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- Unreported Judgment
Gabeen Services Pty Ltd v Neverfail Bottled Water Co Pty Ltd QDC 212
DISTRICT COURT OF QUEENSLAND
Gabeen Services Pty Ltd v Neverfail Bottled Water Co Pty Ltd  QDC 212
GABEEN SERVICES PTY LTD
NEVERFAIL BOTTLED WATER CO PTY LTD
District Court at Brisbane
19 August 2015, ex tempore
19 August 2015
PROCEDURE – JUDGMENTS AND ORDERS – AMENDING, VARYING AND SETTING ASIDE – whether a default judgment was regularly entered – whether the defendant failed to give a satisfactory explanation for its failure to appear – whether the defendant has demonstrated a prima facie defence on the merits to the claim on which the judgment is founded
Uniform Civil Procedure Rules 1999 (Qld) rr 120, 290
Morel v The Bank of Queensland Limited  QCA 207, distinguished
Wallace v The Rural Bank Limited & Anor  QCA 295, applied
J T Dillon for the plaintiff
C M Copley for the defendant
Spranklin McCartney for the plaintiff
Ashurst for the defendant
- This is an application seeking orders that the default judgment entered on 31 March 2015, be set aside pursuant to rule 290 of the Uniform Civil Procedure Rules 1999 (‘UCPR’) and that the defendant file and serve a defence and counter-claim within 14 days.
- This proceeding concerns a distribution agreement entered into between the plaintiff and the defendant in relation to the sale and distribution of bottled water and other goods. The dispute between the parties relates to whether or not the plaintiff exercised the option to renew the agreement for a renewed term and whether the plaintiff breached the agreement by selling products of a competitor. The extent of any damages owing to the plaintiff is very much in issue. This is reflected by the fact that there is, awaiting determination, a previous application of the plaintiff seeking, among other things, the fixing of a date for the hearing of the assessment of damages as a consequence of the default judgment.
- The issues in dispute between the parties, should the application of the defendant be granted, extend not only to the construction of the distribution agreement, but also whether conduct of the plaintiff breached the agreement, and whether conduct of the plaintiff waived strict compliance with obligations of the defendant so far as they related to exercising an option to extend the agreement. The application of the defendant is argued on two bases. Firstly, it is argued that the judgment was irregularly entered. Secondly, it is argued that in the event the judgment was found to be regularly entered, the judgment should be set aside because the defendant has demonstrated that it has given a satisfactory explanation for its failure to defend and the delay in bringing this application and that it has a prima facie defence on the merits.
- Turning to the first aspect of the application, the registrar entered judgment for the plaintiff on 31 March 2015 in reliance upon an affidavit of Peter John McCartney, filed on 20 March 2015. Mr McCartney is the solicitor acting on behalf of the plaintiff. There were difficulties in complying with all of the legislative requirements for serving the defendant pursuant to the Service and Execution of Process Act 1992. Ultimately, on the third attempt, the plaintiff complied with these requirements. Relevantly, at paragraph 12 of his affidavit, Mr McCartney deposes:
“On 21 October 2014, I duly served the defendant by causing Gayle Spranklin, receptionist in the employ of Spranklin McCartney Lawyers Pty Ltd, to forward correspondence enclosing a sealed claim and statement of claim, together with the Form 1-Notice in the correct format, by ordinary prepaid post to the registered office for the defendant.”
- Subsequently, it is deposed at paragraph 16:
“The envelope was then posted by Brooke Daley, secretary in the employ of Spranklin McCartney Lawyers Pty Ltd at the post box on Beaudesert Road in Moorooka on 21 October 2014.”
- In order for the registrar to enter judgment by default, the registrar needed to be satisfied that the claim and statement of claim had been lawfully served on the defendant. There is an abundance of authority which stresses the need for strict compliance in this regard, although it was noted recently in the Court of Appeal in Wallace v the Rural Bank Limited & Anor that whilst an irregularly obtained judgment will normally be set aside on the application of a defendant, there is “a residual discretion”.
- Pursuant to r120 of the UCPR, an affidavit of service may be made on information given to, or belief of, the person causing the service. But if so, “must state the source of the information”. The defendant submits that the affidavit of Mr McCartney referred to above, does not relevantly state the source of the information that the claim and statement of claim were, in fact, posted to the registered office of the defendant on 21 October 2014. Whilst Fraser JA was content to state that his provisional view is that “…an affidavit by a solicitor that she caused the item to be sent by registered post is sufficient proof it was sent by registered post” in Morel v the Bank of Queensland Limited, this is not the factual scenario before me. What Mr McCartney deposes to is, firstly, that he caused Ms Franklin to forward the relevant correspondence and, secondly, that Ms Daley posted it. There is no attempt to state the source of the information that Ms Daley posted the correspondence, and in terms of Ms Franklin, there is no particular information as to what she actually did.
- This is a different fact scenario from that under consideration by Fraser JA in Morel. A solicitor, being an officer of the court, making an assertion that she caused an item to be served, with the consequential professional obligations owed to the court, does so in very different circumstances to where a solicitor merely states that other people did certain things. If the solicitor distances himself from the acts giving rise to the allegation that service of a document has taken place in a particular way, that solicitor needs to state on what basis the assertion is made that service has been affected. That has not occurred on the facts before me. The distinction is not a trivial one, given the consequences of entering judgment by default.
- I, therefore, find that the judgment was not regularly entered, and I set aside the judgment on this basis. If I am wrong, however, I am nonetheless satisfied that the judgment should be set aside even if it was regularly obtained. The explanation of the defendant for its failure to appear is that it knew nothing of the claim and statement of claim until such time as it received the defendant’s application seeking an order for the fixing of a date for the hearing of the assessment of damages.
- Employees of the defendant have deposed to the fact that they can locate no record of the receipt of the claim and statement of claim. In the circumstances, I am satisfied that there has been a satisfactory explanation, not only for the defendant’s failure to appear, but also the delay in bringing this application.
- Correspondence exhibited to the affidavit of Mr Miller filed 13 August 2015 and, in particular, exhibits NM6, NM7 and NM8, together with the draft defence exhibited to the affidavit of Mr Miller demonstrate, in my view, that the defendant has a prima facie defence on the merits to the claim on which the judgment was founded. Therefore, in the event I am wrong and the judgment was regularly obtained, I am satisfied that it should be set aside in any event.
- The orders are:
- The default judgment entered on 31 March 2015 is set aside;
- The defendant file and serve defence and counterclaim within seven days;
- The application filed on 24 July 2015 on behalf of the plaintiff is dismissed with no order as to costs; and
- The costs of and incidental to the application filed 10 August 2015 on behalf of the defendant be costs in the course on the standard basis.
- Published Case Name:
Gabeen Services Pty Ltd v Neverfail Bottled Water Co Pty Ltd
- Shortened Case Name:
Gabeen Services Pty Ltd v Neverfail Bottled Water Co Pty Ltd
 QDC 212
19 Aug 2015