Marketforce Advertising Limited v Stadium Events Pty Ltd
[2009] WADC 126
•26 AUGUST 2009
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MARKETFORCE ADVERTISING LIMITED -v- STADIUM EVENTS PTY LTD [2009] WADC 126
CORAM: PRINCIPAL REGISTRAR GETHING
HEARD: 3 AUGUST 2009
DELIVERED : 26 AUGUST 2009
FILE NO/S: CIV 217 of 2009
BETWEEN: MARKETFORCE ADVERTISING LIMITED (ACN 009 260 495)
Plaintiff
AND
STADIUM EVENTS PTY LTD (ACN 089 510 092)
Defendant
Catchwords:
Summary judgment - Counterclaim - Stay of execution - Payment of part of the claim into court
Legislation:
Nil
Result:
Summary judgment
Part of judgment paid into Court pending counterclaim
Representation:
Counsel:
Plaintiff: Mr P D Quinlin
Defendant: Ms A Aldrich
Solicitors:
Plaintiff: Clayton Utz
Defendant: Alison & Associates (Legal) Pty Ltd
Case(s) referred to in judgment(s):
Ansearch Ltd v Wavetech Pty Ltd [2006] WASC 184
Australia & New Zealand Banking Group Ltd v Cawood [1987] 1 Qd R 131
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Bayview Quarries Pty Ltd v Castley Development Pty Ltd [1963] VR 445
Casella v Costin Pty Ltd, unreported; FCt SCt of WA; Library No 5416; 22 June 1984
Con–Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
Davis v Hueber (1923) 31 CLR 583
DMS Shipping & Trading Co Ltd v Lionheart Asia Ltd [1996] 2 Qd R 20
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Harbeck & Ors v Vasse Dozer Hire Pty Ltd [2009] WADC 48
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
John D Hope & Co v Glendinning [1911] AC 419
Maersk Australia Pty Ltd v Rebelo Nominees Pty Ltd [2008] WADC 81
Miliangos v George Frank (Textile) Ltd [1976] AC 443
Morgan & Son Ltd v S Martin Johnson & Company Ltd [1949] 1 KB 107
Morgan v Pallister [2004] WASC 188
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
MV Yorke Motors (a firm) v Edwards [1982] 1 All ER 1024
Re; Clune; Ex parte Verge v Isabella Nominees Pty Ltd (in liq) (1988) 14 ACLR 261
State Bank of Victoria v Parry [1989] WAR 240
W Pope & Co Pty Ltd v Edward Souery & Co Pty Ltd [1983] WAR 117
Webster v Lampard (1993) 177 CLR 598
Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71
PRINCIPAL REGISTRAR GETHING: By application dated 5 June 2009 the plaintiff, Marketforce Advertising Limited, has sought summary judgment against the defendant, Stadium Events Pty Ltd. The judgment sought by the plaintiff is for an amount of A$77,484.79 and NZ$16,783.65 (or Australian dollar equivalent), with interest, said to be the balance due and owing pursuant to an agency arrangement whereby the plaintiff arranged for certain television advertising to be placed on behalf of the defendant.
The plaintiff relies on an affidavit of Helen Hammond sworn 5 June 2009. Ms Hammond is the plaintiff's general manager.
The defendant did not file any affidavit in opposition to the application. However, the defendant did file an amended defence and counterclaim on 2 June 2009 which is an unusual format and is more in the nature of an affidavit.
At the end of the hearing on 3 August 2009 I advised the parties that I was giving serious consideration to whether I should order some or all of the judgment, if granted, to be paid into Court. On the authorities as I understand them, this meant that I should give the defendant an opportunity to file an affidavit setting out its means to pay money into Court. I gave the defendant until 10 August 2009 to file and serve such an affidavit. An affidavit was filed on 10 August 2009. The plaintiff filed responsive submissions on 13 August 2009.
