Corso v Rejuvi Laboratories Inc
[2018] SADC 71
•29 June 2018
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
CORSO v REJUVI LABORATORIES INC & ORS
[2018] SADC 71
Ruling of His Honour Judge Slattery
29 June 2018
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - DEFAULT JUDGMENT - SETTING ASIDE - GENERALLY
On 17 June 2016 Ms Corso obtained a Judgment following an assessment of damages for physical injuries caused by a breach of duty found to have been committed by Rejuvi Laboratories Inc, an American corporation. Ms Corso suffered severe injuries following the application of a tattoo removal paste manufactured by Rejuvi. The Court found that Rejuvi was in breach of its duty of care owed to persons who underwent the treatment using the paste because it knew or ought to have known of the severe physically damaging consequences of the application of the paste and that it failed to properly warn of the known consequences.
The Judgment in favour of Ms Corso was entered following two default Judgments being obtained against Rejuvi, the first dated 6 May 2010 and the second dated 27 May 2015. The first default judgment was entered following service of the Court documents under Rule 40 as that Rule existed in 2010. The second default judgment was entered by the Court following service of the fourth statement of claim upon Rejuvi under The Hague Service Convention to which Australia acceded during 2010. In entering the two Judgments by default the Court received and relied upon declarations of service prepared by two process servers in the USA.
Following delivery of the Judgments of the Court and no response being received by the Court from Rejuvi, an application was made by Ms Corso to register the Judgment of the Court in the USA.
Rejuvi seeks to set aside the first and second Judgments. Rejuvi contends that it was never served with the summons and the first statement of claim in 2009. It also contends that it was not later served with the second, third and fourth statements of claim. Rejuvi contends that it did not receive any correspondence by mail or email from Ms Corso’s Australian solicitors confirming the existence of the Australian proceedings, the service of Court documents upon Rejuvi and warnings that judgment would be signed in default if steps were not taken by Rejuvi to enter an address for service and then a defence. Rejuvi contends that it did not receive a series of letters sent by the Court to its address following orders by a Master of this Court for such correspondence to be sent to its address. The letters from the Court described the orders made in Chambers by a Master of the Court relating to the pre-trial conduct of this action.
Preparatory to the hearing of the application to set aside judgments, both parties filed affidavit and declaration material in support of and in opposition to the application. Both parties sought and were given permission to cross-examine the deponents to the affidavits and declarations.
Ms Corso failed to make available for cross-examination the two process servers, Mr Merino and Mr Pena, as well as Mr Santillana, the then supervisor of Mr Merino, all of whom had prepared and filed declarations of evidence. Rejuvi contended that in the absence of the deponents being available for cross-examination those declarations should not be permitted to be read by Ms Corso in support of her opposition to the application by Rejuvi.
The declaration of Mr Santillana dealt in part with the information supplied by Mr Merino to Western Legal Services associated with the alleged service by Mr Merino in 2009 of the summons and the first statement of claim. Ms Edios Jacinto, the person who Mr Merino deposed was served in 2009 with that summons and statement of claim at Rejuvi denied in her viva voce evidence that such service had occurred in 2009 or at any other time. The content of Mr Santillana’s declaration relied in part upon the content of the declaration of Mr Merino.
The declaration of Mr Pena deposed that he served the documents required under the Hague Service Convention including the second, third and fourth statements of claim on Rejuvi on 28 January 2015, by service directly upon one Amy Chow who was then employed by Rejuvi as a receptionist. Ms Chow did not provide a declaration of evidence despite Rejuvi being aware of her whereabouts and despite its senior executive, Dr Cheng having discussed the matter with her. At the time of Ms Chow’s employment. the senior executives were Dr Cheng and his wife, Ms Michelle Cheng. Ms Cheng did not provide a declaration of evidence even though evidence was received by the Court that Ms Cheng was in good health, continued to work at the premises of Rejuvi and continued to occupy the role as a senior executive of that company.
Mr Pena was retained by ABC Legal Services, the authorised agent of service under the Hague Convention. Mr Pena provided to ABC Legal Services a proof of service of the second, third and fourth statements of claim upon Rejuvi and also provided photographs of Rejuvi’s premises, a copy of a Rejuvi business card that could only have been obtained from within Rejuvi’s business premises, an accurate physical description of Ms Chow, the Rejuvi employee upon whom he said he served the documents, and GPS coordinates containing dates and times taken within 50 metres of Rejuvi’s premises at or about the time of the alleged service. These were all contained within Mr Pena’s affidavit of service under the Convention which was then filed at Court.
Whether in the absence of Mr Merino and Mr Santillana being available to be cross-examined Ms Corso should be permitted to read their declarations into evidence.
Whether in the absence of Mr Pena being available for cross-examination, Ms Corso should be permitted to read his declaration into evidence.
Rejuvi contends that the first judgment should be set aside pursuant to 6 DCCR 230. Rejuvi further contends that the second judgment should be set aside because, without fault on its part, it did not have knowledge of the initiating process of Ms Corso for the purposes of 6 DCCR 41L.
HELD:
1. The denials of service by Ms Jacinto mean that there are clear differences of versions of fact between Ms Jacinto and Mr Merino. Cross-examination of Mr Merino or Mr Santillana would not resolve the differences of versions of fact and the issue was a matter for trial.
2. Mr Merino’s declaration may not be read into evidence in the absence of his availability for cross-examination.
3. Mr Santillana’s declaration may be read into evidence in part only.
4. The first Judgment should be set aside under 6 DCCR 230.
5. In the absence of any evidence led by Rejuvi from Ms Chow, Ms Cheng or any other relevant person, there was no contradictor of the evidence of Mr Pena apart from the general evidence of Dr Cheng and Ms Jacinto which did not and could not address the fact of service deposed to by Mr Pena. There was no real or practical utility in the cross-examination of Mr Pena because of the absence of declarations from Rejuvi of any evidence to contradict the fact of service and because of the whole of the other relevant admissible evidence before the Court. The declaration of Mr Pena may be read into evidence without Mr Pena being made available for cross-examination.
6. On the whole of the evidence before the Court, Rejuvi is unable to satisfy the Court that without any fault on its part, it did not have knowledge of the initiating process in sufficient time to defend Ms Corso’s claims under the fourth statement of claim.
7. In the exercise of its discretion, the Court refuses to set aside the Judgment obtained by Ms Corso on 27 May 2015.
8. Paragraphs 3 and 4 of Rejuvi’s application are dismissed and the Court will hear the parties on the question of consequential orders and costs.
Observations about the operation of 6 DCCR 41H.
District Court Civil Rules 2006 (SA) 41K, 41L, 230, referred to.
Battiste v Mulvaney [1997] SASC 6419; Southern Cross Commodities Pty Ltd v Martin (1985) 126 LSJS 306; Australian Broadcasting Corporation v O’Neill (2006) 80 ALJR 1672, applied.
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - DEFAULT JUDGMENT - SETTING ASIDE - PROCEDURAL AND OTHER MATTERS
District Court Civil Rules 2006 (SA) 162(2), 165; Evidence Act 1929 (SA) s 53, 45A (repealed), referred to.
Palmer v Prince [1980] WAR 61; Worldwide Products Pty Ltd v Hoffman [1982] QdR 316; Price v Calvary Health Care Adelaide Inc [2013] SADC 46; R v Keogh (No 3) [2014] SASCFC 137; The Queen v Calabria (1982) 31 SASR 423; The Queen v Perry (No 4) (1981) 28 SASR 119; Residues Treatment & Trading Co Ltd v Southern Resources Ltd (1989) 52 SASR 54; Hillier v Lucas (2000) 81 SASR 451, applied.
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SERVICE
Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 15 November 1965, Hague Conference on Private International Law; Disctict Court Civil Rules 2006 (SA) 40 (amended), 41 (repealed), 41AF, 41H, 41K, referred to.
CORSO v REJUVI LABORATORIES INC & ORS
[2018] SADC 71The judgment
On 17 June 2016 I gave judgment in favour of the plaintiff Ms Maria Corso against the second defendant, Rejuvi Laboratories Inc (Rejuvi) which is an American corporation. Rejuvi did not appear at any hearing of this action; it did not file an address for service or a defence to any of Ms Corso’s claims.
The principal issue in the action at first instance was whether any justiciable cause of action arose between Ms Corso and Rejuvi and if so on what basis. On the assumption that the answer to the first question was in the affirmative, a consequential question arose about whether any damages were proven to have been sustained by Ms Corso and whether Rejuvi was a cause of such damage as a matter of common sense and experience.
In her pleadings, Ms Corso alleged that Rejuvi’s negligence was the cause of her injuries. In the first Judgment, I said at [38]:
In the statement of claim, the plaintiff alleges that her injuries were caused by the negligence of the first and or second defendants because they:-
1. Failed to include warnings on the products promotional materials of burning, infection and scarring that could be caused by either the correct or incorrect application of the products;
2. Failed to advise, train or otherwise inform the persons to whom they sold the product and by extension apply it, in this case Ms Babich and Platinum Beauty of the matters in 1 above;
3. Failed to include warnings on the website of the second defendant and then (wrongly) made reference to benzoic acid as a natural ingredient and food additive, therefore implying it was safe;
4. Provided the plaintiff with a brochure (disseminated by the second defendant) notwithstanding the incorrect statements that the product was safe and would not cause side effects;
5. Failed to consider the brochure could be misleading and could falsely reassure the plaintiff; and
6. Failed to set out in a document a recital of the risks of the products (which was eventually given to distributors in April 2008).
In the Judgment I first considered whether a justiciable claim could be identified on the face of Ms Corso’s pleadings and the evidence led in support of her liability claim. I then assessed the evidence led in support of each head of damage and all of the available medical evidence about the sequelae of the application of the Rejuvi Tattoo Removal Paste (at [63]-[77]). I concluded at [78]-[85] as follows:
In light of this material, the plaintiff has fully substantiated paragraph 15 of the Statement of Claim. The material which has been surveyed above, discloses the following:-
1. The method of application of the Paste requires a re-tattooing procedure involving the insertion through a needle of the Paste into the skin of the customer. The Paste is intended to cause a reaction in the dermis of the skin. That reaction is in the form of an eruption of the skin, akin to the process of burning whereby the body sheds the affected skin and thereby also sheds the layers of skin affected by the tattoo;
2. The treatment is carried out by non-medically trained personnel. It may generally be described as a tattoo process conducted by persons who do not ordinarily involve themselves in tattooing. Therefore, implicitly, if not actually, there will be a variation in the depth into the dermis and epidermis into which the Paste is inserted into the skin of the customer. Howsoever deep the Paste is inserted, the intended reaction is an eruptive one with the result and consequences as above described;
3. The available medical literature indicates that the process inevitably leads to scarring at the site of the treatment and also pigmentation of the skin described as hypopigmentation and hypertrophic scarring;
4. The proceedings commenced by Ms Janos in Illinois alleged that Ms Janos had suffered adverse skin consequences, scarring, pain and suffering, disability and loss of normal life as well as disfigurement as a result of the process of the application of the Paste.
