Grey v Mango Pre Paid Calling Cards Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Grey v Mango Pre Paid Calling Cards Pty Ltd [2004] FCA 1664

PROCEDURE – judgment entered – whether orders should be set aside – no entry of appearance – absent party represented by solicitors to whom notice was given – non‑appearance by absent party at directions hearings – service on solicitor rather than absent party at place of business – order not void for uncertainty – no consideration of evidence to support case of applicants in entering judgment – discretionary consideration.

Trade Practices Act 1974 (Cth) ss 51AC, 52, 82, 86, 87

Federal Court Rules O 1 r 4, O 1 r 8, O 4 r 5, O 7 r 1, O 7 r 2, O 7 r 3, O 7 r 4, O 7 r 6, O 7 r 8, O 7 r 11, O 7 r 12, O 9 r 4, O 10 r 3, O 10 r 7, O 19, O 35 r 4, O 35 r 7

GE Dal Pont, Law of Agency, Butterworths, Australia, 2001

Alpine Bulk Transport Co Inc v Saudi Eagle Shipping Co Inc [1986] 2 Lloyd’s Rep 221 cited
Australia & New Zealand Banking Group Ltd v Kostovski (unreported, Supreme Court of Victoria, Chernov J, 2 July 1997) cited
Australian Securities Commission v Macleod (1994) 54 FCR 309 applied
Baker v Shire of Albany (1994) 14 WAR 46 cited
Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245 cited
Davies v Pagett (1986) 10 FCR 226 cited
Dependable Database Data Pty Ltd v ABI-Australian Business Information Pty Ltd (unreported, Federal Court of Australia, Burchett J, 16 June 1995) cited
Ditfort v Temby (1990) 26 FCR 72 distinguished
Lazar v Taito (Aust) Pty Ltd (1985) 5 FCR 395 cited
Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 cited
Lynn v Dronspace Pty Ltd (unreported, Federal Court of Australia, Einfeld J, 25 June 1992) cited
Maritime Union of Australia v Geraldton Port Authority (2001) 111 FCR 434 applied
Registrar of Aboriginal Corporations v Murnkurni Women’s Aboriginal Corporation (1995) 58 FCR 125 cited
Rollond v Bank of Western Australia Ltd (unreported, Supreme Court of Western Australia, Full Court, 3 September 1998) cited
Skahill v Kestral Holdings Pty Ltd [2000] WASCA 185 considered
Vipond v Masters (unreported, Supreme Court of Western Australia, Master Staples, 28 January 1987) considered

JOHN AND ANGELA GREY and JEREMY AND LINDA GREY v MANGO PRE PAID CALLING CARDS PTY LTD, SUSAN VIAL and NICHOLAS RHODIN
W31 of 2004

RD NICHOLSON J
17 DECEMBER 2004
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W31 OF 2004

BETWEEN:

JOHN AND ANGELA GREY and
JEREMY AND LINDA GREY
APPLICANTS

AND:

MANGO PRE PAID CALLING CARDS PTY LTD
(ACN 104 386 932)
FIRST RESPONDENT

SUSAN VIAL
SECOND RESPONDENT

NICHOLAS RHODIN
THIRD RESPONDENT

JUDGE:

RD NICHOLSON J

DATE OF ORDER:

17 DECEMBER 2004

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.        The first respondent’s amended notice of motion filed on 14 May 2004 be…

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Details
Case
[2004] FCA 1664
Decision Date

CaseChat Overview and Summary

In the case of Grey v Mango Pre Paid Calling Cards Pty Ltd, the applicants sought to enforce a default judgment against the first respondent, Mango Pre Paid Calling Cards Pty Ltd. The proceedings were initially set for directions on 8 March 2004, but the respondents did not appear, and subsequent hearings were similarly adjourned due to their non-attendance. On 6 April 2004, despite a faxed notice from the first respondent's solicitors indicating their intention to appear and seek a transfer of proceedings, no appearances were made. The applicants applied for judgment in default, which was subsequently granted on 29 April 2004, leading to the entry of judgment on 6 May 2004.

The primary legal issue before the court was whether the judgment entered in the absence of the first respondent should be set aside. The applicants argued that the first respondent had failed to comply with procedural requirements and had not demonstrated any substantial prejudice or evidence of a defence. The first respondent, however, contended that the judgment was irregular due to the absence of proper service and should be set aside under Federal Court Rules 19 and 35. The court had to balance the procedural irregularities against the applicants' contentions regarding the absence of prejudice and the first respondent's delay in raising the issue.