Relevant law
It is well established that the power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. Great care must be exercised to ensure that under the guise of achieving expeditious finality, a party is not improperly deprived of its opportunity for the trial of the case in the appointed manner by the Court: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130.
The burden of persuasion in a summary judgment application was considered by Pullin J (as his Honour then was) in Morgan v Pallister [2004] WASC 188 at [4] in the following terms:
"The plaintiff carries the burden of persuading the court that the claim is a good one, that there is no defence to it, that leave to defend should not be granted, and that judgment should be given for the plaintiff. The party showing cause against the application assumes an evidentiary burden but the overall burden of persuasion remains on the applicant. The power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried. It is clear however, that the procedure is not confined to cases which are immediately plain and obvious and the fact that a transaction is intricate does not disentitle the plaintiff to relief in a clear case. It was never intended that when the facts are in dispute, an action should be disposed of summarily. If a defendant's affidavit reveals inconsistencies which might in a trial persuade a court not to believe the defendant's evidence, this will not necessarily lead to judgment for the plaintiff. It is not necessary to cite authority for these propositions."
Where there are disputed facts, and in the absence of cross‑examination, the application is to be determined on the basis that the defendant's version of the facts, assuming that it is not inherently incredible, would ultimately be accepted at the trial of the action: Webster v Lampard (1993) 177 CLR 598 at 608. In the same case, the members of the High Court had previously commented that the "issue before the learned Master on the application for summary judgment was … whether the material before the Master demonstrated that the action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail" [at 602]. If after argument there remains real uncertainty as to the plaintiff's right to judgment without further investigation of the facts, summary judgment must be refused: Ansearch Ltd v Wavetech Pty Ltd [2006] WASC 184, at [28]; Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 at 335.
The plaintiff's case
The plaintiff, trading as Media Decisions OMD, is in the business of, among other things, acting as an agent for its clients to arrange media advertising. Over the 10 year period between 1999 and 2008, the plaintiff had acted as the defendant's agent in arranging media advertising for a number of events.
In February 2008, the sole director of the defendant, Mr John McNeill, contacted Ms Hammond (the plaintiff's general manager) about a motor cross event to be held in July 2008 in Auckland, New Zealand.
The plaintiff's case is that on or about 22 February 2008 Mr McNeill and Ms Hammond had a telephone conversation the result of which was that the defendant appointed the plaintiff to act as its agent for the purchase of advertising in New Zealand. The agreement, which was entirely oral, was to the following effect:
(a)the plaintiff was authorised to secure and purchase television advertising for the motor cross event ("Event");
(b)the plaintiff had confirmed a budget for the advertising with its insurer of $100,000, which Mr McNeill confirmed;
(c)the defendant was to confirm a proposal with the plaintiff within a reasonable timeframe, and the plaintiff would secure advertising as close to the proposal as possible, determinate upon the availability of advertising space within the nominated television networks in New Zealand; and
(d)the plaintiff would secure the advertising and pay for it on behalf of the defendant.
Ms Hammond deposes that the standard industry practice in Australian and New Zealand is that where a recognised or accredited agency purchases advertising on behalf of a client, the agency is entitled, when paying for the advertising charges, to deduct from the advertising charges a percentage commission. In accordance with this standard industry practice, payment by a recognised or accredited agency of an amount minus the percentage commission is accepted in full and final satisfaction of the advertising charges. The plaintiff is an accredited advertising agency for the relevant New Zealand television stations. In New Zealand, the standard commission rate is 15 per cent.
Pursuant to the oral agreement, the plaintiff, through Ms Hammond, received instructions from Mr McNeill to secure and purchase advertising with two television networks. As to the first, the plaintiff's case is that by agreement made on or about 13 March 2008 with TV Works Limited the plaintiff agreed to purchase certain television advertising for the Event for the defendant. Pursuant to that agreement, the plaintiff purchased advertising from TV Works Limited at a cost of NZ$49,920.