In 2007, in light of the material that was known (the legal proceedings) and ought to have been known of the subjects of the reports within the medical journals (who had suffered the effects of the treatment before the articles were published and therefore at least implicitly prior to the plaintiff undergoing her treatment), it is apparent that the second defendant knew or ought to have known of the faults within the Paste and some of their sequelae. It may also be assumed that before an article is published in a learned journal, it will be subject to the usual processes of peer reviews. These articles make clear that the second defendant was not in a position to produce and promote the use of the Rejuvi Paste absent a number of very clear warnings in relation to the obvious and known consequences of the use of that Paste.
I am satisfied that the consequences suffered by the plaintiff as a result of the application of the Paste are as described by the plaintiff in her pleadings and in the further materials which I have received within Exhibit P2 based only upon the content of the Statement of Claim. I am satisfied that in the quite peculiar circumstances of this case, sufficient of the consequences suffered by the ordinary person of the application of the Paste was known or ought to have been known to the second defendant that a number of legal consequences followed. The second defendant was, as at 2007 at the least, under a duty to inform any user or consumer of the product of the risk of the sequelae of its application. These include a warning about the chance of the deep burning detailed of the consumer’s skin once the substance is used and the difficulties so caused. They also include the prospect of hypopigmentation and scarring, perhaps severe scarring. At that time, sufficient and strong warnings of these deleterious side effects should have been given to any potential consumer of the product. All forms of (misleading) advertising should have been withdrawn and steps should have been taken to substitute correct advertising material that properly, accurately and fairly described the physical damage that a consumer could suffer arising from the use of this product. Any form of advertising that suggested that the skin could be restored to pre-tattoo condition was demonstrably wrong and misleading.
As a result, the second defendant had or should have had in their contemplation all potential consumers who may have been affected by the misinformation then available through these misleading forms of advertising when making their choice whether to use this product. The available advertising material produced by the second defendant was so misleading that, in light of the current information that was known to that defendant, there arose a duty and an obligation to correct that misleading material. That duty arose generally in respect of each person in the contemplation of the second defendant who may have received and relied upon this material. This is not in the nature of a liability in an indeterminate amount for an indeterminate time to an indeterminate class.[1] The duty arises only in respect of that very narrow class of persons who are seeking the services of someone to remove a tattoo. Such persons are by their very nature vulnerable and are completely reliant upon information given to them about such a process and the results. The information given to this plaintiff was grossly misleading, failed to identify known issues of difficulty and damage that any potential customer should have been warned about, and misrepresented the potential result of the process and its sequelae.
In these very narrow and peculiar circumstances the second defendant came under a duty to those persons who were or should have been in its contemplation, namely potential users of the Paste and recipients of treatment, to warn of those dangers and ensure that such persons made a fully informed choice about such matters. The second defendant breached that duty by doing nothing. The plaintiff was a person who should have been in its contemplation as being so affected by its conduct that a duty arose in the second defendant to ensure that the plaintiff made an informed choice. The second defendant breached that duty.
As I have set out above, the advertising of the product was misleading and in reliance thereon the plaintiff entered into the contract for services with the third or fourth defendants. In light of my earlier findings, it is not necessary to analyse the facts of this matter having regard to the application of the Trade Practices Act (TPA) or the Fair Trading Act (FTA). It is sufficient to say that any remedy available under those statutes arises as between plaintiff and the first, third and fourth defendants will be subsumed in any finding that I make or whether the plaintiff is entitled to a remedy at common law. And I do not need to address here the coverage of this legislation to, for example, the conduct of a corporation overseas but which falls within the jurisdiction of this Court and the expanded jurisdiction provisions of the TPA. This is because the offending behaviour took place here in South Australia.
In the result, I am satisfied of the following matters:-
1. When the first defendant produced the promotional material which was supplied to the Platinum Beauty business it engaged in conduct that was misleading and deceptive because those who may be contemplated as the recipients of that material such as the plaintiff were not made aware of the possibility of long term injury, scarring or burning from the application of the Paste. I am satisfied that such conduct was in breach of s 56, s 58(a), s 58(e), s 63 and s 64 of the Fair Trading Act 1987 (SA).
2. The Paste was manufactured goods and the plaintiff was a consumer of those manufactured goods within the meaning of the Manufacturer’s Warranties Act 1974 (SA). For the purposes of that Act, the first defendant was at all material times a manufacturer of manufactured goods and therefore owed to the plaintiff a statutory warranty pursuant to s 4(a)(c) of that Act that the goods were of merchantable quality. The Paste was not of merchantable quality because it was not fit for purpose for which goods of that kind are ordinarily purchased and so the first defendant was in breach of an express warranty and statutory warranty and is liable to the plaintiff for damages pursuant to s 5 of the Manufacturer’s Warranties Act 1974 aforesaid.
3. Alternatively, the first defendant is deemed pursuant to s 74AB of the Trade Practices Act 1974 to be the manufacturer of the Paste and the first defendant is liable pursuant to s 75AD of the Trade Practices Act 1974 to the plaintiff for the injuries that she has sustained.
In those circumstances, I am satisfied that the plaintiff is entitled to be given a remedy in damages against the first defendant for breach of duty and or damages for breach of the statutory warranty under s 5 of the Manufacturer’s Warranties Act 1974 and or damages pursuant to s 75AD of the Trade Practices Act 1974 and or damages for breach of statutory duty pursuant to s 84 of the Fair Trading Act. I am separately satisfied that the plaintiff is entitled to an award of damages against the second defendant for breach of duty for the reasons that I have already set out.
[1] Ultramares Corporation v Touche 174 N.E. 441 (1932) per Cardozo J.
On the question of liability, I found that as a result of the information possessed by and available to Rejuvi at the relevant time in 2007, Rejuvi knew or ought to have known of the faults within the paste and their sequelae prior to their application upon Ms Corso. This in turn informed the obligation upon Rejuvi to provide warnings to applicators and customers about the consequences of the application of that paste which it knew or ought to have known. This duty to warn arose out of the sequelae of the use of the paste in America, in other parts of the world and the steps taken in other parts of the world to ban the distribution and sale of the Rejuvi paste, which Rejuvi knew or ought to have known. I was also satisfied on the evidence that Ms Corso also suffered a cystic nephroma as a result of exposure to the chemical triethanolomine (TEA) at a concentration of 7 per cent in the Rejuvi paste product. In so finding I relied upon the medical evidence tendered before the Court.
In the further evidence before me on this application, it appears that some attempt is now made by Rejuvi to challenge the Court’s reliance upon this medical evidence about the effect of TEA in the paste. In his evidence led on behalf of Rejuvi, its CEO and managing director, Dr Wei Cheng, said that for ‘commercial reasons’ the true concentration of TEA in the paste was not 7 per cent. In his evidence, Dr Cheng suggested that in order to protect Rejuvi’s intellectual property, in the formulation of the paste as disclosed on the product packaging the figure of 7 per cent was declared as the content of TEA; however, the actual concentration was different. He said that the misleading entry about the concentration of TEA in the product was designed to confuse competitors. No competitors were identified and Dr Cheng was not able to inform the Court of the actual concentration of TEA in the paste. It is difficult to know what to make of this evidence in light of legislated requirements about disclosures upon packaging that are reasonably standard throughout many parts of the world.
The application
In its application dated 9 June 2017, Rejuvi seeks the following orders:
1. …
2. That the default judgment entered on 6 May 2010 be set aside;
3. That the default judgment entered on 27 May 2015 [sic] be set aside;
4. That the orders of 17 June 2016 and 19 August 2016 be set aside.
The correct date for the default Judgment under paragraph 3 is 27 May 2016.
The primary rules under which the application is brought are 6 DCCR 230 and 6 DCCR 41L. 6 DCCR 41L is part of a suite of generally standardised rules throughout Australia that were established following Australia acceding to The Hague Service Convention[2] (‘The Convention’) in 2010. 6 DCCR 230 provides that a court may, on conditions that it considers just, set aside or vary a judgment.
[2] Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, concluded 15 November 1965, Hague Conference on Private International Law.
Paragraph 2 of the application seeks that the default Judgment of 6 May 2010 be set aside. Paragraph 3 seeks an order that the default Judgment of 27 May 2016 be set aside. On two separate occasions Ms Corso applied for and obtained a Judgment in default of Rejuvi filing a defence in the proceedings. I set out below a discussion about the process of obtaining judgment on both of those dates. My focus here is only upon the two dates upon which a judgment was obtained, the reasons therefore and the rules of Court regime which operated at those times.
The original summons and the first statement of claim are the subject of the default Judgment entered on 6 May 2010. An earlier version of the 2006 Rules had application at that time. The applicable rules were to be found in 6 DCCR Rules 40 and 41, the pertinent parts of which read as follows:
40—Service of originating process outside Australia
(1) Originating process may be served outside Australia without the Court's permission if—
(a) …
(b) …
(c) …
(d) …
(e) …
(f) the action is founded on a tort and—
(i) the tort was committed in the State; or
(ii) damage was sustained in the State as a result of the tort; or
(g) …
(h) …
(i) …
(j) …
(k) …
(2) …
(3) Originating process that is to be served outside Australia must be in the appropriate form for such originating process.
41—Special rules for service outside Australia
(1) Subject to the law of the country in which service is to be effected, originating process is to be served outside Australia in the same way as if it were served within Australia.
(2) The Court may give any direction as to service outside Australia that may be appropriate—
(a) to avoid conflict with the law of the country in which service is to be effected; or
(b) for any other reason.
The tort was allegedly committed in this State and the damage alleged was also allegedly suffered in this State. At that time, under the operation of 6 DCCR 59(3), an address for service was required to be filed by a defendant within 21 days of service. Under 6 DCCR 92, a defence was required to be filed within 28 days of service.
The summons and the first statement of claim were allegedly served under the regime of this Rule. On 6 May 2010, Ms Corso obtained from this Court an interlocutory Judgment dated 6 May 2010 (FDN 8). The Judgment text read as follows:
By reason of the above default The Court Orders that the plaintiff recover from the second defendant damages to be assessed and the costs of action pursuant to Rule 229(3)(ii).
The second, third and fourth statements of claim were allegedly served by the plaintiff on Rejuvi on 28 January 2016. Prior to that occurring, I had given Ms Corso leave to serve those documents (viz paras [29]-[37] of the first Judgment). Each of those documents was served under The Hague Service Convention. In so doing, Ms Corso was required to comply with Chapter 3, Part 4 Div 3 of the Rules of Court. On 27 May 2016 Judgment was entered for Ms Corso (on the fourth statement of claim), which Judgment was based upon Rejuvi’s failure to file a notice of address for service and a defence to the fourth statement of claim.