The court found that while the applicants' arguments had merit, the necessity to consider the evidence and the procedural irregularity under Federal Court Rules 19 and 35 led to the conclusion that the judgment should be set aside. The court emphasised that the discretion under Federal Court Rules could be exercised even if the absent party had knowledge of the impending motion. Consequently, the court granted the first respondent's motion to set aside the judgment and ordered that counsel be heard regarding costs.

Orders

Orders of the court

1. The first respondent’s amended notice of motion filed on 14 May 2004 be granted.

2. Paragraph 1 of the orders made on 29 April 2004 and entered on 6 May 2004 be set aside.

3. Counsel be heard as to costs.

Background

Background to the litigation

The applicants rely on the affidavits of a solicitor, Ms Cowan, sworn on 14 May 2004 and 5 July 2004 as admitted into evidence. BACKGROUND CIRCUMSTANCES The proceeding was set down for directions on 8 March 2004 but there was no appearance for the respondents who were not served until 10 March 2004. The directions hearing was adjourned to 16 March 2004. On this latter date there was again no representation for the respondents so the directions hearing was further adjourned to 6 April 2004. On 1 April 2004 the first respondent’s solicitors wrote to the applicants’ solicitors and sought their consent to have the proceedings transferred to the New South Wales Registry. In a letter dated 5 April 2004 the applicants’ solicitors stated that they would not agree to the request and that ‘further, unless your client instructs solicitors in Western Australia to appear at the hearing on 6 April 2004, we will request that the application be heard in the absence of your client’. On 6 April 2004 there were no appearances for any of the respondents. However, on that day the first respondent’s solicitors sent a letter by facsimile to the applicants’ solicitors advising that they had instructions to appear for the first respondent and to file a notice of motion seeking a transfer of the proceedings to the New South Wales Registry. They requested that in the meantime the applicants’ solicitors appear on their behalf and obtain a timetable allowing the first respondent two weeks to seek further particulars appropriate to preparation of its defence and four weeks from the date the particulars were provided to file and serve the defence. At the directions hearing on 6 April 2004 the applicants applied for judgment in default of appearance against the first respondent. They also informed the Court of the faxed letter from the first respondent’s solicitors of that day. In consequence the following orders were made:‘1.The applicants’ minute of proposed orders dated 6 April 2004 be held over for any further submissions on 29 April 2004 at 11.15 am.2.The first respondent file and serve any application for transfer of the proceedings by 22 April 2004.3.Further programming orders be held over for directions on 29 April 2004.4.Costs be reserved.’ Following the directions hearing on 6 April 2004 the applicants’ solicitors informed the first respondent’s solicitors, on that day, of the orders made and provided a copy of the applicants’ minute of proposed orders which were stood over to 29 April 2004. That minute read as follows:‘1.In default of appearance by the first respondent, there be judgment for the applicants against the first respondent in the terms sought in paragraphs 1 and 2 of the relief sought in the application herein, together with interest on the sum of $157,500 at the rate of 6% per annum from 1 July 2003 to the date of judgment herein, and costs.2.The application otherwise be adjourned to 2004 for hearing as to relief sought in paragraph 3 of the application against the first respondent, and for further directions with respect to the relief sought against the second and third respondents herein, such hearing to take place in the absence of the first respondent unless it shall have filed and served an appearance not less than 7 days before the date.’

Evidence

Evidence Before The Court

In relation to the liability arising independently of the Act, it is claimed that the vending machines were not reasonably fit for their purpose and were not of merchantable quality. Further it is claimed that the first respondent failed to establish the retail outlets and the locations for the vending machines. Additionally, it is alleged the first respondent failed to provide to the applicants all necessary point of sale advertising material with respect to the ‘Mango Calling Cards’ and sold such cards to another person so that the first respondent repudiated the Agreement. These circumstances are said to be contrary to the pre-contractual representations. EVIDENCE The affidavits relied upon by the first respondent in support of its motion is the affidavit of Thaw Thaw Htin sworn on 13 May 2004; the affidavits of Mr McConnell (of the Sydney solicitors for the first respondent) sworn on 23 June 2004 and 20 July 2004, as admitted into evidence; and the affidavit of Mr Yates (the current sole director of the first respondent) sworn on 21 July 2004. The applicants rely on the affidavits of a solicitor, Ms Cowan, sworn on 14 May 2004 and 5 July 2004 as admitted into evidence. BACKGROUND CIRCUMSTANCES The proceeding was set down for directions on 8 March 2004 but there was no appearance for the respondents who were not served until 10 March 2004. The directions hearing was adjourned to 16 March 2004. On this latter date there was again no representation for the respondents so the directions hearing was further adjourned to 6 April 2004. On 1 April 2004 the first respondent’s solicitors wrote to the applicants’ solicitors and sought their consent to have the proceedings transferred to the New South Wales Registry. In a letter dated 5 April 2004 the applicants’ solicitors stated that they would not agree to the request and that ‘further, unless your client instructs solicitors in Western Australia to appear at the hearing on 6 April 2004, we will request that the application be heard in the absence of your client’. On 6 April 2004 there were no appearances for any of the respondents. However, on that day the first respondent’s solicitors sent a letter by facsimile to the applicants’ solicitors advising that they had instructions to appear for the first respondent and to file a notice of motion seeking a transfer of the proceedings to the New South Wales Registry. They requested that in the meantime the applicants’ solicitors appear on their behalf and obtain a timetable allowing the first respondent two weeks to seek further particulars appropriate to preparation of its defence and four weeks from the date the particulars were provided to file and serve the defence. At the directions hearing on 6 April 2004 the applicants applied for judgment in default of appearance against the first respondent. They also informed the Court of the faxed letter from the first respondent’s solicitors of that day. In consequence the following orders were made:‘1.The applicants’ minute of proposed orders dated 6 April 2004 be held over for any further submissions on 29 April 2004 at 11.15 am.2.The first respondent file and serve any application for transfer of the proceedings by 22 April 2004.3.Further programming orders be held over for directions on 29 April 2004.4.Costs be reserved.’