As to the second, by agreement made on or about 4 April 2008 with TVNZ, the plaintiff agreed to purchase certain television advertising for the Event from TVNZ. Pursuant to that agreement, the plaintiff purchased advertising from TVNZ at a cost of NZ$61,971.
On 15 and 23 July 2008, 21 August 2008, 4 and 22 September 2008, the plaintiff paid the various invoices for the advertising expenses of the two television networks in accordance with the two agreements. The total net amount paid by the plaintiff on behalf of the defendant for the cost of the advertising for the event was A$77,484.79.
In accordance with the oral agreement and standard industry practice, the plaintiff issued an invoice to the defendant dated 30 June 2008 for payment of A$99,529.43 for the cost of the advertising including the commission. This amount consists of the A$77,484.79 together with the 15 per cent commission amount calculated from the New Zealand television network invoices in New Zealand dollars, which had then been converted at the exchange rate at the time of the plaintiff's invoice.
Ms Hammond then goes on to depose that the defendant has failed to pay the plaintiff any amount for both the reimbursement of the advertising cost of A$77,484.79 or the 15 per cent commission (being NZ$16,783.65 converted to A$22,044.64 at the date of invoice) totalling A$99,529.43.
As a matter of law, an agent is entitled to be indemnified for losses, liabilities and expenses incurred on behalf of its principal in carrying out the instructions of the principal for the principal's benefit: John D Hope & Co v Glendinning [1911] AC 419 at 431; Davis v Hueber (1923) 31 CLR 583 at 588; Re; Clune; Ex parte Verge v Isabella Nominees Pty Ltd (in liq) (1988) 14 ACLR 261 at 266. The right of an agent to indemnity will be implied into the agency contract unless it is clearly excluded by that contract: Clune (supra) at 266.
As regards the payment of commission, I am satisfied that the payment of a 15 per cent commission in the manner outlined by Ms Hammond is the standard industry practice in New Zealand. In particular, the invoices rendered by the two television stations record on their face a commission to the plaintiff at a rate of 15 per cent being deducted from the gross invoice amount (see pages 80, 81, 86, 88, 89, 90, 94, 100 and 107 of Ms Hammond's affidavit). The subsequent payment advices are for the amount of the invoice less 15 per cent. The defendant has not put on any contrary affidavit evidence. Nor is there any contrary material in its defence and counterclaims.
As a matter of law, a term may be implied into a contract by custom or trade usage. In Con–Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 236‑237 the High Court, in a joint judgment of all members of the court, endorsed the following propositions as to when a term will be implied by custom or trade usage:
(a)The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact;
(b)There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract;
(c)A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement; and
(d)A person may be bound by a custom notwithstanding the fact that he had no knowledge of it.
In my view, the plaintiff has sufficiently established the existence of the custom which it relies on.
Entitlement to summary judgment
Rules of the Supreme Court 1971 (WA) O 14, r 2(1) provide that an application for summary judgment is to be supported by an affidavit verifying the facts on which the claim is based. The plaintiff has satisfied me that it has verified the facts on which the claim is based. Ms Hammond on behalf of the plaintiff has further deposed that in her belief the defendant has no defence to the action. The plaintiff thus has a prima facie right to judgment.
Where a plaintiff has satisfied all the requirements of O 14 to give it prima facie the right to an order in the terms asked, the burden shifts to the defendant to satisfy the court why judgment should not be given against it: Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 per Brinsden J at 110; Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71 per Murray J at 74. The defendant must satisfy the Court "with respect to the claim … that there is an issue or question in dispute which ought to be tried, or that there ought for some other reason to be a trial of that claim": Rules of the Supreme Court, O 14 r 3(1). As noted in the quote above from Pullin J in Morgan v Pallister (supra), this is an evidentiary burden, the overall legal burden of persuasion remaining on the plaintiff as applicant.
The defendant's defence
As noted, the defendant did not file any affidavit in opposition to the application. It did, however, file an amended defence and counterclaim. Given the care that the authorities direct me to exercise before granting summary judgment, it is appropriate that I consider whether the facts in the amended defence and counterclaim, if established, would give rise to a defence to the claim.