This background discussion explains the approach taken by Rejuvi in its application (paras 2 and 3). It will be necessary to separately consider the applications but before doing so, it is necessary to recite some of the background history of this action. This is because both applications must be separately considered in their particular context under the Rules regime applicable to them.
The Judgment on the fourth statement of claim
At trial, I was eventually satisfied on the balance of probabilities from the material filed at Court that Ms Corso had caused to be served upon Rejuvi each of the second, third and fourth statements of claim for which permission had been given to her to file in this action.
An anomaly did arise in the course of the hearing of Ms Corso’s claim. At that time, the only proof of service before the Court was of the first statement of claim filed by Ms Corso. There was no evidence before the Court that Ms Corso had served upon Rejuvi the second, third or fourth statements of claim. Ms Corso wished to proceed upon her claim as reflected in the fourth statement of claim. As a result and upon application by Ms Corso, I gave leave for the terms of this Court’s interlocutory orders on service of the statements of claim to be discharged and under The Convention for the prescribed time to be allowed for Rejuvi then to file a notice of address for service and a defence to the last pleaded iteration of Ms Corso’s claim. Thus I required Rejuvi to be given every opportunity to file documents in response in this proceeding, having been satisfied that it would be aware of the full expression of Ms Corso’s claim to be found in the fourth statement of claim. If upon service of these further documents Rejuvi then elected to participate in the proceedings, it would be able to do so as if the trial hearing was to recommence. This was necessary as a matter of fairness to Rejuvi and as a consequence of Ms Corso’s failure to satisfy the interlocutory orders of the Court. I was mindful that despite the situation that had developed to that time, it was necessary to ensure that Rejuvi was fairly treated consistent with the principles of the administration of justice. The arrangements for and the time limits governing the taking of these steps were governed by The Convention rules for service of documents outside of Australia and in the United States of America.
In the course of the trial, I received affidavit material deposing to the service in the USA of these further court documents upon Rejuvi. These documents reflected the requirements of the Convention including for inter-governmental requests for the service of documents under the Convention. Such a request must be made by the requesting authority in a particular form and to enclose specified documents for service. As the name suggests, the Convention is an agreement between nations, in this case to facilitate service. Each of the signatory-nations to the Convention is responsible to comply with its requirements according to any request made.
Notwithstanding the proof of service of these further pleadings, there was, as for the first statement of claim, no response from Rejuvi. In October 2016, the Judgment of this Court, as an Australian Judgment, was registered in the USA and many months after that time, on 9 June 2017, Rejuvi now applies for the Judgment in favour of Ms Corso to be set aside and orders made by the Court also be set aside.
The nature of Rejuvi’s application
There were a number of affidavits and declarations sworn and filed in support of Rejuvi’s application. Both parties sought and obtained permission to cross-examine deponents to the filed affidavits/declarations. In light of the circumstances and the nature of the matter it was appropriate that such leave should be given. To that extent at least, this application differed from the usual application to set aside a judgment entered upon a defendant’s default. As I explain below, there are a number of reasons for this difference. This application eventually displayed many of the characteristics of a trial process. This has been a great advantage to my considerations here.
These were both judgments in default of Rejuvi filing a notice of address for service and any defence in the action; such a judgment follows upon proper proof of service of the court proceedings upon Rejuvi. I consider those matters below. Before doing so, there are a number of propositions that need to be considered that sit in the background of considerations here.
Courts as a general rule exercise particular care when dealing with a default judgment. There are a number of reasons but the foundation usually is that the party in default has not been heard and otherwise may have an apparent or at least a maintainable and arguable defence. Also, courts are aware that some defendants are unaware whether they have defences due to a broad range of circumstances. In some cases the court is put on enquiry about the facts of an action and the respective merits of the position of the plaintiff and the defendant. These experiences tend to increase the level of circumspection that a court may exercise when dealing with default judgments. This can be manifest in a number of ways; a primary example is that in an application to set aside a default judgment supported by affidavits, a court will not embark upon a trial by affidavits. Cases will vary but where the affidavits disclose a conflict of versions, a court will usually require a resolution at a trial of the action. The foundation of these considerations is the requirements of the due administration of justice and the right of citizens to have their dispute heard in and resolved by the courts. I will keep those considerations in mind when dealing with the questions that arise in this application. These considerations are part of the background of the exercise of the Court’s discretion. They do not ameliorate or subjugate the plain meaning of the rules under which these applications are to be considered. I turn to the specific rules relating to service under the Convention.
The Rules of Court
As earlier explained, in this action two different rule arrangements on service have applied. The differences arise because on 1 November 2010 Australia acceded to The Hague Service Convention. From that time a generally harmonized set of rules was established for all Australian States’ and Federal jurisdictions. In South Australia, these harmonized Rules are to be found within Division 3 of Part 4 of Chapter 3 of the DCCR 2006.
As the summons and first statement of claim were dealt with under Rule 40 of the earlier version of the District Court Rules, it is necessary to separately deal with any application to set aside the Judgment under Rule 230, the content of which I have detailed earlier.
As the Rule suggests, the court has a discretion about whether or not it would be prepared to set aside the default judgment. The exercise of the court’s discretion must not be weighed down by rigid rules; there are a number of considerations that a court may take into account. Some of those considerations are reasonably obvious. For example, Rejuvi must show that it has a bona fide defence, it must address the reasons for the default and how it is that, absent lawyers’ fault, a default judgment has been entered.
The court will also look to weigh the comparative prejudice suffered by a plaintiff and a defendant. For example, if a plaintiff suffers no prejudice that could not be made good by an order for costs, a court would ordinarily set aside a default judgment. Questions of prejudice arise also where there has been significant delay by the defendant in acting to set aside the judgment. Therefore, absent any prejudice suffered by the plaintiff, delay is not sufficient on its own to avoid an order for a judgment to be set aside. If a defendant can show a complete defence to an action, ordinarily the judgment will be set aside.
One consideration in this context is whether the plaintiff, Ms Corso, gave a reasonable warning to Rejuvi that she intended to sign Judgment in the absence of any documents being filed by Rejuvi in the action.
The application is not interlocutory notwithstanding the description of the application taken by Rejuvi here.[3] Any deponent to an affidavit may only depose to the facts of that person’s own knowledge.[4] The affidavit must disclose an arguable defence both in law and in fact. It must then also disclose that it would be desirable in the interests of justice that the defence should be adjudicated upon at a trial of an action. In the general course, such an application should not be turned into a trial upon affidavits. However, those are questions of fact and discretion. This is because a bare and unsupported claim that a defence exists will not be sufficient under the Rule.[5] There is no bar to allowing cross examination upon affidavits and this will be allowed in appropriate circumstances.[6]
[3] Palmer v Prince [1980] WAR 61; Worldwide Products Pty Ltd v Hoffman [1982] QdR 316.
[4] 6 DCCR 162(2).
[5] Battiste v Mulvaney [1997] SASC 6419.
[6] Southern Cross Commodities Pty Ltd v Martin (1985) 126 LSJS 306.
In summary, it is for the defendant Rejuvi to disclose sufficient material facts to satisfy me that it has an arguable defence on the merits and, in the exercise of my discretion, the Judgement should be set aside. In exercising my discretion, I may take into account the whole of the circumstances of the case before me and my assessment of all of the evidence put before the Court.
The Judgment obtained under the fourth statement of claim: The Hague Service Convention Provisions in the South Australian Rules.
Under 6 DCCR 41AF, which came into effect on 11 September 2014, a party may seek and obtain permission to serve a document on a person in a foreign country under The Hague Service Convention to which Australia became a signatory in 2010. In my Judgment of 17 June 2016, I said at [6]-[7] and [29]-[36] the following on the topic of service:
Pursuant to the requirement of the Rules of Court and the Service and Execution of Process Act (Cth) a notice of summons to be served outside of Australia, and the first statement of claim was served upon the second defendant Rejuvi Laboratories Inc at its address at 360 Swift Avenue, Suite 38, South San Francisco, California, 94080, United States of America. The notice informed the second defendant of the claim of the plaintiff, that the action had been commenced in the District Court of South Australia and required Rejuvi to file a notice of address for service in accordance with the Rules of Court within 28 days of the service of the notice and these proceedings upon it.
An Affidavit of Service of Anibal Alejandro Merino of 75 Columbia Square San Francisco CA 94103, sworn 29 September 2009 has been filed at Court. In the Affidavit sworn by Ms Merino before Barbara Barrish, Commission No. 1860186 a Notary Public of the San Francisco County of California, Ms Merino deposes that on Friday 25 September 2009 at 1.50pm at the premises at 360 Swift Avenue, Suite 38, South San Francisco, CA, 94080, USA, she served Rejuvi Laboratories Inc with the summons and statement of claim together with a true copy of the notice of summons to be served outside South Australia under the Service and Execution of Process Act (Cth). Ms Merino also deposes that at the time of service, the person on whom she served the documents admitted that he was authorised to accept service on behalf of the second defendant, Rejuvi Laboratories Inc. No challenge has been made to the content of the affidavit of Ms Merino which has been received into evidence before me. I accept it as proof of the facts deposed to therein. I am also satisfied that as a consequence of the content of the papers served upon it, the second defendant has been informed that if it wished to contest the claim of the plaintiff in the first statement of claim it was required to take some steps in this action including the filing of an address for service and a defence.
…
The service of the further pleadings on the second defendant
The summons and statement of claim was served on Rejuvi in San Francisco USA on 25 September 2009 and by letter of 7 June 2013 in a letter sent directly to Rejuvi, the Court informed Rejuvi of the trial date set for the assessment of damages. The Court has given Rejuvi an opportunity to be heard on the question of the quantum of the unliquidated damages claims. I am satisfied that Rejuvi has not taken up the opportunity given to it by the Court.
Following the hearing before me for the assessment of damages, I raised with the plaintiff at a subsequent hearing before me on 13 October 2015 that there was no evidence before the Court that the second, third or fourth Statements of Claim had been served upon the defendant Rejuvi or that judgment had been sought in respect of the allegations set out in the fourth Statement of Claim which was the basis upon which the plaintiff sought her assessment of damages before me. On 13 October 2015 the matter was left with the plaintiff to give consideration to the way in which she wished to proceed and whether, for example, she wished to proceed on the first Statement of Claim or whether she wished for an assessment of damages to be made on some other and if so what basis.
The Court then received an application for permission to serve the second, third and fourth Statement of Claims upon the defendant Rejuvi. The Court was informed that the plaintiff requested the Court to assess her damages on the basis of the allegations set out in the fourth Statement of Claim and the response (if any) of the defendant Rejuvi to the allegations of fact and the claims set out in the fourth Statement of Claim. On 9 December 2015 I consequently gave leave to the plaintiff to serve the second, third and fourth Statements of Claim upon the defendants Rejuvi Laboratories Inc. in accordance with the Rules and Service of Process Regulations under The Hague Convention. On the same day, I ordered that the plaintiff’s assessment of damages be stayed until service of the proceedings had been effected pursuant of the orders that I made so that the second defendant Rejuvi could be given a further opportunity to file any Notice of Address for Service in answer to the claims made under the fourth Statement of Claim.
