servedon a company personally must be served in the wayprovided for service ofdocuments under the Corporations Law.
[19]By s.109X(1) of the Corporations Law, a document may be served on acompany by posting it to the company's registered office. There is analternative provided of delivering the document personally to a director of thecompany who resides in Australia (s.109X(1)(b)). Pursuant to s.109Y, serviceby post is effected by pre-paid post and unless the contrary is proved, theservice is taken to havebeen effected at the time at which the letter wouldhave been delivered in the ordinary course of the post.
[20]"Registered office" is defined in s.9 in relation to a body corporate tomean the body's registered office under s.142.
[21]Section 142 requires that a company must have a registered office inAustralia. Communications and notices to the companymay be addressed to itsregistered office. A company must lodge a notice of a change of address of itsregistered office with ASICnot later than 14 days after the date on which thechange occurs (s.142(2)). A notice of change of address takes effect from theseventh day after the notice was lodged or on a day specified in the notice,whichever is the latter (s.142(3)).
[22]Where a company does not occupy the premises at the address of itsregistered office, it must be able to show to ASIC the occupier'swrittenconsent to the company's use of those premises as its registered office(s.143(1)). If the ASIC becomes aware that the occupierof the premises haswithdrawn consent to the use of the premises as the address of the company'sregistered office, the ASIC maygive written notice to a director of thecompany who resides in Australia that the ASIC intends to change the address ofthe company'sregistered office to the director's address (s.143(2)). If theASIC is not notified of the address of the company's proposed newregisteredoffice under s.142(2) within 14 days after the notice under s.143(2) is sent,the ASIC may change the address of the company'sregistered office to thedirector's address (s.143(3)).
[23]The effect of a notice of withdrawal of consent is that it commences aprocess whereby the ASIC may give a notice to the directorunder s.143(2).Fourteen days after that notice is given, the ASIC may change the address.There is no statutory provision as tothe date the notice takes effect from,which is different from the effect of a notice of change of address (s.142(3)).The noticeof withdrawal of consent thus does not have the same impact as anotice of change of address. It should be noted that there is anobligation ona company to lodge a notice of change of address within 14 days after thechange. The directors of the defendant companyapparently became aware at somestage that P C Smith and Co had sold its practice to Dowling and Associates andthat Dowling andAssociates had lodged a withdrawal of consent (see paragraph 7above). However, no notice of change of address was lodged by thecompany.
[24]The applicant's contention that the notice of withdrawal of consentoperated as a change of registered office effective sevendays after itslodgment is not correct. The effect of the lodgment of a withdrawal of consentis as noted above. It commences aprocess whereby the registered office may bechanged to the director's address. It does not have the same impact as anotice ofchange of address.
[25]No cases have been cited to me on the effect to be given to the lodgmentof a notice of withdrawal of consent. In my view,the registered office at thetime of the search on 11 August 2000 was that as disclosed on the register.Provided service is madeon the address lodged with the ASIC, it will be goodservice, whether or not the office of the company is in fact at that location.InQuicksafe Freightlines Pty Ltd v. Shell Co of Australia Ltd(1984) 10ACLR 161;Re Nicholls Pty Ltd(1982) 7 ACLR 76 andRe: RichardsonInvestments and Dewatering (WA) Pty Ltd(1988) 14 ACLR 315, the companieshad in each case changed the registered office but had not notified the ASIC.Service on the addresses contained inthe register was held to be good service.
[26]As to the contention that the respondent should have been alerted to apossible change in the registered office by the presencein the search of anotation as to the receipt of a withdrawal of consent (paragraph 8 above) andso served the directors personally,I am of the view that the situation isdifferent from that disclosed inRe: Swiftcrete(1977) 2 ACLR 411 wherea change of office was indicated to the public on an annual return filed in theregistry. Here, the obligation was on theapplicant company to lodge a changeof address. That was not done. The respondent was entitled to rely on theregister and didnot need to resort to other permissible modes of service.
[27]I am of the view that service was regularly made and thus the judgment wasproperly entered.
Discretion To Set Aside Default Judgment
[28]Rule 290 Uniform Civil Procedure Rules provides that the court may setaside or amend a judgment by default under that divisionof the rules, and anyenforcement of it, on terms, including terms about costs and the giving ofsecurity that the court considersappropriate. The relevant considerations tobe taken into account are:
(a)whether there is a good reason why the defendant failed to file a defence;
(b)whether there has been any delay by the defendant in bringing theapplication;
(c)the defendant's conduct in the action before and after judgment;
(d)the defendant's good faith;
(e)whether the defendant has raised a prima facie defence on the merits(raising triable issues); and
(f)whether the plaintiff would be irreparably prejudiced if the judgment isset aside which cannot be adequately compensated bya suitable award of costs.
[29]In my view, the defendant has provided a good reason for the failure tofile a defence. The passing of the claim and Statementof Claim through thehands of Dowling and Co was not brought to the attention of the defendant. Thedefendant misapprehended thedate of service as a result and believed that ithad until 13 September 2000 to file a defence. The defendant contacted itssolicitorsimmediately it was served and gave instructions for the filing of adefence.