In the amended defence and counterclaim, the defendant states that the defendant and plaintiff had a longstanding commercial relationship going back to 1999, and that payment for such dealings had always been made by the defendant without default. In the present case, the defendant and plaintiff agreed on television advertising campaigns. The defendant alleges that the plaintiff failed to book the campaigns in the required time and the spots were no longer available. As a result of alleged deficiencies in which the manner in which the advertising was booked, the advertisements "appeared with an unacceptably low frequency, with schedules different to those ordered by the Defendant, particularly in regards to the vital last weeks of the campaign." (par 4). The amended defence and counterclaim continues that "due in large part to the inadequacy of the advertising campaign, the Defendant experienced unprecedentedly low sales, and thus had to cancel two of the performances".
The defendant states, in essence, that because of the alleged deficiencies it does not owe the plaintiff any money. The defendant does not contest the existence generally of the contract. There is no issue to be tried that I can discern in direct defence to the plaintiff's claim. Further, no set off is pleaded. However, there is a counterclaim which repeats the terms of the defence and in which the defendant claims $300,000.
As a general rule, unconditional leave to defend ought to be given where there is a counterclaim that could be raised as an equitable set-off: Morgan & Son Ltd v S Martin Johnson & Company Ltd [1949] 1 KB 107 at 113 ‑ 114. The counterclaim is a claim for unliquidated damages. As such, it could only be raised as an equitable set-off, and not a legal set off: see generally Harbeck & Ors v Vasse Dozer Hire Pty Ltd [2009] WADC 48.
An equitable set-off may only be raised where the claim impeaches the claim of the plaintiff or has otherwise been brought about or contributed to or is so bound up with the rights which are relied upon by the plaintiff that it would be unconscionable for the plaintiff to succeed without allowing the set-off: Hazart Pty Ltd v Rademaker (1993) 11 WAR 26 at 38; Casella v Costin Pty Ltd, unreported; FCt SCt of WA; Library No 5416; 22 June 1984, per Wallace J (with whom Burt CJ agreed). The authorities are to the effect that a defendant cannot set-off against a plaintiff’s claim for payment under a contract an unliquidated claim for defective performance of the contract: see generally Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd (supra), at 85-86; W Pope & Co Pty Ltd v Edward Souery & Co Pty Ltd [1983] WAR 117 at 120-121; Bayview Quarries Pty Ltd v Castley Development Pty Ltd [1963] VR 445 at 449; Maersk Australia Pty Ltd v Rebelo Nominees Pty Ltd [2008] WADC 81.
In my view, there is nothing in the amended defence and counterclaim, the documents attached to it, nor the materials generally which suggests that in any way that the defendant's counterclaim could impeach the claim of the plaintiff in the sense discussed in the authorities just cited. Accordingly, I am of the view that the defendant's counterclaim could not be raised as an equitable set-off.
It follows that I am of the view that, pursuant to Rules of the Supreme Court O 14 r 3(1), the defendant has failed to satisfy me with respect to the claim that there is an issue or question in dispute which ought to be tried, or that there ought for some reason to be a trial at that part of the claim. I am also satisfied that the plaintiff has discharged its burden in the application, and that it is entitled to judgment.
Stay of execution
Rules of the Supreme Court O 14 r 3(2) provides:
"The court may, by order and subject to such conditions, if any, as may be just, stay execution of any judgment given against a defendant under this Rule until after the trial of any counterclaim made or raised by the defendant in the action."