The Court has now received and the plaintiff has read into evidence the fifth affidavit of Richard Gregory Eckermann (FDN72) sworn 24 March 2016 as well as the documents comprising FDN71. The documents in FDN71 are a Certificate of Attestation which identify that in conformity with Article 6 of The Hague Convention, the documents particularised therein have been served upon the second defendant on 28 January 2016 at 360 Swift Avenue STE.38 South San Francisco California USA 94080. Attached to the Certificate of Attestation is an affidavit sworn by Billi Pena, an authorised process server of San Francisco California USA sworn 19 February 2016. Attached to that affidavit is a California Jurat Certificate also dated 19 February 2016 which is a certificate of the Court identifying that it is satisfied that the persons swearing the affidavit, namely Billi Pena is the person who purports to be swearing the affidavit.
Relevantly the affidavit reads as follows:-
On the 28th day of January 2016 at 9.51am at the address of 360 Swift Avenue STE.38 South San Francisco, within the county of San Francisco, state of California 94080; this affiant served the above described documents upon Rejuvi Laboratories Inc. by then and there personally serving one true and correct copy(ies) thereof, by then presenting to and leaving the same with Amy Chaw, Clerk Person Authorised To Accept, who accepted service with identify confirmed by physical description, an Asian female approx. 25-35 years of age, 5 ft 6 in – 5 ft 8 in tall, weighing 140-160lbs with black hair.
No information was provided or discovered that indicates that the subjects served are members of the US military. It is in respect of that matter that the notary certificate entitled “California Jurat Certificate” executed by a Notary Public, Maricela Garay and dated the 19th of February 2016 refers.
From the contents of Court file document FDN71, I am satisfied on the balance of probabilities that on 28 January 2016 the following documents were served upon the second defendants namely:-
1. A sealed copy of the second Statement of Claim
2. A sealed copy of the third Statement of Claim
3. A sealed copy of the fourth Statement of Claim
4. The Tender Book (FDN61)
These are the documents described in FDN68 which, in accordance with the requirements of The Hague Convention, are the summary of the documents to be served prepared by the plaintiff and filed by her solicitors with the Court on 14 December 2015. These were the documents which were described in the request for service abroad of judicial documents and the certificate of service filed with the Court comprising FDN69 dated 14 December 2015. That request was directed by this Court to the US Department of Justice Civil Division, Office of International Judicial Assistance, Benjamin Franklin Station PO Box 14360 Washington DC 20004 United States of America. I am also satisfied that this request was forwarded to the American authorities under The Hague Convention on 16 December 2015 under cover of letter from this Court to ACABC Legal – Process Forwarding International, Corporate Headquarters 633 Yesler Way Seattle WA 98104 USA.
The affidavit of the solicitor Mr Eckermann sworn 24 March 2016 (FDN72) discloses that the Form 14 summary of documents served advises the defendant Rejuvi that if Rejuvi wishes to be heard on the plaintiff’s assessment of damages, it was required to file a Notice of Address for Service in the District Court of South Australia within 42 days of the service of the documents upon it. That period of 42 days expired on 10 March 2016. I am satisfied that no Notice of Address for Service has been filed since the date of service of the documents upon the second defendant on 28 January 2016. I am therefore satisfied that the plaintiff is at liberty to ask the Court to sign judgment against the second defendant Rejuvi and to request the Court to assess damages based upon that judgment.
6 DCCR 41H is concerned with the service of judicial documents and it reads as follows:
41H—Evidence of Service
A certificate of service in relation to a local judicial document, (being a certificate in due form within the meaning of rule 41F(2)) that certifies that service of the document was effected on a specified date, is, in the absence of any evidence to the contrary, sufficient proof that—
(1) service of the document was effected by the method specified in the certificate on that date; and
(2) if that method of service was requested by the applicant, that method is compatible with the law in force in the Convention country in which service was effected.
Under this Rule, in the absence of evidence to the contrary, the certificate of service is sufficient proof. Under this rule the certificate of service documents attracts a particular status of proof upon which a court may place reliance. That status is only qualified by the insertion of the phrase ‘…in the absence of evidence to the contrary…’ I have been unable to identify whether there are any authorities binding on me about the meaning of the expression ‘evidence to the contrary’. In context, those words must be given their ordinary meaning. At a minimum, such evidence must address the issue and fact of service. A number of questions then consequentially arise. Is it only necessary to consider this requirement internally, such that any ‘evidence’ is sufficient? If not, what is the test to be applied in considering such evidence – for example of cogency, weight, reliability and whether the evidence satisfies the preponderance of possibilities test at civil law.
I consider that the drafter of the Rules intended that ‘evidence’ which, for example, is an otherwise unsupported and perhaps unsupportable assertion of fact (that is hearsay or only relies upon hearsay) in an affidavit or declaration without more, will not meet the description of ‘evidence’ required under the Rule. The reasons are obvious. Such ‘evidence’ may have such little weight that it is obviously unreliable and ignores the capacity of a court to discern cogent, truthful or reliable evidence from what is demonstrably an artifice.
This proposition adheres to one of the fundamental precepts of a Convention between nations. The courts of this country will be slow to cast doubts about the process of service in a foreign country which is a signatory to The Hague Convention and so to allow doubt to be cast upon the performance by that sovereign country of a duty under that Convention. Similarly a court may be slow to cast doubt upon the the arrangements made by such officials and the affidavit evidence that proceeds from them based upon mere evidence, the reliability, weight and cogency of which is open to serious question. I consider that to suggest otherwise fails to comprehend the reason that the Convention exists and came into operation in 1965 and which states in its preamble paragraph as follows:
The States signatory to the present Convention,
Desiring to create appropriate means to ensure that judicial and extrajudicial documents to be served abroad shall be brought to the notice of the addressee in sufficient time,
Desiring to improve the organisation of mutual judicial assistance for that purpose by simplifying and expediting the procedure,
Have resolved to conclude a Convention to this effect and have agreed upon the following provisions…
In my view, the ‘evidence’ referred to in this rule must at least satisfy the test of cogency, reliability, admissibility and be of sufficient weight to satisfy the applicable test under an application to set aside a default judgment under 6 DCCR 230. That is the approach that I intend to adopt here and as a result, this question then falls to be considered together with the decision I am required to make under 6 DCCR 41L based upon the whole of the material before me.
Setting aside a default judgment under the Rules
Under 6 DCCR 41L(2), a default judgment such as the present, may be set aside if the defendant satisfies the court that it:
(a) without any fault on the defendant’s part, did not have knowledge of the initiating process in sufficient time to defend the proceedings; and
(b) has a prima facie defence to the proceedings on the merits.
It is convenient that I consider the matters arising under 6 DCCR 41L(2)(b) first. The expression ‘prima facie’ in the context of an application for an injunction is well known and understood. It was recently discussed by the High Court of Australia in its decision in Australian Broadcasting Corporation v O’Neill (2006) 80 ALJR 1672. Although the decision of the High Court was concerned with the applicable test for the granting or refusal of an interlocutory injunction, the discussion of the Court on the meaning of ‘prima facie’ is apposite. At [65] et seq, Gummow and Hayne JJ held that the use of the expression ‘prima facie case’ does not,
… mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances of the preservation of the status quo [in the context meaning that the defendant’s case in defence be put at trial] …
As the Judgment of the High Court in O’Neill demonstrates, from a pleadings perspective it is not difficult to meet this test; a drafter of pleadings should have little difficulty in meeting this test, turning as it often does on questions of fact that may not be able to be resolved in the context of the application under 6 DCCR 230.
I have reviewed the proposed defence of Rejuvi and in the end (and with some reluctance), I am satisfied that it meets the test prescribed under 6 DCCR 41L(2)(b). However, a number of observations may be made. Apart from denials, the pivotal pleading is paragraph 17 which sets out a number of grounds of defence.
Paragraph 17(a) contains a denial that Rejuvi owed to Ms Corso a duty of care where there was an opportunity for an intermediary inspection of the paste (the intermediary is not identified) and that was intended by Rejuvi (there is no pleading of the manifestation of Rejuvi’s intention). The relevance of an intermediary inspection in a product liability case is that the inspection could reveal the defect and so, causation will not be established. As currently drafted, this plea is internally inconsistent, lacks logic and appears confused.
Paragraph 17(b) proceeds on the basis that Rejuvi owed a duty of care to Ms Corso that was fulfilled by the provision to her of adequate warnings, that Rejuvi had the benefit of the contractual protection of a release agreement and consent forms, the adequacy of Rejuvi’s training, the delegation of the duty to warn including through intermediaries (not identified) and the failure of Ms Corso and the intermediary (not identified) to follow the instructions (not identified) given to them.
Some deficiencies in this form of pleading that come immediately to mind are: there is no pleading about the documents that were said to be supplied by Rejuvi to any particular distributor or by a distributor to an applicator or by an applicator to a customer and consequently, the intermediary involved cannot be identified; Dr Cheng denied in his evidence that he did the training upon which Rejuvi now relies; there is no pleading of communications to any of the alleged intermediaries (unidentified) some of whom (Babich) went out of business up to 10 years ago.
Rejuvi also now relies upon documents said to have been provided to an intermediary more than 13 years ago and then to a document said to have been provided to Ms Corso by an intermediary (unidentified) at least 12 years ago, to which it was not contractually privy and which, in its affidavit material, says was not part of the documentation given to intermediaries. Rejuvi then pleads that intermediaries did not follow instructions and that it did not have an opportunity to warn because of the breaches by the intermediaries (unidentified). How this may be sustained in the absence of the pleading of any material facts is not clear. The pleas of misuse, novus actus, volenti and contributory negligence plead no material facts at all. At a number of levels, the pleading is problematic, including also because it fails to address the claim of Ms Corso under the Trade Practices Act 1974.
I do not think it is necessary or helpful to develop these criticisms further and I will proceed on the basis that Rejuvi is able to satisfy the test in 6 DCCR 41L(2)(b).
In light of those comments, I turn to consider the first subparagraph of 6 DCCR 41L(1). It is apparent that the drafters of the Rule have deliberately used broad forms of expression connected with the concept of notice. This is not confined to knowledge arising out of service of Court documents (for example a statement of claim). The issue is the knowledge of the initiating process, however that may occur.[7] The drafter of this Rule has not used an expression such as ‘prima facie’ or similar to describe the burden of satisfaction of the court to be discharged here by Rejuvi. It follows that Rejuvi must satisfy me that it is more likely than not that, without fault on its part, it did not have knowledge of the initiating proceedings in sufficient time. A complicating feature here is that the drafter has used the phrase ‘…without fault on the defendant’s part…’ in the Rule. This phrase requires an examination of the conduct of Rejuvi and my task is to decide if I am satisfied that Rejuvi has discharged the burden upon it. The burden is, in effect, to disprove the negative.