Decision

Reasons for decision

These submissions raise important considerations. Yet I do not consider they can outweigh the necessity for the Court to consider the evidence referred to in Macleod at 720. The orders were made and the judgment consequently entered in circumstances where the Court has not considered such evidence. That consideration occasions the balance of factors present here to tip in the first respondent’s favour when considered in all the circumstances. It is also of relevance that FCR O 35 r 7(2)(a) is, in terms, a rule which gives rise to a discretion which may be exercised ‘whether or not the absent party had notice of the motion for the order’; that is, even if notice to the first respondent’s solicitors had led to knowledge in the first respondent of the impending motion.CONCLUSION For these reasons I consider the first respondent’s motion should be granted. Counsel should be heard as to costs.

Ratio Decidendi

Legal Principle Established

The application of the reasoning in Lazar leads to this position. The requirement for the applicants to serve the first respondent at its usual place of business is a requirement which, consistently with Lazar, could be dispensed with. However, the making of the orders for entry of judgment without compliance with FCR O 19 is not such a requirement; it is an irregularity, not a matter of procedure. This is because compliance with FCR O 19 on the reasoning in Macleod is directed to the substantive issue of whether the applicants can make out their case.DISCRETIONARY CONSIDERATIONS Nevertheless, the applicants contend that even if the judgment is irregular that should not mean that it must be set aside, for the following reasons. First, FCR O 35 r 7(2)(a) is discretionary in its terms. Second, in the context of FCR O 1 r 8, an irregular judgment will not be set aside in the absence of substantial prejudice: Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245 at 250-251; Australia & New Zealand Banking Group Ltd v Kostovski (unreported, Supreme Court of Victoria, Chernov J, 2 July 1997) at 5-7; Lynn v Dronspace Pty Ltd (unreported, Federal Court of Australia, Einfeld J, 25 June 1992) at [15] and [27]. Third, an irregular judgment will not necessarily be set aside: Dependable Database Data Pty Ltd v ABI-Australian Business Information Pty Ltd (unreported, Federal Court of Australia, Burchett J, 16 June 1995) at [9] and [10]. Fourth, the first respondent has not adduced any evidence of prejudice, in circumstances where it is open to the Court to infer that the first respondent had the knowledge through its solicitors: Baker v Shire of Albany (1994) 14 WAR 46 at 56; Dal Pont, Law of Agency, Butterworths, Australia, 2001 at [22.43]-[22.44]. Fifth, the applicants rely on their earlier submissions that the first respondents have not adduced evidence to support the existence of any defence. Sixth, the first respondent did not raise the issue of power to make the orders until three months after the order was made. Seventh, the first respondent has not made payment into Court nor given any explanation for that failure. These submissions raise important considerations. Yet I do not consider they can outweigh the necessity for the Court to consider the evidence referred to in Macleod at 720. The orders were made and the judgment consequently entered in circumstances where the Court has not considered such evidence. That consideration occasions the balance of factors present here to tip in the first respondent’s favour when considered in all the circumstances. It is also of relevance that FCR O 35 r 7(2)(a) is, in terms, a rule which gives rise to a discretion which may be exercised ‘whether or not the absent party had notice of the motion for the order’; that is, even if notice to the first respondent’s solicitors had led to knowledge in the first respondent of the impending motion.CONCLUSION For these reasons I consider the first respondent’s motion should be granted. Counsel should be heard as to costs.