Able Net Pty Ltd v Wafia Group Pty Ltd (ACN: 127 475 996)

[2015] NSWSC 1228

Supreme Court

New South Wales

Medium Neutral Citation:	Able Net Pty Ltd v Wafia Group Pty Ltd (ACN: 127 475 996) [2015] NSWSC 1228
Hearing dates:	14 August 2015
Date of orders:	14 August 2015
Decision date:	14 August 2015
Jurisdiction:	Equity
Before:	Rein J
Decision:	See [13]
Catchwords:	EQUITY - Application to strike out defences and cross claim - Defendants failure to file evidence and appear - Defences and cross claim struck out
Legislation Cited:	Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Nil
Texts Cited:	Nil
Category:	Consequential orders (other than Costs)
Parties:	Able Net Pty Ltd (Plaintiff) Wafia Group Pty Ltd (ACN: 127 475 996) (First Defendant) Onlyne Pty Ltd (Second Defendant) Kwang Kuen Ryoo (Third Defendant)
Representation:	Counsel: P. Afshar (Plaintiff) J. Kim (solicitor) (First, Second and Third Defendants) Solicitors: Spinks Eagle Lawyers (Plaintiff) Sydney Legal House (First, Second and Third Defendants)
File Number(s):	2014/316729
Publication restriction:	nil

EX TEMPORE JUDGMENT

1. In this matter, the plaintiff seeks, by way of Notice of Motion filed on 29 July 2015, orders striking out the defendant's defences and cross claim. Mr Afshar of counsel appears for the plaintiff in the matter and Ms Kim, who is the solicitor on the record for the defendants appears for them.

2. I should note that Ms Kim indicated that she wished to obtain an adjournment of this matter. She indicated that she had tried to brief a barrister yesterday for the matter but that he had informed her that he was not available today and I do not regard that as a satisfactory reason and basis for an adjournment. No explanation for the delays prior to that has been provided. As will be seen, part of the problem in this case has been that not only have the defendants failed to file the evidence that they were ordered on three separate occasions to file but on the occasions when the plaintiff's solicitor has written to the defendants’ solicitor, he has not been favoured with a reply.

3. The plaintiff also sought by way of late amendment, to have, in addition to the striking out of the defence, default judgment entered. Mr Afshar accepts that as the amendment was only advised yesterday he cannot press for any relief on that basis. He does however, on behalf of plaintiff seeks the plaintiff's costs of and pertaining to the proceedings including the costs of this application on an indemnity basis having regard to the conduct of the defendant and Ms Kim. Mr Afshar provided me with detailed submissions and Ms Kim does not dispute any of the factual material in those submissions. The facts which I set out below are taken from his written submissions which summarises the evidence contained in Exh A.

4. On 3 March 2015, the Court ordered the defendants by consent to serve their evidence by 30 April 2015. The defendants failed to serve their evidence by that date and made no attempt to explain that failure. On 5 May the Court made orders by consent requiring the defendants to serve their evidence. By 19 May 2015, the defendants again defaulted and failed to explain the reasons for their default. On 9 June 2015, the Court ordered the defendants to serve their evidence by 23 June 2015 failing which they would be required to seek the Court's leave to serve any evidence. Those orders were made by consent on or about 4 June 2015. There have been three further directions hearings at which neither the defendants nor the solicitor have appeared. Notwithstanding correspondence sent by the plaintiff's solicitor to the defendant's solicitor no answer was received.

5. The plaintiff relies on Part 12.71 of the Uniform Civil Procedure Rules2005 (NSW) (“UCPR”) which provides that if a plaintiff does not prosecute proceedings with due despatch, the Court may order that the proceedings be dismissed or make such other orders the Court thinks fit. For the definition of plaintiff which includes cross claimant, see s 3 of the Civil Procedure Act 2005 (NSW) (“CPA”).

6. Part 12.72 of the UCPR provide that if a defendant does not conduct his, her or its defence with due despatch, the Court may strike out the defence in whole or in part or make such other orders the Court thinks fit.

7. Mr Afshar also relies in relation to the defence of the third defendant on rule 14.28 of the UCPR which provides that a Court can strike out pleadings for various reasons including that the pleading in whole or in part discloses no reasonable defence or is an abuse of process of the Court.

8. Mr Afshar submits that the repeated unexplained failures by the defendant to comply with the Court orders demonstrate that the defendants do not intend to prosecute the defences or the cross-claim and that they have in fact failed to prosecute their defences or the cross claim with due despatch. Their unexplained and repeated failure to appear before the Court remains unexplained. Even as of today, Ms Kim did not have an affidavit to put before the Court explaining past delays and the position of the defendants.

9. Secondly, the defendants, he submits are barred from leading evidence unless they obtain the Court's leave. No effort has been made to seek that leave nor has there been any indication of what the evidence in support of such an application would be. He submits that in those circumstances the defences of the cross-claim are doomed to fail. I think that is certainly correct in relation to the cross-claim. So far as the defences are concerned, that would apply to the claim of duress but I am not sure that it must automatically follow that the plaintiff would succeed in its claim. That will be determined on the application for default judgment by the plaintiffs in due course if the defences are struck out.

10. The third matter is that the defendant's conduct is at odds with the requirements of the CPA which imposes an obligation on parties and those acting for them to attend to endeavour to ensure that in conformity with case management principles, matters are dealt with expeditiously and appropriately. Again, no explanation has been provided as to why the defendants have failed to appear or serve their evidence. Mr Afshar submits that the delays are prejudicial to the plaintiff. He points to the fact that the plaintiff is liable to Optus in relation to the SIM cards which are the charges which are the subject of the plaintiff’s claim against the defendants. The plaintiff has a significant debt in excess of a million dollars and is entitled in a commercial context to a speedy determination of its rights in relation to that claimed debt.

11. Another matter which is raised which is of some concern, is that the evidence before the Court demonstrates that the third defendant is not the second defendant's director. In those circumstances, it is difficult to see that he would be able to have arranged for the filing of the defence by the second defendant. That conduct, unexplained as it is, would be a separate reason why the second defendant’s defence should be struck out.

12. Another matter to which attention is drawn and which is of concern is that para 23 of the Statement of Claim makes a very specific allegation against the third defendant namely that he is liable effectively as a guarantor of the obligations of the first and second defendants to the plaintiff. In response to that allegation, the third defendant has said "Paragraph 23 is not admitted as it does not relate to the third defendant".

13. How such a defence could be filed in the circumstances has not been adequately explained as it is clear that it is an allegation against the third defendant to which he was required to respond. I asked Ms Kim to explain why that that was done and her explanation was inadequate. She accepted I think ultimately that it was a clear pleading against the third defendant. In my view that would be a reason for that paragraph to be struck out. It also raises questions about the approach that has been taken by the defendants and those advising the defendants to the claims that are made in the statement of claim. It is not strictly to enter further into that as I am satisfied that no adequate explanation has been provided for the failure by the defendants to file evidence in support of their defences and their cross-claim or to appear and that it is appropriate that the Court orders that those defences be struck out and I so order. I also order the defendants to pay the costs of the notice of motion including today.

Decision last updated: 27 August 2015