[7] In 6 DCCR 41A the expression ‘initiating process’ is defined to mean ‘any document by which proceedings (including proceedings on any cross-claim or third party claim) are commenced.’
The burden of Rule 41L would be discharged if Rejuvi did not have any knowledge, in the corporate sense, through direct notice or through any of its corporate functions and agencies. Such an approach may also assume that policies, procedures and internal controls of Rejuvi existed and operated to ensure that it became corporately aware of the initiating process. The Rule will not allow an entity served with court and other documents to rely upon its own level of incompetence and disorganisation to successfully assert that it did not have knowledge of the initiating process in sufficient time to defend.
The use in this rule of the words ‘without any fault on the defendant’s part’ requires a consideration of both subjective and objective matters. The subjective aspects are the identification of the actual conduct of the defendant: ‘on the defendant’s part’. In part this may be answered by addressing the following questions: what did the defendant know and what did the defendant do in light of the information before it. Subsidiary questions will arise according to the circumstances and it is not appropriate to attempt to prescribe an exhaustive list.
It would then be necessary to assess fault in an objective way: would the reasonable informed bystander consider that there was or was not fault on the part of the defendant in the light of the circumstances as they were known. This will include those circumstances to which the defendant gave attention or did not give attention according to the peculiar facts of the matter. Considerations that may attract attention are, for example, how mail, facsimile and email materials and telephone contacts were dealt with internally by Rejuvi. Another may be the internal processes and controls in place in the business of Rejuvi. The application of an objective test, by its nature, does not impose some counsel of perfection about how a corporation should operate internally. This is why the subjective aspects need to be addressed first.
I turn then to the question of knowledge. There are a number of agencies of a corporation, the knowledge of which will inform the knowledge of the corporation. The most obvious are the major shareholders, the board, the senior executives and the officers of the corporation. Usually, in a limited liability corporation with a narrow shareholding structure and where the corporation is closely held, major shareholders will be the directors and chief executive of the corporation. They will constitute the guiding hand and mind of the corporation, as will senior executives outside of the shareholders but who will fall into the same category of authority. Another class of persons whose knowledge will be the knowledge of the corporation are other individual directors, employees and agents who have the authority to receive and communicate relevant information to the corporation.
These principles are well known and understood so that for example in the usual course, the knowledge of an employee will not necessarily or at all be the knowledge of the corporation. There are now an increasing number of statutes that provide exceptions to this rule particularly in the corporations area, areas of corporate criminal activity and anti-trust areas. In the area of corporate criminal activity, there are also common law exceptions based largely upon a close connection being found between an employee, his conduct, and the operation of the corporation.
To an extent these principles will have some operation here but only in context. This is because at one level there is only so much that a plaintiff can do to ensure that a defendant has knowledge of the initiating proceedings. The Hague Service Convention does not require service on a corporation by prescribing the receipt of documents by the managing director or someone else who is the directing mind and will of the corporation as the only valid means of service. This is both impractical and would operate egregiously at many levels. The requirement of service is to ensure compliance, here, with the law of the United States. There has been no contest that if the court documents were served upon an obviously employed person at the corporation’s place of business and that person affirmatively indicates an authority and a willingness to accept service of these documents for the corporation that will be sufficient.
Those considerations then need to be married with other practical considerations and cogent and reliable evidence of the transmission by post and electronic means to the corporation of material identifying the fact of the initiating proceedings. Part of the assessment to be made includes a factual survey of what was the process within the corporation for dealing with those things. Finally, there are a number of other minor considerations that may be taken into account depending on circumstances. One of these is the attempt (or failure) by the corporation to ensure that its best evidence on the relevant issues is placed before this Court.
I turn then to the declarations filed at Court and then the viva voce evidence. Although a little unusual, I consider that it is appropriate first to consider the declaration/affidavit material filed on behalf of Ms Corso. This is because it will then be easier to comprehend the responding material of Rejuvi. The fate of the application rests on my consideration of all of this material.
The affidavit/declaration material filed by Ms Corso
Ms Corso’s former lawyer, Andrew John Mitchard, swore an affidavit filed in the Court about the initial service of proceedings on Rejuvi in 2009. It is dated 4 August 2017 (FDN 89). He relevantly informed the Court as follows:
3. I caused the issue of the Summons and Statement of Claim in this action dated 21 September 2009 following which I made arrangements for service on the Second Defendant. At that time The Hague Convention (Convention of 15 November 1965 on the Service Abroad of Judicial and Extra Judicial Documents in Civil or Commercial Matters) had not been adopted by Australia.
4. Service of the Summons and Statement of Claim herein was effected on the Second Defendant on 25 September 2009.
Mr Mitchard relied upon an affidavit of service of Anibal Merino dated 29 September 2009. I will discuss that affidavit below.
Mr Mitchard then wrote a letter dated 16 December 2009 to Rejuvi at its address at 360 Swift Avenue, Suite 38, South San Francisco, CA 94080 that confirmed service of these initiating proceedings and informed Rejuvi of the intention of Ms Corso to apply for a judgment in default. The letter was sent by airmail, it has not been returned as undelivered and no response was received. Mr Mitchard gave oral evidence on this topic and was cross-examined. This evidence satisfied me that Mr Mitchard gave instructions to his staff, in the usual way, to ensure that the letter of 16 December 2009 was set by mail, a copy of the letter was placed upon his lawyer’s file and it is a copy of that letter which comprises Exhibit AJM1 to his affidavit (FDN 89). Cross-examination did not cast any doubt upon the evidence of Mr Mitchard.
The affidavit of service of Anibal Alejandro Merino dated 29 September 2009 (FDN 6) deposes to service of the originating proceedings and first statement of claim upon Rejuvi on 25 September 2009. Following the service of the documents, and after his first letter of 16 December 2009, Mr Mitchard wrote a second letter to Rejuvi dated 11 February 2010. That letter read as follows:
We refer to the … service of documents upon your office and the further letter to your office of the 16th of December 2009. As yet we have not heard from you or any solicitor [lawyer] acting on your behalf.
As a final warning with respect to default judgment, we confirm that we will apply for a default judgment after fourteen (14) days from the date of this letter should no further response be received from you. We confirm that we will bring this letter to the attention of the Court, along with our previous letter, should any application be made to set aside the default judgment at a later time.
This was a final letter of warning to Rejuvi of the intention of Ms Corso to seek a default Judgment and was sent about five months after service of the originating process. According to the evidence of Mr Mitchard, the letter was sent in the same fashion and using the same process as the first letter of 16 December 2009. The second letter was not returned undelivered and Mr Mitchard received no response from Rejuvi. Cross-examination of Mr Mitchard cast no doubt upon this evidence of Mr Mitchard.
Stephanie Jane Shevlin, lawyer, has sworn a first affidavit dated 14 August 2017 (FDN 90). She deposes to the fact that during various directions hearings in the management of this action to trial, orders were made by this Court on a number of occasions requiring the Registry of this Court to notify the parties of the orders made from time to time. Those orders were made on 6 February 2012, 13 June 2012, 22 August 2012, 14 November 2012, 30 April 2013 and 6 August 2013. On 8 February 2012, Ms Shevlin’s office received correspondence from the District Court Civil Registry of 7 February 2012 addressed to all of the parties to the action including Rejuvi advising that a directions hearing had been listed before a Master of the Court on 6 February 2012. That letter attached a copy of the Record of Outcome of the directions hearing and orders made on that day. It invited the recipients to telephone the number provided if they had any queries. Under the orders made on 6 February 2012, Ms Corso was given leave to file a third statement of claim. Order 7 of those orders required the Registry of this Court to notify the parties of the orders. There had by that time been no appearance for Rejuvi. Ms Shevlin then exhibits a letter from the District Court Civil Registry dated 15 November 2012 addressed to each of the parties including Rejuvi at its address at 360 Swift Avenue, Suite 38, South San Francisco USA. The letter enclosed a copy of the orders made on 14 November 2012. There were eight orders made on that day including an order that the Court Registry was to notify the parties of the orders. I am satisfied from the affidavit evidence that the letter of 15 November 2012 addressed, inter alios, to Rejuvi was sent in accordance with the requirements of the orders made by the Master on that day. According to this material, this Court sent a letter to Rejuvi dated 15 November 2012 enclosing a copy of the orders made by the Court on 14 November 2012.
By a further letter of 30 April 2013 from this Court addressed to Ms Shevlin’s firm, Rejuvi and another firm of lawyers, notice was given that the action was listed for argument on 30 April 2013 before Master Norman and orders were made. A copy of the orders were enclosed. Those orders reflect the orders made by the learned Master on 30 April 2013.
By a further letter dated 6 August 2013 from this Court addressed to, inter alios, Rejuvi, notice was given that in this action there was a directions hearing on 6 August 2013 before Master Norman and orders were made on that day. A copy of the orders was enclosed with the letter.
On 7 June 2013 a trial notice was sent to the lawyers for all parties or, where the parties were not represented, to the parties themselves; this included directly to Rejuvi. It gave notice that the trial of the matter was set for 8 September 2014. Ms Shevlin deposes and there was no challenge to the fact that on 20 May 2014, another lawyer in her firm, Mr Richard Eckermann, wrote to the second defendant attaching the third statement of claim filed 6 March 2012. The letter referred to the earlier service of the first statement of claim and the proceedings upon Rejuvi on 25 September 2009 (as deposed to by Mr Mitchard) and that no defence had been filed. Mr Eckermann also further advised that on 6 May 2010, this Court had ordered that Judgment be granted in favour of Ms Corso against Rejuvi with damages to be assessed.
Mr Eckermann went on to advise in the letter that offers of settlement had been received from the first, third and fourth defendants and that Ms Corso intended to proceed to settle the action with those other defendants. Any such settlement was not and could not be seen to be a release of the liability of Rejuvi (Judgment having been already obtained against that defendant in any event). In the same letter of 20 May 2014, Mr Eckermann confirmed to Rejuvi that Ms Corso intended to proceed with the action against it, that there would be an accounting for the benefit of the Judgment from the first, third and fourth defendants, the matter would proceed to trial on 8 September 2014, Ms Corso would seek to have her damages assessed and she would enforce any judgment so obtained. Ms Shevlin then deposes to the fact that her file indicates that this letter was forwarded to Rejuvi by facsimile transmission, post and email. The correspondence was not returned to the lawyers’ office as undelivered by post and the email was not returned undelivered.
Ms Shevlin also deposes that on 26 July 2017 she made telephone enquiries with the Civil Registry about compliance with court orders for service of notices and orders upon parties. If any such correspondence was returned to the Court, it would be placed upon the Court file. There is no evidence of any such correspondence sent by the Court to Rejuvi having been returned and placed upon the Court file. I accept the affidavit of Ms Shevlin. I am satisfied from this evidence that the relevant correspondence was sent in the usual course of mail and there would be a rebuttable presumption of the delivery to Rejuvi of this mail.