The issue of when judgment ought to be stayed to allow counterclaim to proceed was considered by Malcolm CJ in State Bank of Victoria v Parry [1989] WAR 240 at 246:
"A stay of execution on a summary judgment is often granted where the defendant has a counterclaim against the plaintiff. Express provision for such a stay is contained in O 14 r 3(2). Such a stay may be granted until after the trial of the counterclaim. Where a defendant sets out a bona fide counterclaim arising out of the same subject matter as the action and connected with the grounds of defence, the defendant will normally be given unconditional leave to defend: Morgan & Son Ltd v S Martin Johnson & Co [1949] 1 KB 107. Although a counterclaim is for many purposes a cross-claim, for the purposes of O 14 it is generally treated as a defence: Zoedon Co v Barrett (1882) 26 Sol Jo 657. Where there is no defence to the plaintiff's claim, but there is a plausible counterclaim for an amount not less than the plaintiff's claim, summary judgment will be ordered with a stay of execution until the trial of the counterclaim or further order: Sheppards & Co v Wilkinson & Jarvis [1889] 6 TLR 13. In a proper case the court may order payment into the court of part of the claim with a stay of execution pending the counterclaim: Slater v Cathcart [1891] 8 TLR 92. Where the counterclaim arises out of quite a separate and distinct transaction, or there is no connection between the claim and the counterclaim, the proper order is for judgment for the plaintiff with costs without a stay pending the trial of the counterclaim: see the authorities collected in the Annual Practice (1988) par 14/3 – 14/13, p 145. The degree of connection between the claim and counterclaim, the strength of the counterclaim and the ability of the plaintiff to satisfy any judgment on the counterclaim are some of the considerations which the court may take account of in the exercise of its discretion whether or not to order a stay. In general, therefore, a counterclaim which is in effect an unconnected cross-action will not provide a basis for a stay under O 14 r 3."
In this case, it cannot be said that the counterclaim arises out of "quite a separate and distinct transaction". Nor could it be said that there is "no connection between the claim and the counterclaim". Rather, the counterclaim arises out of the same transaction.
One issue raised by Malcolm CJ in Parry is whether or not the court should order payment into Court of the claim or part of the claim with a stay of execution pending a counterclaim. This question analogous to the Court ordering payment of the claim into court as a condition for allowing a defendant to defend the claim. In this regard, Rules of the Supreme Court O 14, r 4(3) provides that the Court may grant leave to defend "either unconditionally or on such terms as to giving security or time or mode of trial or otherwise as it thinks fit". In Hazart Pty Ltd v Rademaker (1993) 11 WAR 26, at 31-32, Anderson J with whom Malcolm CJ and Scott J agreed, stated the following about the grant of conditional leave to defend:
"In my experience of the practice in this Court, when the Court concludes that the bona fides of a defence and/or counterclaim are in doubt, the Court will usually require that the defendant provide some security. This is to ensure that a defence that appears to be very weak on its merits is at least being put forward in good faith. Unless the court was prepared to take this step in appropriate cases, injustice often would be done to plaintiffs pursuing good causes of action against debtors playing for time. When the plaintiff's claim appears clear cut, as, for example, in the case of the sale and delivery of goods for an agreed price, and the Court is left in real doubt about the defendant's good faith (although not able to say for certain there is no triable issue) it is not unusual for the Court to order, as a condition of leave to defend, that the full amount of the claim be secured. This will usually be by payment into court. If to do so would impose hardship on the defendant, the court may order that less than the full amount be paid in."
In DMS Shipping & Trading Co Ltd v Lionheart Asia Ltd [1996] 2 Qd R 20, at 23 Thomas J stated the following of the discretion to grant conditional leave to defend (at 23):
"… the Rules of the Supreme Court [give] the judge an unfettered discretion, when leave to defend is granted, to impose such terms as to giving security as the judge may think fit. Commonly the discretion is exercised when the judge perceives the defence to be 'shadowy', 'insubstantial', 'tricky', 'suspicious' or 'almost one in which summary judgment should be ordered'.
…
In my view, it is sometimes appropriate that in a dubious case that security be provided as a condition of the advantage thereby secured of delaying the plaintiff, of running up costs which are probably going to be wasted and of giving a commercial advantage to a defendant who has faintly arguable defence. Such factors namely the perception of the strength of the defence, influence many forms of pre-trial execution, such as Mareva injunctions, applications for security for costs and the imposition of a condition of the present kind which is in effect a security for judgment. The apprehension of the strength of the case or of the flimsiness of the defence may be a relevant basis for the exercise of the discretion and of course questions of degree are involved."
