Unique Product Marketing Pty Ltd V Bortek Sales Pty Ltd
[2000] QDC 314
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- Unique Product Marketing Pty Ltd V Bortek Sales Pty Ltd[2000] QDC 314
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Unique Product Marketing Pty Ltd V Bortek Sales Pty Ltd[2000] QDC 314
Unique Product Marketing Pty Ltd V Bortek Sales Pty Ltd[2000] QDC 314
DISTRICT COURT OF QUEENSLAND
CITATION: | Unique Product Marketing Pty Ltd v. Bortek Sales Pty Ltd [2000] QDC 314 |
PARTIES: | Unique Product Marketing Pty Ltd (ACN 010344742) (Respondent/Plaintiff) v. Bortek Sales Pty Ltd (ACN 055108462) (Applicant/Defendant) |
FILE NO/S: | 3261 of 2000 |
DIVISION: |
|
PROCEEDING: | Application to Set Aside Default Judgment |
ORIGINATING COURT: | District Court Brisbane |
DELIVERED ON: | 1 November 2000 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 28 September 2000 |
JUDGE: | Shanahan DCJ |
ORDER: | The default judgment for the plaintiff entered on 12 September 2000 be set aside |
CATCHWORDS: | Quicksafe Freightlines 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 ACLR 315 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 Developments Pty 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 the respondent/plaintiff on 12 September 2000, and to set aside any enforcement thereof. The applicant also seeks leave (if necessary) to file and serve its Notice of Intention to Defend and Defence and Counterclaim.
- [2]The plaintiff’s claim was for contractual debts due and owing. The Claim and Statement of Claim were filed on 11 August 2000. Default judgment was entered 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 for costs).
- [3]The applicant submits that the judgment was entered irregularly (because the claim was not properly served) and should be set aside ex debito justiciae. Alternatively, if the judgment was regularly entered, it should be set aside under a proper exercise of the court’s jurisdiction (r.290 Uniform Civil Procedure Rules).
Factual Background
- [4]The plaintiff’s claim against the defendant is for:
- The sum of $100,000 being the balance allegedly outstanding pursuant to a written agreement for the sale by the plaintiff to the defendant of certain equipment in Indonesia due on 10 June 2000;
- The amount of $11,460.90 being the alleged outstanding balance of shipping expenses incurred by the plaintiff payable on or about 13 July 2000;
- 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 the Australian Securities and Investment Commission (ASIC) register on 11 August 2000 for the registered office of the defendant (affidavit of Paul George Anthony Betros). That search showed the 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 was forwarded by letter dated 11 August 2000 to that address. A copy of the search is exhibited to Mr. Betros’ affidavit (PGB1). The letter enclosing the Claim and Statement of Claim was sent by pre-paid registered post.
- [7]P C Smith and Co were the defendant’s former accountants and its practice was sold to Dowling & Associates and the office of P C Smith and Co moved to Mr. Smith’s house (affidavit B R Welch sworn 27 September 2000). Dowling and Associates notified the ASIC of its withdrawal of consent to act as registered office of the defendant. Mr. Welch attests that in early August 2000 he received a letter from the ASIC informing him that Dowling and Associates had withdrawn their consent to act as the registered office for the defendant company (affidavit sworn 15 September 2000). Mr. Welch also attests that when one Michael Dowling purchased Mr. Smith’s practice, he corresponded with the defendant seeking to retain the defendant as a client. The defendant did not engage Michael Dowling and Associates and they had never acted on behalf of the defendant or its directors (affidavit sworn 27 September 2000).
- [8]Under the heading “Document Details” on the ASIC search (PGB1), the last entry in point of time appears as “Notification of Withdrawal of Consent for Registered Office”. It is noted as received on 1 August 2000, processed on 2 August 2000 and effective on 1 August 2000. However, as noted above, on 11 August 2000, the register still displayed the registered office as care of P C Smith & Co at 1106 Ipswich Road.
- [9]Mr. Welch swears that on 16 August 2000 he took delivery of the Claim and Statement of Claim of the plaintiff. The documents were delivered to him at his home by registered post. They were in an envelope from the plaintiff’s solicitors. He had examined the signature of the addressee or agent in a document headed Australia Post Delivery Confirmation – Advice Receipt (document BIW2 to affidavit of Bridget Isobel Walker) and was of the view that it appeared to be “Michael Dowling” (affidavit BR Welch sworn 15 September 2000). When he accepted the document on 16 August 2000, there was no covering letter, memorandum or note from Dowling and Associates indicating that the documents had previously been received by them.