There has been no challenge made in this application to the fact that the address of Rejuvi is 360 Swift Avenue, Suite 38, South San Francisco, USA. On the affidavit and declaration material before the Court, that is the address to which all correspondence was sent and at which all documents were served. There is no evidence before me which casts any doubt upon the fact that each of the letters sent from the Court Registry were sent, that the letter signed by Mr Eckermann was sent to Rejuvi, or that the trial notice was sent by this Court to Rejuvi.
In her third affidavit sworn 24 October 2017 (FDN 100) Ms Shevlin deposes that the firm’s postal records have now been found and these record dispatch of the third statement of claim of Ms Corso to Rejuvi by fax, email and surface mail on 21 May 2014. None of these documents were returned as undeliverable/ undelivered nor did any electronic transmission ‘bounce back’ to the sender. I accept this further affidavit of Ms Shevlin to the extent of the letter and the email transmission. This is because it is alleged that the facsimile number used was wrong. I will not hereafter consider the facsimile. I find that the third statement of claim was set to Rejuvi on 21 May 2014.
Affidavit/Declaration material of Rejuvi
I turn then to the affidavit/declaration material filed on behalf of Rejuvi. The declaration evidence filed by Rejuvi consists of the following:
·Dr Wei Cheng of 1 June 2017 (Exhibit D1).
·The second declaration of Dr Wei Cheng dated 6 June 2017 (Exhibit D2).
·The third declaration of Dr Wei Cheng dated 6 September 2017 (Exhibit D3).
·Declaration of David Rosprim dated 22 August 2017 (Exhibit D4).
·Declaration of Edios Jacinto dated 6 September 2017 (Exhibit D5).
These declarations are directed towards the operation of 6 DCCR 230 and 6 DCCR 41L. I gave leave to both parties to cross-examine the deponents of the other’s declarations. I considered that cross-examination was appropriate because there was a real and practical utility in allowing such cross-examination. The reasons are largely self-evident. The Court had already seen and admitted the declaration evidence submitted by Ms Corso about the service of proceedings (in the action) as a precursor to satisfying the Court that it could proceed to assess damages in the absence of an appearance by Rejuvi. The second group of affidavits of service arose from the request for service made by Australian authorities to the US authorities under The Hague Service Convention. A request under the Convention was directed by this Court to the relevant US department. I dealt with these matters in [32], [33], [34] and [35] of my Judgment that I have set out above.
This application was supported by a first declaration of Dr Wei Cheng, the president and CEO of Rejuvi, of 1 June 2017. He deposed that no officer of Rejuvi was aware of the service of any proceedings in this action; this includes the summons and the first, second, third and fourth statements of claim. Dr Cheng then challenged the veracity of the affidavits of service and he denied that the correspondence referred to in the affidavits filed by any deponent was received by mail or by any other means from Ms Corso’s lawyers or from this Court. He further deposed that Rejuvi was not aware of the service of any further statements of claim and that none were served. He only became aware of the action on 7 October 2016 when Rejuvi was sub-served with the US enforcement proceedings. He became aware of this information through a Michelle Cheng. He said that after receiving this information he checked again with the staff and officers of Rejuvi and each of them denied ever having been served with or knowing anything about these proceedings. He does not name the staff with whom he made his enquires, nor does he say whether any of these staff members were employed at the relevant time or were named in any of the affidavits of service filed on behalf of Ms Corso.
Dr Cheng then deposed to the process established within Rejuvi to be followed by staff who are served with legal documents. The instruction is to bring such documents immediately to the attention of Dr Cheng or, in his absence, the next most senior executive (and the evidence discloses that this was Michelle Cheng). He then deposed that the legal process (and by this I assume he means all court letters and notices, all lawyers letters and all court documents) were never received by Rejuvi. If the court documents had been served, then Rejuvi would have relied upon defences including that the injuries suffered by Ms Corso were as a result of improper application of the tattoo removal paste and Ms Corso’s failure to follow aftercare instructions. Dr Cheng does not say in his declaration how it is that ten years after the event he could now depose from his own knowledge that there was improper application of the Rejuvi Tattoo Removal Paste or that there was a failure to follow aftercare instructions.
Dr Cheng does not exhibit to his declaration any internal document of Rejuvi setting out the detail of the process to which he refers. In his evidence, I gained the clear impression that there was no document in which it was recorded and so he relied upon the ‘process’ to be communicated orally but not necessarily by him.
In his first declaration, Dr Cheng also says that there is a legal causation issue but he does not inform the Court what that may be apart from the matters that I have set out above. It is not clear to me whether strictly a causation issue arises from these matters but I will leave that issue to one side. He compares the number of treatments required to remove permanent makeup (one) and to remove a tattoo (two-six). He refers to the recommendation within a users’ guide about how to test a portion of a tattoo and aftercare upon removal. It is not then clear how these matters may be connected to the causation assertion. Again, I will leave that to one side.
Dr Cheng then deposes that between 2006 and 2015, Rejuvi sold the relevant product to Med-Op Aust as a distributor. Med-Op Aust was responsible to train the users of the product. I will assume that Rejuvi contends that it trains its distributors in each country and if there is a failure of training and communication, it must be the fault of these authorised/trained distributors. He says that the complaint rate according to the Rejuvi statistics is that 0.4 per cent, namely the claim by Ms Corso, according to the units sold.
Exhibit D2 was the second affidavit in time sworn by Dr Cheng on 6 June 2017. Paragraphs 3 and 4 of that affidavit read as follows:
3. Since October 7, 2016, the date which Rejuvi received notice of the Plaintiff’s U.S. District Court for the Northern District of California enforcement action, Rejuvi wanted to appear and raise any and all defenses to Plaintiff’s law suit in District Court of South Australia. Rejuvi is defending against the perfecting of the foreign judgment in the U.S. District Court, but is not allowed as part of the process to raise defenses to Ms. Corso’s claims.
4. Rejuvi retained Dillingham & Murphy LLP as U.S. counsel to defend the plaintiff’s U.S. District Court for the Northern District of California Enforcement Action on or about November 3, 2017. It was my understanding that Rejuvi was not permitted to appear and raise any and all defenses to Plaintiff’s lawsuit in District Court of South Australia once the Northern District Court Action was filed. I was under the mistaken belief that Rejuvi could raise its defenses to Plaintiff’s substantive claims in the Plaintiff’s U.S. District Court for the Northern District of California enforcement action.
Dr Cheng does not state how he formed the mistaken belief that Rejuvi could ‘…raise defences in the substantive claim in the US as that was an enforcement action.’ He does not say that he received legal advice to that effect but only says that he retained lawyers. He does not disclose what instructions he gave to those lawyers. It may be inferentially assumed that the content of these paragraphs reflect some of the advice that he has been given, but he has not been prepared to make a declaration to that effect.
Dr Cheng then says that it was only after he changed lawyers that he understood the true position. This is an important declaration, but it is more significant for what it omits to say than for what it does say. Although this part of the declaration does not directly address the issue arising under 6 DCR 41L(2)(a), these omissions are significant in circumstances where it may be argued that there was at the least an implied waiver of privilege on the grounds of the inconsistency of attempting to maintain the privilege. Nothing was made of this by Ms Corso and I will leave it to one side.
Rejuvi eventually filed a proposed defence to Ms Corso’s fourth statement of claim to which I have earlier made reference. I will not repeat those comments here but they are apposite in these considerations.
Exhibit D1 to the first affidavit of Dr Cheng is a 37 page document entitled ‘Rejuvi Tattoo Removal Technique – Technicians User Guide’. It carries a copyright claim date of 2007. There is no evidence in Dr Cheng’s affidavits that this guide was provided to the Australian distributors and if so, when or what training was given surrounding the provision of this guide. A general perusal of the guide shows that specific reference is made (as a warning) about the possibility of scarring on the removal of tattoos and that it will be necessary to perform deeper puncturing with more repetitions to achieve satisfactory results (see pp 18 and 28 of Exhibit D1 to the first affidavit of Dr Cheng). On an ordinary reading, it appears to suggest that the applications of the paste using the puncturing of the skin method would need to vary the depth of skin puncture according to the tattoo being treated. Nothing is said of the dangers of, for example, deeply puncturing the skin of an individual or what precautions should be taken in such an ad hoc process.
In the same document there is a recommendation to cover treated areas with the same paste afterwards, but no reasons are given. In this document, there is no discernment about whether any particular part of the human body should be treated differently according to the physiology of that part of the body into which the repetitive deeper puncturing would occur. The document is focussed upon the scientific aspects of products produced by Rejuvi and it does not appear to attempt to address issues of the physiology of the human body and to differences between peoples’ physiology. There is no evidence that this document was ever seen by Ms Corso; it is a technician’s user guide that appears to promote a universal approach to the technique of removal of tattoos using the paste in a puncturing method.
The contentions of Rejuvi
The primary contention of Rejuvi is that it was never served with any of the summonses, any of the four versions of the statement of claim, any notice from the Court of any interlocutory orders made, any letters from the Court or from lawyers, any trial notice or any emails from lawyers or from this Court.
The evidence before the Court were the assertions in the affidavit material and later the viva voce evidence in cross-examination of those deponents. Apart from the user’s guide there were no other relevant Rejuvi documents put before the Court. In light of those matters there are some specific matters to which reference should be made.
The Cheng declaration of 1 June 2017 is so lacking in detail and content that it is difficult to attribute to it any particular weight; there is no identity of the persons to whom he spoke or of the contemporaneity of their employment or their roles. The declaration is so general that it is of little assistance to me in resolving these issues.
Dr Cheng challenges the content of the affidavit of service of Anibal Merino by suggesting that he does not give a description of the male served with the summons and the statement of claim. On the letter sent by Ms Corso’s lawyer Mr Mitchard dated 20 May 2014, Dr Cheng says that neither he nor a Rejuvi corporate officer received this letter. He does not say who the corporate officers may be or how it could be said that this letter was not received by those (unnamed) corporate officers in the absence of any deposition about the usual process about handling mail. And I have significant doubts that Mr Merino has ever said that he served a male person or that he identified the gender of the person served. This declaration suffers the same drafting defects as the earlier one and provides little information for my consideration.
Dr Cheng then addresses the alleged service of the second, third and fourth statements of claim by Mr Billy Pena. Dr Cheng admits that an Amy Chow worked for Rejuvi as a receptionist at the relevant times, but that he was not served with those statements of claim nor was an unnamed Rejuvi officer served with them. In all of Dr Cheng’s declarations he makes reference to other persons in a general way and he does not descend to detail about who he may have spoken to in order to be in a position to make his declaration. There is no basis in fact made out in support of these assertions.