In Hazart (supra) Anderson J, went on to say that the Court should not order payment into court of the amount of the claim where the defendant was able to show that "compliance with such condition would be so onerous as to practically deny the defendant a real opportunity to present his defence" (at p 32). It is thus usual for the defendant to be given an opportunity to produce evidence as to its financial position to assist the Court within the exercise of its discretion.
In MV Yorke Motors (a firm) v Edwards [1982] 1 All ER 1024, Lord Diplock makes it clear that the condition must be impossible for the defendant to fulfil before a court would defer making an order granting conditional leave to defend that it would have otherwise made. In that case, the amount of money paid into court was reduced from the value of the claim, taking into account the financial position of the defendant. Lord Diplock (with whom the other members of House of Lords agreed) noted that the onus is on the defendant to "put sufficient and proper evidence" before the court of his impecuniosity. The disclosure must be "full and frank" (at p 1027).
Lord Diplock then comments (at p 1028):
"I would accordingly dismiss this appeal; but before parting from the subject of imposing terms as to the giving of security as a condition of granting leave to defend an action under Ord 14, it may be helpful to mention an old decision of this House Jacob v Booth's Distillery Co (1901) 85 LT 262. This case, decided at the close of the Victorian age before inflation and high interest rates had made delay in payment of debts of such great benefit to the debtor and so disadvantageous to the creditor as it has become of recent years, is often cited as authority for reducing to minimal proportions the number of cases in which security should be ordered, however shadowy or dubious in its bona fides the suggested defence may be. My Lords, … the facts in Jacobs v Booth's Distillery Co were complex and its value as an authority against giving conditional leave to defend may not be as great as had been thought; but, quite apart from this, an expression of opinion by this House as to the way in which a judicial discretion ought to have been exercised in circumstances as they existed many years ago, ought not to be regarded as immutable when circumstances have altered radically from those current when the judgment containing that expression of opinion was delivered. To depart from it in the changed circumstances does not involve any question of overruling a previous decision of the House. The greater premium now accruing to the debtor who manages to achieve delay is an important causative factor in the change in practice recorded in … The Supreme Court Practice: 'The condition of payment into Court, or giving security, is nowadays more often imposed than formerly…' This is a statement that my own experience, extending over half a century, can confirm."
Merits of the defendant's counterclaim
As noted in the authorities discussed above, the "apprehension of the strength of the case or the flimsiness of the defence may be a relevant basis for the exercise of the discretion" (DMS Shipping(supra) at 23).
The defendant's counterclaim is to the effect that the plaintiff failed to act in accordance with its instructions in placing the television advertisement. However, from the emails attached to Ms Hammond's affidavit between Mr McNeill and representatives of the plaintiff, the following appears:
(a)By emails on or about 16 May 2008 advertising schedules were sent to Mr McNeill;
(b)On 4 June 2008, Mr McNeill directed the plaintiff to cancel certain advertising and reschedule it due to the need to change the advertisements;
(c)Revised advertising schedules were sent to Mr McNeill by email on 5 June 2008 – the schedules went through to 10 July 2008, the event being held on 11 and 12 July 2008;
(d)By email dated 9 June 2009, Mr McNeill enquired of Ms Hammond: "If we want to pull the pin on Auckland can (sic) cancel the rest of the TV advertising and if so how much are we up for?"
(e)By emails of 9 and June 10 2009, Mr McNeill advised the plaintiff that ticket sales were far below his expectation; and
(f)By emails subsequent to 9 June 2008, Mr McNeill is pressed by the plaintiff's staff to provide a new advertisement that had been foreshadowed – there were also discussions about rescheduling the advertising time.
