NEC Australia Pty Ltd v Gamif Pty Ltd

[1992] FCA 1073

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG 9 of 1992

)

GENERAL DIVISION )

BETWEEN:NEC AUSTRALIA PTY LIMITED

Applicant

AND:GAMIF PTY LIMITED

First Respondent

First Cross-Claimant

Second Cross-Claimant

Third Cross-Claimant

Fourth Cross-Claimant

NEWAY TRANSPORT INDUSTRIES PTY LIMITED

Second Respondent

Second Cross-Respondent

JERICHO CRAFT PTY LIMITED

Third Respondent

JOLIMONT DELL PTY LIMITED

Fourth Respondent

AUSTRALIAN EAGLE INSURANCE CO LIMITED

First Cross-Respondent

COLONIAL MUTUAL GENERAL INSURANCE COMPANY LIMITED

Third Cross-Respondent

WEBDEN PTY LIMITED

Fourth Cross-Respondent

16 November 1992

REASONS FOR JUDGMENT

LOCKHART J.

There are before the Court today a number of motions. The

first two are motions of the applicant which I have dealt with.

The applicant in its first motion seeks to join two additional respondents Jericho Craft Pty Limited and Jolimont Dell Pty Limited as the third and fourth respondents respectively.

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The basis on which it is sought to join those companies is

essentially that the first respondent, Gamif Pty Limited has, so

it is alleged, disposed of its assets in favour of the

prospective third and fourth respondents being companies with common directorships and perhaps shareholdings. In short, the applicant says that faced with the prospect of this litigation the first respondent decided to denude itself of its assets and to pass them across to two friendly and related companies.

A proposed amended statement of claim has raised these

questions and the applicant asserts that if that is right then

it has a valid cause of action against the first, third and

fourth respondents. There has been some authority cited support

of this proposition, in particular, Creasey v Breachwood Motors

Pty Limited [1992] 10 ACLC 3052.

There is a second motion by the applicant for further and

better discovery by the first respondent. That motion seeks

discovery of documents relating to any transfer, disposition or

alienation of the first respondent's assets since 1 January 1990. Such a motion is, in a sense, consequential upon the proposed amendments to the statement of claim and the joinder of the third and fourth respondents. The applicant says that, assuming the pleadings are amended to raise a fraudulent disposition of property by the first respondent in favour of the

third and fourth respondents, then all documents that bear upon

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that question should be discovered by the first respondent and

in due course by the third and fourth respondents.

It seems to me that if the first motion succeeds, the second motion would be consequential so far as the first respondent and indeed the third and fourth respondents are concerned, though it has not been an issue until today and the first respondent resists the motion for further and better

discovery on the ground that there is no issue relating to

disposition of its assets in favour of the third and fourth

respondents. On that point, I think the first respondent is entirely correct. There is no such issue at this stage but will be once I accede to the applicants first motion and make

appropriate orders. The ramifications therefore of the argument

on this motion for discovery go essentially to costs.

The orders which I propose to make are that the applicant be granted leave to join Jericho Craft Pty Limited as the third respondent to the proceeding and Jolimont Dell Pty Limited as the fourth respondent to the proceeding. I also propose to direct the first respondent to file and serve a verified

supplementary list of documents for discovery relating to the

issues tendered by the proposed amended statement of claim.

I will give leave to the applicant to amend the application

and amended statement of claim by filing in Court a further

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amended application and a further amended statement of claim which for purposes of identification I have initialled and dated today.

The remaining question arises as to the costs of the two motions. As to the motion to join the third and fourth respondents to the proceedings, the proper order for costs is that those costs of the applicant should be reserved. Accordingly, the Court orders that the costs of the applicant of the motion to join the third and fourth respondents be reserved.

As to the motion by the applicant for further and better

discovery by the first respondent, as I have already indicated,

the issue to which that motion goes has not become an issue until a few moments ago when I made the orders joining the third and fourth respondents and allowing the applicant to file a further amended statement of claim and amended application. In

my view, the order for costs that should be made on the motion is that the costs of that motion be the first respondent's costs

in the proceeding.

The third motion before the Court is a motion for judgment against the second respondent, Neway Transport Industries Pty Limited based on O. 10 r. 7 which is the rule of the Court which provides for default judgment against parties, including a respondent who is in default.

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The second respondent initially appeared and though the solicitor whose name appeared has since filed notice of withdrawal, that was a date after certain of the relevant events with which the affidavits before me are concerned. The second respondent has failed to comply with orders of the Court including an Order of 18 September 1992 that the second

respondent, who is also the second cross-respondent, should file and serve a defence to the amended statement of claim by 1 October 1992. On that day the Court ordered the applicant to notify, in the way then prescribed by the order, the second respondent of the making of the order, as the second respondent was not then represented or otherwise present before the Court and to inform the second respondent specifically that the applicant may seek summary judgment against the second respondent if it did not comply with the orders of the Court.

I note that the second respondent has not been present at certain of the directions hearings in which Orders have been made against it, including an order made on 30 July 1992 that it was directed to file and serve its defence to the amended statement of claim by 3 September 1992. On that date the applicant's solicitors drew the attention of the solicitors then acting for the second respondent to the making of those orders and to the fact that the matter had been relisted on a later date for further directions. There is no question of the second

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respondent not, in fact, being aware of the making of the Court's orders and directions and of the consequences that might ensue if it did not comply with them. Indeed, it is apparent that the applicant and its solicitors have taken every reasonable step to inform the second respondent of the consequences of its non-compliance.

There is evidence that the second respondent not only knows of today's motion but does not propose to attend, including evidence that it has no assets. However, I prefer to rely on the evidence as to non-compliance with the Court's directions. Accordingly, I am satisfied that the second respondent has failed to comply with orders of the Court directing it to take

steps in the proceeding and I am satisfied that the applicant is entitled to an order for default judgment and I propose to enter it.

The Court orders:

1.That the applicant be granted leave to join Jericho Craft Pty Ltd as the third respondent to the proceedings and Jolimont Dell Pty Limited as the fourth respondent to the proceeding;

2.The Court grants leave to the applicant to file a further amended application and statement of claim by filing it in court, initialled by Lockhart J., dated 16 November 1992;

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3.Costs of the applicant of motion for joinder be reserved;

4.Costs of motion for further discovery be the first

respondent's costs in the proceeding;

5.Judgment be entered against the second respondent in favour of the applicant in the sum of $423,413 plus interest thereon calculated at 15% per annum from 19 February 1990 to 16 November 1992, being 999 days at $174 per day being $173,826;

6.The second respondent pay the applicant's costs of the

proceedings in so far as they relate to the second

respondent including the costs of this motion.

7.Liberty to apply to applicant or second respondent on three

days motice;

8.Leave granted to file in Court a notice of motion of that

initialled by Lockhart J. dated 16 November 1992;

9.The Court makes orders by consent in accordance with short

minutes of order initialled by Lockhart J., dated 16

November 1992 and placed witht the papers.

I certify that this and the preceding six (6)

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pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate

Dated: 16 November 1992

Counsel for the Applicant :Corrs Chambers Westgarth

Counsel for the First

Respondent : A.C. Neal

Solicitors for the First Respondent : Madgwicks

Counsel for the Fourth

Respondent : F.G. Lever

Solicitors for the Fourth

Respondent: Finlaysons

Date of Hearing:16 November

1992

Date of Judgement:16 November 1992