In the same declaration, Dr Cheng goes on to say that if any attempts are made to personally serve legal documents, ‘it is Rejuvi’s custom and practice to instruct that any Rejuvi corporate officers and directors or employees … to immediately forward such documents to [him] …’ Staff are required by instruction to immediately contact Dr Cheng if legal documents are left with any Rejuvi employees or if legal documents are received by mail. The policy does not require employees to refuse to accept service of legal process. It requires them to immediately notify Dr Cheng after they have received documents directed to Rejuvi. If Dr Cheng is not present, and he said he was not present for a large part of the time because of his work outside of America, presumably the next most senior person present would be notified. The evidence discloses that the only other director who was consistently present was Ms Michelle Cheng, the wife of Dr Cheng.
In that context, Dr Cheng does not exhibit or refer to any particular written form of policy or instruction. He does not say how this requirement was communicated and by whom. He does not refer to any form of induction process for employees. He relies entirely upon his own assertion of the factual position.
Exhibit D3 is a further declaration of Dr Cheng dated 6 September 2017. It first refers to Mr Mitchard’s affidavit. Dr Cheng declares that Rejuvi did not keep a record of received mail and in the period 16 December 2009 to 11 February 2010 it did not receive any letter from Mr Mitchard. There is no basis in fact for Dr Cheng to make this assertion or what may support the making of this assertion; it is no more than an unsupported assertion and for that reason alone it carries little weight. For reasons which I set out below, I consider that this assertion and much of the other unsupported factual assertions made by Dr Cheng appear to be inconsistent with his viva voce evidence and may not be accepted; they are likely factually wrong but I do not need to make such a finding in this application.
Dr Cheng said that in the period 2009 to 2012, his office received a lot of marketing and promotional material from overseas. He says that all received mail is opened. Correspondence and important mail is given to him, accounts and receivables go to the accounts department and the rest is thrown away. He appears to have had no input into what was thrown away. That is and has always been the procedure.
Dr Cheng then declares that Rejuvi has never received any communications direct from the Civil Registry of this Court including any trial notice. The declaration does not say on what basis this assertion is made or what enquiries Dr Cheng has made that would in some way support or inform this declaration. Dr Cheng appears to justify the assertion in the declaration by pointing out the shorthand name of the action on the letters. He fails apparently to notice that the full names of the parties are listed on each of the letters and that this includes the name of Rejuvi. I will not relist the number of letters sent by this Court to Rejuvi’s address. They are numerous. The Court is asked to accept that all of this mail was opened, read, assessed and placed in the correct pile or, for the balance, in the trash container of the office without Dr Cheng seeing them. Of course that is not an answer to the presumption arising from the despatch of the mail by post to Rejuvi being received. It is difficult to assess how this evidence actually assists Rejuvi.
Ms Corso also points to the fact that the declarations of service have already been relied upon by the Court as proof of service. The Registrar of this Court has acted upon the content of the documents to sign the first default Judgment. The Registrar has accepted the material on the face of the declaration that there was a proper service and so default Judgment could be signed. This is only accurate to a point. The default of Rejuvi upon which this Court proceeded to assess damages (which was the second Judgement in favour of Ms Corso) was the failure to respond to the claims within the fourth statement of claim. The first Judgment was granted on 6 May 2010, but the statement of claim then served was not the basis of the Judgement upon which the damages assessment was made by the Court.
In relation to the Pena affidavit, Ms Corso again points to the fact that the service was conducted at arms-length from the plaintiff through the requesting authority in South Australia requesting service from the central authority in the United States of America. That authority in turn referred the documentation to ABC Legal which was a recognised organisation under The Hague Convention. These are all arms-length organisations. I refer to my discussion in my Judgment in first instance at [31]-[37] where I decided that I was satisfied on the balance of probabilities that the documents referred to in the request have been served upon Rejuvi having regard to the content of the request, the content of the certificate of attestation and the content of the affidavit of Mr Pena which accompanied the certificate of attestation from the recognised organisation under The Hague Convention.
Ms Corso also argued that I may take into account the other material before the Court and the cross-examination of witnesses which, on Ms Corso’s argument, significantly diminishes the credibility of any assertions made by those witnesses of not having been served with documents. Rejuvi did not seek to cross-examine Ms Saeteurn.
In hearing argument[66] I made orders that the affidavits of Mr Pena and Mr Santillana should be accepted de bene esse. In relation to the submissions of Rejuvi concerning the Santillana affidavit, I accept those submissions in part. I accept the affidavit of Mr Santillana, insofar as it refers to the electronic record described as a screen shot in Exhibit B to that affidavit. I therefore accept paragraphs 6, 7, 8, 9, 10, 11 and 12 of that affidavit. I consider that there would be no real or practical utility in the cross-examination of Mr Santillana on those topics. I accept paragraphs 1, 2 and 3 of the affidavit of Mr Santillana and I also can see no real or practical utility in the cross-examination of him about that affidavit.
[66] T173.26.
I would not accept paragraphs 4 and 5 of the affidavit in the absence of some other record identifying the presence of Mr Merino at the offices of Rejuvi on 25 September 2009. Therefore, to the extent that it is relevant, I have accepted those parts of the affidavit of Mr Santillana as indicating that as a result of information received from Mr Merino, a business record was created within Western’s business recording the facts as they are recorded on Exhibit B to Mr Santillana’s affidavit.
I accept the submissions of Rejuvi that there was a clear understanding that Mr Merino would be presented for cross-examination. He was not so presented. In light of the challenge to the question of service, I would not allow Mr Merino’s affidavit to be read by Ms Corso in the absence of Mr Merino being presented for cross-examination. I was satisfied that there was a real and practical utility in Mr Merino being cross-examined. The practical utility was that there was some evidence of inconsistencies between the gender of the person who was served. There is a genuine challenge on that issue. I think there is little relevance in the spelling of the full name of Ms Jacinto. These are largely matters of pronunciation and may be explained by the fact that Ms Jacinto was a Filipina national and her first language was Spanish. I think that nothing turns on that fact.
At another level, there is also a real utility in allowing such cross-examination. The declaration evidence is that Mr Merino served documents upon a Xedios X Jacinto. In her viva voce evidence Ms Jacinto was emphatic that in 2009 she was not served with any legal documents. She said that if someone had tried to serve documents upon her, she would have refused and sent the process server away. There is a peculiarity about this evidence but any cross-examination of Mr Merino will only harden the issue of service to a point of intractability. In light of the denials of Ms Jacinto, the Court would be left with two diametrically opposed versions of fact. In this application the Court cannot and should not attempt to resolve such evidentiary issues. That is the position reached in the absence of cross-examination of Mr Merino or where Mr Merino was presented for cross-examination. Irrespective the result is the same. The declaration if read (or not read) begets an insoluble difference of versions of fact that I am unable to resolve here.
The affidavit material concerning Mr Pena I consider sits in an entirely different category. There are a number of reasons. The first is that the process under which Mr Pena received the documents was following a request under The Hague Service Convention issued by this Court to the US Department of Justice Civil Division for service of five documents upon Rejuvi. That request for service abroad is FDN69 in the court file of this Court. Mr Pena was contracted to serve the documents through the auspices of the USA authorities. The firm which retained him, ABC Legal, was an authorised process server retained by USA authorities under its obligations under The Hague Convention.
Mr Pena executed a declaration of service. That declaration was attached to a certificate of attestation. That certificate of attestation describes that the documents referred to in the request (being the five relevant documents) had been delivered to Amy Chaw, clerk, person authorised to accept, and her description at Rejuvi. A person authorised to accept is any person who, when questioned, indicates an authority and a willingness to accept documents. There has been no evidence from Amy Chow to contradict the evidence of Mr Pena. That is different from the position of Mr Merino where Ms Jacinto denies in her viva voce evidence ever having been served with those documents in 2009. For the reasons discussed above, I will leave to one side the significant doubts that I have that Ms Jacinto could remember in 2017 everything that happened in 2009 or about her evidence generally.
The second is that in her affidavit, which is not challenged, Ms Saeteurn deposes that in the regular course of ABC Legal’s business for contracted process servers, there was a requirement to update each service of process attempt via ABC Legal’s mobile software application. Earlier in these reasons I have set out the relevant detail concerning the submission of the event of service, the GPS coordinates and the detail of date, place, time and descriptions supplied to ABC Legal by Mr Pena.
All of those business records disclose the service attempt upon Rejuvi on 28 January 2016 at 9.51 am at the address of Rejuvi by Mr Billy Pena, an independent contractor. He reported upon the service by describing the person to whom he had delivered the documents as a person apparently with authority to accept service.
It follows that the only matter for cross-examination for Mr Pena would have been the issue of what was said between he and Ms Chow. However, in light of the evidence of Dr Cheng about this topic that I have discussed several times above, in the absence of any evidence from Michelle Wang and in the absence of any evidence of an assertion by Ms Chow denying that Mr Pena attended and served the documents, there is no purpose to that cross-examination. There is no factual alternative that may be put to Mr Pena. Otherwise it is a cross-examination limited to credit issues and the rule of finality applies.
That position is quite different to the position of Mr Merino. I consider that there is no sufficient basis to challenge the declaration of Mr Pena such that there is a real or practical utility in allowing that cross-examination.
In those circumstances, I allow the affidavit of Mr Pena to be read in response to the application to set aside the Judgment, together with the unchallenged affidavit of Ms Saeteurn. The declaration of Mr Pena may be read in evidence without Mr Pena being made available for cross-examination.
I turn then to Rejuvi’s submission that the records of Western and ABC Legal should not be accepted as business records and be admitted into evidence without further proof. The breadth of this argument is reduced following the views I have expressed about the receipt of Mr Merino’s declaration. I will only address the arguments made to the extent that I consider necessary.
The admission of business records into evidence in South Australia has since 4 April 2016 been governed by s 53 of the Evidence Act 1929 (SA).[67] That section is in largely the same terms as the repealed s 45A and the authorities decided under that section are apposite.[68] The section is directed at overcoming problems caused by technicalities associated with the hearsay exclusion of documentary evidence which is otherwise genuine and of substantive probative value. The section is to be given a literal construction,[69] it is remedial in character[70] and the court is concerned primarily with the accuracy of documents. On the application of s 53(2) of the Act, where a witness is out of the state and may give evidence by video link, then that is a matter I may take into account in deciding whether a witness should be called and whether the business record should be excluded or accepted. It is to be recalled that I am here dealing with the records held by the entities and not the declarations made by the deponents that I have earlier considered on the question of whether they may be read into evidence. However, in the case of Mr Pena there is an obvious intersection between the content of his declaration and the content of the business records kept by ABC Legal. This is the basis of the application of Rejuvi for the exclusion of this evidence.
[67] 53—Admission of business records in evidence
(1) An apparently genuine document purporting to be a business record—
(a) is admissible in evidence without further proof; and
(b) is evidence of a fact stated in the record, or any fact that may be inferred from the record (whether the inference arises wholly from the matter contained in the record, or from that matter in conjunction with other evidence).