[30]I am also of the view that the defendant acted in good faith throughoutand there has been no delay by the defendant in bringingthis application onceit became aware of the default judgment. Nothing in the defendant's conductbefore or after the judgment impactsadversely on the exercise of thediscretion.
[31]The respondent submits that the only matter in contention is whether thedefendant has a good prima facie defence on the merits. The respondent submitsthat the defendant has failed to depose to factual matters in support of itsalleged defences. The respondentalso submits that the defendant has failed todepose to factual matters in relation to an oral contract concerning shippingcosts,in support of a defence in regards to the debt claimed. The respondentalso submits that the alleged defences of set off and duressare unavailable tothe defendant. It is submitted that nothing in the proposed defence andcounterclaim affects a no set off clausein a written contract that was enteredinto between the parties. It is further submitted that assertions as to duressin the signingof the written contract are not capable of giving rise to anarguable defence because all that is asserted is commercial pressureratherthan unlawful threats or unconscionable conduct. It is submitted that thedefendant has not established a prima facie defenceon its merits.
[32]The defendant submits that it has raised a bona fide defence, set off andcounterclaim which are prima facie good on the merits. The defendant'sposition is that the defendant's agreement to purchase the goods is constitutedby two oral agreements and partlyby written agreement, although the writtenagreement was obtained under duress and did not include all agreed terms. Itis submittedthat these issues are verified by Mr. A M Walker (affidavit sworn27 September 2000), the plaintiff's relevant agent at the time. It is alsoclaimed that the plaintiff breached the agreements or that the plaintiff wasnegligent in the handling of the goods,and that the plaintiff was guilty ofmisleading and deceptive conduct and/or breaches of warranty and that, as aconsequence, thedefendant suffered loss and damage.
[33]In order to have judgement set aside the defendant must establish that ithas a prima facie defence on the merits to the claimon which the judgment wasfounded:Aboyne Pty Ltd v. Dixon Homes Pty Ltd[1980] Qd R 142;National Mutual Life Association of Australasia Ltd v. Oasis DevelopmentsPty Ltd [1983] 2 Qd R 441 at 449 where McPherson J described this elementas "the most cogent". (Civil Procedure Queensland, r290.10, Butterworths2000).Without considering the counterclaim, it is my view that the defendant hasestablished a defence which is prima facie goodon its merits. I am of theview that the defendant has deposed to factual matters in sufficient detail.The defendant has shownin affidavit material (including the affidavit of Mr.Walker) a defence on the merits. The written agreement itself is challengedonthe basis of duress and also under the Trade Practices Act. The no set offclause in the written agreement is thus under attack. I am also of the viewthat a prima facie defence of duress has been made out. The extent andcharacterisation of the conduct allegedto amount to duress is a matter fortrial. As noted by McPherson J in National Mutual Life Association ofAustralasia Limited v.Oasis Developments Pty Ltd [1983] 2 Qd R at 449:
"It is not often that a defendant who has an apparently good ground of defencewould be refused the opportunity of defending ....."
[34]As to whether the plaintiff would be irreparably prejudiced if thejudgment is set aside, no arguments as to that aspect havebeen directed to meby the respondent. I am of the view that the plaintiff would not beirreparably prejudiced in these circumstances.
[35]I am thus of the view that in the exercise of my discretion the defaultjudgment of 12 September 2000 should be set aside.
The Giving Of Security
[36]The respondent submits that should the judgment be set aside, that anyorder allowing the filing of the defence should be conditionalupon thedefendant providing security by paying the judgment sum into court. It issubmitted that because the allegations of duressand the argument about thenon-applicability of the no set off clause as inadequately deposed to, that anorder for security is appropriate. Reference is made to a comment by the courtinConners v. Acheron Pty Ltd (No.2)[1996] 1 Qd.R. 243 at 246,
"It was argued ... that the court should follow and apply the law as laid downin judgments in the South Australian Supreme CourtinEdwards v. Wallace(1986) 42 SASR 308, especially at 315 per O'Loughlin J. The essence of thatstatement is that the court should not require payment into court if thereis areasonable defence, but may do so if the proposed defence seems to have no realsubstance. We are of the opinion that it isunnecessary to determine, in thisappeal, whether those principles should be applied; it is possible thatinstances will occur inwhich it is appropriate to provide for security for ajudgment, as a condition for leave to defend, when such an order would notbejustified under theEdwards v. Wallace principles."
It is submitted that the circumstances here fall as an appropriatecase under theEdwards v. Wallace principles.
[37]Theapplicant submits that there is no justification for the court to order anyform of security, because the plaintiff has shownno justification for theordering of security, and no prejudice has been demonstrated by the plaintiff.There is no evidence to suggestthat the defendant is impecunious and the setoff and counterclaim are so closely related to the plaintiff's claim that itwouldbe unjust for the defendant to suffer further prejudice by being requiredto secure a further sum. It is further submitted thatthe defendant's defenceand counterclaim are not such that the defendant has not shown a reasonabledefence which would justify thegiving of security.
[38]I am not satisfied that the defence has "no real substance", so as torequire an order for security. There is no other basisargued. I decline toattach conditions to any order.
[39]My order is that the default judgment for the plaintiff entered on 12September 2000 be set aside. I will hear the partiesas to the need forfurther orders and as to costs.