On the limited materials available to me, and in particular in the absence of affidavit evidence from the defendant, I am of the view that the defendant's counterclaim has little prospects of success. It has all the hallmarks of an attempt by the defendant to shift the blame for an unsuccessful event from the defendant to the plaintiff. A key factor appears to have been the need for the defendant to stop advertising in the middle of the campaign due to a need to change a particular logo and the need to change and up date the names of the motor-cross riders contracted to participate.
Financial position of the defendant
By affidavit dated 10 August 2009, Mr McNeill deposed that the defendant “does not have any funds to provide monies for a trust in relation to this matter”. The affidavit annexed:
(a)a bank statement for the defendant showing a credit balance of $267.63 as at 1 July 2009;
(b)a personal Visa card statement showing a balance of $39,971.13 as at 19 June 2009;
(c)a letter dated 16 June 2009 from the Commonwealth Bank to McNeill stating that to assist Mr McNeill in his "current financial difficulties" the bank was prepared to defer repayments on the Visa Card account for a period of 3 months commencing 16 June 2009; and
(d)a bank account in the name of Mr McNeill showing a nil balance as at 30 July 2009.
As the defendant points out in its supplementary submissions, the affidavit does not make any effort to identify what other cash, liquid assets, accounts receivable or other assets held by the defendant. We are not told that the bank accounts are the only bank accounts for the defendant. The defendant has not put "sufficient and proper evidence" before the Court of its financial position. For example, the defendant could have provided its accounts for the year ending 30 June 2008 and its business activity statements since then.
The defendant must pursue its counterclaim through a lawyer: Rules of the Supreme Court O 4 r 3(2), O 12 r 2(2). Assuming that the defendant is as impecunious as Mr McNeill deposes, it does not have any funds with which to retain a lawyer.
The resolution of this case involves the balancing of a number of competing risks of injustice. These risks take as their context my earlier findings that the plaintiff is entitled to judgment and that I have real concerns as to the merits of the counterclaim. The relevant risks are:
(a)the injustice due to the plaintiff not being able to immediately enforce a judgment, especially given the comments in Yorke Motors (supra) as to the "greater premium now accruing to the debtor who manages to achieve delays";
(b)the injustice to the defendant of not being able to pursue its counterclaim, which arises out of the same transactions as the claim, due to its inability to pay the claim into court (if that were ordered) or from having to use all its available funds to pay the judgment instead of being able to use them to pursue the counterclaim (if a stay is not ordered);
(c)the injustice to the plaintiff if it is forced to defend the counterclaim against a defendant who has no apparent assets with which to engage lawyers to prosecute the counterclaim in a timely manner and no apparent assets out of which to pay the plaintiff's costs if the counterclaim is unsuccessful, in the context of my concerns as to the merits of the counterclaim.
It seems to me that the balance is best struck by ordering the defendant to pay into court the sum of $25,000. Paraphrasing the words of Anderson J in Hazart, this is to ensure that the counterclaim, which appears to be very weak on its merits, it at least being put forward in "good faith".
Orders
To give affect to the reasons set out above, orders should be made along the following lines:
(a) The plaintiff have judgment in the amount claimed;
(b)Execution of the judgment be stayed until further order of the court, the stay being conditional upon the defendant paying the amount of $25,000 into Court within say, 21 days of the date of the order (or providing similar security to the satisfaction of the plaintiff).
Part of the judgment was initially sought in New Zealand dollars. It is a question of discretion whether a judgment is expressed in a foreign currency or whether there is a rider to the order allowing payment of the equivalent amount in Australian dollars at the time of payment or the issue of enforcement proceedings in Australia: Miliangos v George Frank (Textile) Ltd [1976] AC 443, at 463, 467, 497, 500-501; Australia & New Zealand Banking Group Ltd v Cawood [1987] 1 Qd R 131 at 134. My preliminary view is that the judgment should at this stage be expressed in Australian dollars to facilitate enforcement. However, I will hear from counsel in relation to this issue.
I will also hear from counsel on the precise form of the orders and costs.