(2) A document must not be admitted in evidence under subsection (1) if the court is of the opinion—
(a) that the person by whom, or at whose direction, the document was prepared can and should be called by the party tendering the document to give evidence of the matters contained in the document; or
(b) that the evidentiary weight of the document is slight and is outweighed by the prejudice that might result to any of the parties from the admission of the document in evidence; or
(c) that it would be otherwise contrary to the interests of justice to admit the document in evidence.
(3) For the purpose of determining the evidentiary weight (if any) of a document admitted in evidence under subsection (1), consideration must be given to the source from which the document is produced, the safeguards (if any) that have been taken to ensure its accuracy, and any other relevant matters.
(4) In this section—
business means business, occupation, trade or calling and includes the business of any governmental or local governmental body or instrumentality;
business record means—
(a) any book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business; or
(b) any reproduction of any such record by photographic, photostatic, lithographic or other like process.
[68] See generally R v Keogh (No 3) [2014] SASCFC 137; The Queen v Calabria (1982) 31 SASR 423, 429-430; The Queen v Perry (No 4) (1981) 28 SASR 119, 123.
[69] Residues Treatment & Trading Co Ltd v Southern Resources Ltd (1989) 52 SASR 54.
[70] Hillier v Lucas (2000) 81 SASR 451, 473.
For reasons that I have already discussed, I am not prepared to accept the declaration of Mr Merino and I am only prepared to accept the declaration of Mr Santillana to a limited extent but which does not assist Ms Corso. That declaration is largely only accepted on the basis that it discloses the existence of a business record of a report of service in 2009 within the records of Western. That does not assist the resolution of any challenge to the evidence of Mr Merino because the record can rise no higher than the evidence of Mr Merino. If that evidence is not accepted, then the record is nothing more than a note of what Mr Merino told Western and so takes the matter no further. For the reasons already stated, the differences between the evidence of Ms Jacinto and the record of service cannot be resolved in this application. No issue arises under s 53 of the Evidence Act.
The declaration of Ms Saeteurn was not challenged. She informed the Court of the process within ABC Legal of process servers being retained and electronically recording the fact, time and location of service. This evidence was received by the Court without challenge. It is unnecessary for me to repeat here the very detailed evidence of Ms Saeteurn that was directed, in part, to the requirements of s 53 of the Act. The records maintained by ABC Legal are plainly business records. The person at whose direction the relevant business record was prepared was not cross-examined (s 53(2)(a) Evidence Act).
I have also given consideration to the requirements of s 53(3) of the Act. Following the reading into evidence of Ms Saeteurn’s declaration, I am satisfied of the evidentiary weight of the business records referred to by Ms Saeteurn in her affidavit. No occasion arises to challenge the genuineness, content, admissibility or weight to be given to those business records. I am unable to accept the submission of Rejuvi about the business records kept by ABC Legal and their admission into evidence. For different reasons, I have rejected the declaration of Mr Merino. The records kept by Western (Mr Santillana) have no evidentiary weight as a result. The business records maintained by ABC Legal are admissible without further proof and are evidence of the facts stated within them.
Decision
The task before me falls for consideration under the two principal applications by Rejuvi. The first that the default Judgment entered on 6 May 2010 be set aside. The second that the default Judgment entered on 27 May 2016 be set aside.
The first application is to be considered under the principles applicable to an application under 6 DCCR 230. The second application is to be considered under the principles applicable under 6 DCCR 41H, 41K and 41L. As I have earlier expressed, there is some intersection between the considerations that arise under 6 DCCR 41H and 230.
I keep in mind that there has been no trial of the issues in the action insofar as they may arise on the proposed defence. I am therefore required to exercise my unfettered discretion under 6 DCCR 230 and 41L(2). In doing so, I have had regard to the whole of the evidence canvassed before the Court. The extra advantage I have had is that each party cross-examined many of the deponents to the affidavits/declarations of the other party. For the reasons earlier expressed, this cross-examination has addressed what I consider to be real deficiencies in the declaration material filed in support of the application.
In the comments that I make below, I do so having regard to what I consider is the preponderance of the weight of the evidence before the Court. I have deliberately used that form of expression to distinguish my decision making process here from that applicable in a trial. The issue now is the exercise of my discretion.
I have taken into account the declaration evidence of Ms Saeteurn and Ms Shevlin that was not seriously challenged and that Mr Mitchard was cross-examined on his affidavit but was untroubled by such cross-examination. I have taken into account the declarations of Mr Pena and Ms Saeteurn that have been read in support of the contention that the Form 14 Summary of the document to be served and the sealed copy of the second, third and fourth statement of claim were served by Mr Pena upon Rejuvi at its premises in San Francisco on 28 January 2016 at 9.51 am. I have taken into account all of the evidence before me about whether the letters from this Court produced following an order of a Master of the Court were sent to Rejuvi. Similarly, I have taken into account all of the evidence before me about whether the email and hard copy correspondence sent by the firm of lawyers, SE Lawyers, was sent to and was received by Rejuvi both by email and by mail in the usual process of handling mail by Rejuvi.
I have taken into account the whole of the evidence before me about the posting of the trial notice by this Court to each of the parties to the proceedings, and the receipt of that trial notice by some of the parties in the ordinary course of post. I have taken into account the whole of the evidence before me about who dealt with mail received by Rejuvi, how it was dealt with and who had ultimate responsibility for the disposition of that mail.
I have taken into account the whole of the evidence before me about whether in 2009 and 2010, the letters sent by the firm of lawyers Johnston Withers signed by Mr Mitchard confirming service of court documents upon Rejuvi, requiring Rejuvi to file a defence to the proceeding and warning that judgment will be signed in this Court were received by Rejuvi in the ordinary course of mail and the dealing with those letters by Rejuvi in the ordinary process of handling of mail.
I have taken into account the evidence before me from Ms Jacinto about all of the mail received by Rejuvi apart from mail directed personally to Ms Edios Jacinto being forwarded unopened to Ms Michelle Cheng or another senior executive of Rejuvi of equivalent status to Ms Cheng.
I have taken into account the evidence before me that on 9 December 2007 Mr David Rosprim, a consultant retained by Rejuvi, received an email report from an Australian distributor that legal proceedings had been commenced in Australia against a cosmetic tattooist trained in the tattoo removal technique in Sydney by Dr Cheng and were connected with the application of the Rejuvi Tattoo Removal Paste. In the usual course of his retainer, such issues were not normally handled by Mr Rosprim and his invariable practice was to speak to Dr Cheng and leave him to deal with those issues.
I have taken into account the evidence before me that at least between 2012 and 2015 and perhaps as early as 2010, Ms Corso made regular telephone contact with the Rejuvi offices and in one particular period, she complained about what she perceived to be surveillance of her person by agents of Rejuvi.
I have taken into account the fact that, in relation to the default Judgment entered on 6 May 2010, the evidence before the Court on the issue of personal service upon the offices of Rejuvi is that of Ms Jacinto and in her viva voce evidence, Ms Jacinto denied that she had received legal documents issued in Australia in this action. I am unable to resolve any evidentiary dispute on that matter because Mr Merino’s declaration has not been accepted in evidence, Mr Merino has not been presented for cross-examination and in any event, the Court is unable to resolve two diametrically opposed factual contentions made by each party.
In light of my earlier comments and in the exercise of discretion under 6 DCCR 230, I would allow the application of Rejuvi under paragraph 2 of its application and I would therefore set aside the Judgement of 6 May 2010.
I then turn to the application of 6 DCCR 41L in the background of the wording of 6 DCCR 41H. The question of the ‘…knowledge of the initiating process…’ falls for determination following my consideration of the evidence about the alleged knowledge of Rejuvi deriving from the alleged service of the second, third and fourth statements of claim upon Rejuvi as well as the letters from lawyers in Australia and from this Court, electronic communications from lawyers and the trial notice sent by this Court.
At 6 DCCR 41A, the expression ‘initiating process’ is defined to mean ‘… any document by which proceedings (including proceedings on any cross-claim or third-party claim) are commenced …’ In its submissions, Rejuvi accepts and I agree that service of amended pleadings, court generated letters and notices, lawyers’ letters about court proceedings, emails about the court proceedings and a trial notice come within the aegis of the means by which, in the ordinary course, the defendant will obtain and therefore have knowledge of the initiating process.
The task before me is the exercise of my discretion. I do so in the background of the whole of the material that I have canvassed in this decision. This includes those circumstances where some assessment is required to be made of the inherent reliability or unreliability of the evidentiary material and where an assessment is unable to be made one way or the other on that material. This is the strain present in any objective assessment. In the exercise of any discretion some part or parts of the evidence before the Court will have greater (or lesser) persuasiveness. In this matter I have formed very clear views having weighed in the balance all of the evidence and the submissions of the parties.
I exercise my discretion in favour of the plaintiff Ms Corso because Rejuvi has not satisfied me that, without any fault on its part, it did not have knowledge of the initiating process in time to defend the proceedings commenced by Ms Corso.
In so deciding, it becomes unnecessary for me to make any decision about whether the application to set aside the Judgment fell outside of the time period that the Court considers reasonable under 6 DCCR 41L(3)(b). If it were necessary for me to decide the matter, I would have exercised my discretion in favour of Rejuvi. I have formed that view notwithstanding the criticisms that I have made of the form of the declarations of Dr Cheng. In these circumstances it is unnecessary for me to say more about that matter.
I make the following orders on the application of Rejuvi of 9 June 2017:
1.I allow paragraph 2 of the application and I set aside the default Judgement of 6 May 2010.
2. I dismiss paragraph 3 and paragraph 4 of the application.
3. I will hear the parties on the question of costs and any consequential orders
To: Rejuvi Australia
Sent: Tuesday, December 11, 2007 3:37 AM
Subject: Re: Tattoo Removal
December 10, 2007
To: Rejuvi Australia
Dear Mariana,
I am sorry to have received your E-mail about what is happening. Infection problem rarely happens for Rejuvi Tattoo Removal and usually could be handled by hydrogen peroxide striation and anti-biotics (topical & oral).
Sometimes a customer tries to see a medical doctor for a little infection problem which a cosmetic tattooist could handle easily. The Consent form and Aftercare Instruction enforce customers to be treated by technicians first for solving infection problem. Of course, if the problem can not resolved, then the customer has to visit a doctor.
Please give more details about what has happened and what is the legal status. Rejuvi does not have any suggestion if we do not know the detailed information.
You might consider pursue an insurance coverage for Rejuvi Tattoo Removal like many other countries.
Sincerely,
Dave Rosprim
From: Rejuvi Australia
To: rosprim
Sent: Sunday, December 09, 2007 4:49 PM
Subject: Tattoo Removal
Dear Dave,
How are you?
I just want to bring to your attention that a Cosmetic Tattooist trained in the Tattoo removal technique in Sydney by Dr. Cheng on his last visit to Australia is currently being sued by one of her clients that developed on [sic] infection on her ankle.
I have received a letter of request to supply them with all information about the product and the procedure.
From your experience do you have any suggestions what is the best information to send?
Thank you for your help and I am looking forward to your quick response.
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