- [10]Mr. Welch believed service had been effected on the defendant on 16 August 2000. On 17 August 2000 he contacted the defendant’s solicitors (Bridge Brideaux) and attended their offices on 22 August 2000. He was informed by his solicitors that the defendant had 28 days from 16 August 2000 to file a Notice of Intention to Defend and Defence (i.e., by 13 September 2000). He gave instructions to prepare a Notice of Defence and Counterclaim. On 11 September 2000 he perused a draft defence and counterclaim and some amendments were made (affidavit B R Welch sworn 15 September 2000).
- [11]Mr. R A Brideaux of Bridge Brideaux Solicitors swears that on 17 August 2000 he received a phone call from Mr. Welch. Mr. Welch attended on 22 August 2000 and, on his instructions, Mr. Brideaux commenced to prepare a Notice of Intention to Defend, Defence and Counterclaim. He believed that Mr. Welch had been served on 16 August 2000 and Mr. Brideaux calculated that the defendant had until 13 September 2000 to file its Notice of Intention to Defend and Defence. On 12 September 2000, he telephoned the plaintiff’s solicitors to inform them that the documents would be filed and served on 13 September 2000. He was informed that default judgment had been obtained on 12 September 2000 and that service had been effected by registered post on 14 August 2000 (affidavit R A Brideaux sworn 15 September 2000).
- [12]On 13 September 2000, Mr. Brideaux conducted a search of the ASIC register. That search showed the registered office of the defendant to be 182 Fort Road, Oxley, 4075 as at 2 August 2000 (document RAB1 to affidavit of R A Brideaux sworn 15 September 2000). That address is the address of both directors of the defendant as shown in the search conducted by Mr. Betros on 11 August 2000 (PGB1).
Was The Judgment Entered Irregularly?
- [13]The answer to this question depends on whether the service of the originating process by registered mail sent on 11 August 2000 to the address as disclosed in the ASIC register was regular service. It is apparent from the Australia Post Delivery Confirmation – Advice Receipt (document BIW2 to affidavit 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 the registered office of the applicant was care of “P C Smith & Co (Moorooka), Unit 1, 1106 Ipswich Road, Moorooka, Queensland, 4105.” When Dowling and Associates purchased the practice of P C Smith and Co, Dowling and Associates withdrew its consent to act as registered office for the applicant on 28 July 2000, and notified the ASIC of that withdrawal. It is submitted that effective from 2 August 2000, the applicant’s registered office reverted to 182 Fort Road, Oxley, Queensland, 4075, the director’s home address. For some reason, the change in the registered office was not recorded by the ASIC when the search was conducted on 11 August 2000. However, the lodgment of the notification of the withdrawal of consent was recorded.
- [15]It is submitted that service of the claim was not properly affected at the registered office of the applicant as required by the Uniform Civil Procedure Rules and the Corporations Law. It is submitted that the ASIC search conducted by the respondent’s solicitors on 11 August 2000 showed that the notification of withdrawal of consent for registered office had been lodged and was effective from 1 August 2000. It is submitted that the respondents were thus aware of that document which was a public document.
- [16]It is submitted that as at 11 August 2000 the correct registered office of the applicant was the Oxley address by reason of the lodgment of the notification of withdrawal of consent, and s. 142(3) and s. 143 of the Corporations Law. It is submitted that the notification of withdrawal of consent operated as a change of registered office, effective seven days after its lodgment, notwithstanding that the actual change had not been recorded. It is submitted that a document which was publicly available to the respondents indicated that the registered office of the defendant had been (or would soon be) changed, effective from 1 August 2000 and the respondent did not make any further inquiries. It is submitted that in view of the notification of withdrawal of consent, it would have been prudent for the respondent to have served the applicant at the Oxley address as it was entitled to do pursuant to s. 109X of the Corporations Law, and which had been used by the respondent in previous correspondence with the applicant. Because service was not properly effected, it is submitted that judgment has been irregularly entered.
- [17]It is submitted on behalf of the respondent that a notice of withdrawal of consent does not have the same impact under the Corporations Law as a notice of change of address. It is submitted that the notice of withdrawal of consent form simply starts a process whereby the ASIC eventually does change the address, but the form in itself does not change the address. It is submitted that as at 11 August 2000, when the proceedings were posted, the registered office was that as recorded on the ASIC register. The public was fully entitled to conduct a search, ascertain what was recorded as the registered office and make service under s. 109 of the Corporations Law. It is submitted that the judgment based on that service was regularly entered.
- [18]Rule 107 Uniform Civil Procedure Rules provides that a claim to be served on a company personally must be served in the way provided for service of documents under the Corporations Law.
- [19]By s. 109X(1) of the Corporations Law, a document may be served on a company by posting it to the company’s registered office. There is an alternative provided of delivering the document personally to a director of the company who resides in Australia (s. 109X(1)(b)). Pursuant to s. 109Y, service by post is effected by pre-paid post and unless the contrary is proved, the service is taken to have been effected at the time at which the letter would have been delivered in the ordinary course of the post.
- [20]“Registered office” is defined in s. 9 in relation to a body corporate to mean the body’s registered office under s. 142.
- [21]Section 142 requires that a company must have a registered office in Australia. Communications and notices to the company may be addressed to its registered office. A company must lodge a notice of a change of address of its registered office with ASIC not later than 14 days after the date on which the change occurs (s. 142(2)). A notice of change of address takes effect from the seventh 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 its registered office, it must be able to show to ASIC the occupier’s written consent to the company’s use of those premises as its registered office (s. 143(1)). If the ASIC becomes aware that the occupier of the premises has withdrawn consent to the use of the premises as the address of the company’s registered office, the ASIC may give written notice to a director of the company who resides in Australia that the ASIC intends to change the address of the company’s registered office to the director’s address (s. 143(2)). If the ASIC is not notified of the address of the company’s proposed new registered office 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’s registered office to the director’s address (s. 143(3)).
- [23]The effect of a notice of withdrawal of consent is that it commences a process whereby the ASIC may give a notice to the director under s. 143(2). Fourteen days after that notice is given, the ASIC may change the address. There is no statutory provision as to the date the notice takes effect from, which is different from the effect of a notice of change of address (s. 142(3)). The notice of withdrawal of consent thus does not have the same impact as a notice of change of address. It should be noted that there is an obligation on a company to lodge a notice of change of address within 14 days after the change. The directors of the defendant company apparently became aware at some stage that P C Smith and Co had sold its practice to Dowling and Associates and that Dowling and Associates had lodged a withdrawal of consent (see paragraph 7 above). However, no notice of change of address was lodged by the company.
- [24]The applicant’s contention that the notice of withdrawal of consent operated as a change of registered office effective seven days after its lodgment is not correct. The effect of the lodgment of a withdrawal of consent is as noted above. It commences a process whereby the registered office may be changed to the director’s address. It does not have the same impact as a notice of change of address.
- [25]No cases have been cited to me on the effect to be given to the lodgment of a notice of withdrawal of consent. In my view, the registered office at the time of the search on 11 August 2000 was that as disclosed on the register. Provided service is made on the address lodged with the ASIC, it will be good service, whether or not the office of the company is in fact at that location. In Quicksafe Freightlines Pty Ltd v. Shell Co of Australia Ltd (1984) 10 ACLR 161; Re Nicholls Pty Ltd (1982) 7 ACLR 76 and Re: Richardson Investments and Dewatering (WA) Pty Ltd (1988) 14 ACLR 315, the companies had in each case changed the registered office but had not notified the ASIC. Service on the addresses contained in the register was held to be good service.
- [26]As to the contention that the respondent should have been alerted to a possible change in the registered office by the presence in the search of a notation as to the receipt of a withdrawal of consent (paragraph 8 above) and so served the directors personally, I am of the view that the situation is different from that disclosed in Re: Swiftcrete (1977) 2 ACLR 411 where a change of office was indicated to the public on an annual return filed in the registry. Here, the obligation was on the applicant company to lodge a change of address. That was not done. The respondent was entitled to rely on the register and did not need to resort to other permissible modes of service.
- [27]I am of the view that service was regularly made and thus the judgment was properly entered.
Discretion To Set Aside Default Judgment
- [28]Rule 290 Uniform Civil Procedure Rules provides that the court may set aside or amend a judgment by default under that division of the rules, and any enforcement of it, on terms, including terms about costs and the giving of security that the court considers appropriate. The relevant considerations to be 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 the application;
- (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 is set aside which cannot be adequately compensated by a suitable award of costs.
- [29]In my view, the defendant has provided a good reason for the failure to file a defence. The passing of the claim and Statement of Claim through the hands of Dowling and Co was not brought to the attention of the defendant. The defendant misapprehended the date of service as a result and believed that it had until 13 September 2000 to file a defence. The defendant contacted its solicitors immediately it was served and gave instructions for the filing of a defence.
- [30]I am also of the view that the defendant acted in good faith throughout and there has been no delay by the defendant in bringing this application once it became aware of the default judgment. Nothing in the defendant’s conduct before or after the judgment impacts adversely on the exercise of the discretion.
- [31]The respondent submits that the only matter in contention is whether the defendant has a good prima facie defence on the merits. The respondent submits that the defendant has failed to depose to factual matters in support of its alleged defences. The respondent also submits that the defendant has failed to depose to factual matters in relation to an oral contract concerning shipping costs, in support of a defence in regards to the debt claimed. The respondent also submits that the alleged defences of set off and duress are unavailable to the defendant. It is submitted that nothing in the proposed defence and counterclaim affects a no set off clause in a written contract that was entered into between the parties. It is further submitted that assertions as to duress in the signing of the written contract are not capable of giving rise to an arguable defence because all that is asserted is commercial pressure rather than unlawful threats or unconscionable conduct. It is submitted that the defendant has not established a prima facie defence on its merits.
- [32]The defendant submits that it has raised a bona fide defence, set off and counterclaim which are prima facie good on the merits. The defendant’s position is that the defendant’s agreement to purchase the goods is constituted by two oral agreements and partly by written agreement, although the written agreement was obtained under duress and did not include all agreed terms. It is submitted that these issues are verified by Mr. A M Walker (affidavit sworn 27 September 2000), the plaintiff’s relevant agent at the time. It is also claimed that the plaintiff breached the agreements or that the plaintiff was negligent in the handling of the goods, and that the plaintiff was guilty of misleading and deceptive conduct and/or breaches of warranty and that, as a consequence, the defendant suffered loss and damage.
- [33]In order to have judgement set aside the defendant must establish that it has a prima facie defence on the merits to the claim on which the judgment was founded: Aboyne Pty Ltd v. Dixon Homes Pty Ltd [1980] Qd R 142; National Mutual Life Association of Australasia Ltd v. Oasis Developments Pty Ltd [1983] 2 Qd R 441 at 449 where McPherson J described this element as “the most cogent”. (Civil Procedure Queensland, r 290.10, Butterworths 2000). Without considering the counterclaim, it is my view that the defendant has established a defence which is prima facie good on its merits. I am of the view that the defendant has deposed to factual matters in sufficient detail. The defendant has shown in affidavit material (including the affidavit of Mr. Walker) a defence on the merits. The written agreement itself is challenged on the basis of duress and also under the Trade Practices Act. The no set off clause in the written agreement is thus under attack. I am also of the view that a prima facie defence of duress has been made out. The extent and characterisation of the conduct alleged to amount to duress is a matter for trial. As noted by McPherson J in National Mutual Life Association of Australasia 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 defence would be refused the opportunity of defending …..”
- [34]As to whether the plaintiff would be irreparably prejudiced if the judgment is set aside, no arguments as to that aspect have been directed to me by the respondent. I am of the view that the plaintiff would not be irreparably prejudiced in these circumstances.
- [35]I am thus of the view that in the exercise of my discretion the default judgment of 12 September 2000 should be set aside.
The Giving Of Security
- [36]The respondent submits that should the judgment be set aside, that any order allowing the filing of the defence should be conditional upon the defendant providing security by paying the judgment sum into court. It is submitted that because the allegations of duress and the argument about the non-applicability of the no set off clause as inadequately deposed to, that an order for security is appropriate. Reference is made to a comment by the court in Conners 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 down in judgments in the South Australian Supreme Court in Edwards v. Wallace (1986) 42 SASR 308, especially at 315 per O'Loughlin J. The essence of that statement is that the court should not require payment into court if there is a reasonable defence, but may do so if the proposed defence seems to have no real substance. We are of the opinion that it is unnecessary to determine, in this appeal, whether those principles should be applied; it is possible that instances will occur in which it is appropriate to provide for security for a judgment, as a condition for leave to defend, when such an order would not be justified under the Edwards v. Wallace principles.”
It is submitted that the circumstances here fall as an appropriate case under the Edwards v. Wallace principles.
- [37]The applicant submits that there is no justification for the court to order any form of security, because the plaintiff has shown no justification for the ordering of security, and no prejudice has been demonstrated by the plaintiff. There is no evidence to suggest that the defendant is impecunious and the set off and counterclaim are so closely related to the plaintiff’s claim that it would be unjust for the defendant to suffer further prejudice by being required to secure a further sum. It is further submitted that the defendant’s defence and counterclaim are not such that the defendant has not shown a reasonable defence which would justify the giving of security.
- [38]I am not satisfied that the defence has “no real substance”, so as to require an order for security. There is no other basis argued. I decline to attach conditions to any order.
- [39]My order is that the default judgment for the plaintiff entered on 12 September 2000 be set aside. I will hear the parties as to the need for further orders and as to costs.