Pacific Clinical Research Group Pty Limited v Kona Medical Inc

[2018] NSWSC 162

Supreme Court

New South Wales

Medium Neutral Citation:	Pacific Clinical Research Group Pty Limited v Kona Medical Inc [2018] NSWSC 162
Hearing dates:	16 February 2018
Date of orders:	16 February 2018
Decision date:	16 February 2018
Jurisdiction:	Common Law
Before:	Johnson J
Decision:	1. Defence filed on 22 August 2017 struck out pursuant to rule 12.7(2) Uniform Civil Procedure Rules 2005. 2. Default judgment granted to the Plaintiff in a total sum of $143,911.96. 3. Costs component of default judgment calculated by way of gross sum costs order under s.98(4)(c) Civil Procedure Act 2005. 4. Costs order in sum of $2,000.00 made by Registrar on 15 December 2017 revoked.
Catchwords:	CIVIL PROCEDURE - application by Plaintiff that Defence be struck out for want of due dispatch - applications for default judgment and gross sum costs order - proper basis demonstrated for orders sought by the Plaintiff - orders made
Legislation Cited:	Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005
Cases Cited:	---
Texts Cited:	---
Category:	Procedural and other rulings
Parties:	Pacific Clinical Research Group Pty Limited (Plaintiff) Kona Medical Inc (Defendant)
Representation:	Counsel: Mr S Lees (Plaintiff)   Solicitors: CG Gillis & Co (Plaintiff)
File Number(s):	2016/204820
Publication restriction:	---

Judgment

1. JOHNSON J: By Notice of Motion filed on 9 February 2018, the Plaintiff, Pacific Clinical Research Group Pty Limited, seeks various orders against the Defendant, Kona Medical Inc. Put shortly, the Plaintiff seeks orders that the Defendant's Defence filed 22 August 2017 be dismissed pursuant to Rule 12.7(2) Uniform Civil Procedure Rules 2005 (“UCPR”), that default judgment be given for the Plaintiff against the Defendant in the sum of $62,793.96 pursuant to Rule 16.6(1) UCPR, together with interest in specified sums and a gross sum costs order.

2. The Plaintiff relies upon the affidavit of Bryan Wing-Shan Wong sworn 9 February 2018. Some additional documents have been tendered as well at the hearing. A helpful outline of submissions has been handed up by Mr Lees, counsel for the Plaintiff.

3. I should note at the outset that the Defendant has not appeared today, either before the Registrar or before me when the matter was called in this Court.

4. The proceedings have a history extending back to 2016. The subject matter of the litigation arises in the following way. The Plaintiff is an Australian company that conducts a business specialising in cardiac and vascular medical device trials. The Defendant is a company based in the United States of America which was a former client of the Plaintiff.

5. The Defendant entered into agreements with the Plaintiff whereby the Plaintiff agreed to conduct certain clinical research trials for the Defendant in hospitals across New South Wales, thereby enabling the Defendant to conduct clinical trial programs in Australia, and the Defendant agreed to pay the Plaintiff pursuant to the terms of the agreement.

6. The proceedings sought the recovery of a liquidated sum upon the basis that the Defendant had not paid the moneys due to the Plaintiff. I note that the amount sued for on 6 July 2016 was in the sum of $62,796.96 in unpaid invoices, interest and costs. The reason for these proceedings being commenced in the Supreme Court of New South Wales may be found in the fact that, at that time, application was also made to serve documents abroad under the UCPR given that the Defendant was a company based in the United States of America.

7. Following the service of the Statement of Claim, the Defendant's then solicitors filed a Notice of Appearance on 6 October 2016. On 8 December 2016, the Defendant filed a Defence to the Statement of Claim. On 2 June 2017, the Plaintiff served its evidence on the claim.

8. On 20 July 2017, the Plaintiff filed and served an Amended Statement of Claim, claiming $62,793.96 in unpaid invoices, interest calculated at 15 per cent under two of the contracts, together with interest under s.100 Civil Procedure Act 2005 and costs.

9. On 22 August 2017, the Defendant filed and served a Defence to the Amended Statement of Claim.

10. On 22 September 2017, the Defendant served a Statement of Cross-Claim on the Plaintiff.

11. At that point, the litigation was moving along with action being taken by both the Plaintiff and the Defendant. However, on or about 9 November 2017, the Defendant's previous solicitors, Prime Lawyers, served a Notice of Ceasing to Act. Thereafter, there has been no sign of the Defendant in the proceedings.

12. There have been a number of directions hearings before the Registrar. These occurred on 10 November 2017, 24 November 2017, 7 December 2017, 15 December 2017, and 1 February 2018. On each occasion, there was no appearance by the Defendant. After each of these directions hearings, the Plaintiff's solicitors sent letters and emails to the Defendant informing it of the orders that had been made and the date of the next directions hearing.

13. On 15 December 2017, the Registrar made an order under Rule 13.6(2) UCPR dismissing the Cross-Claim. In addition on that day, the Registrar made orders that the Defendant was to serve any evidence on which it intended to rely in relation to the Plaintiff's claim by 29 January 2018, and a gross sum costs order in the sum of $2,000.00 was made in favour of the Plaintiff and against the Defendant with respect to the directions hearings on 10 and 24 November 2017, and 7 and 15 December 2017.

14. The Defendant has not served any evidence so that the order of 15 December 2017 has not been complied with.

15. At a directions hearing on 1 February 2018, orders were made by the Registrar adjourning the proceedings until today to allow time for the Plaintiff to file and serve any Notice of Motion and affidavit returnable today. It is that Notice of Motion which is the subject of the present judgment.

16. By letter and email dated 5 February 2018, the solicitors for the Plaintiff advised the Defendant of the orders made on 1 February 2018. On 9 February 2018, further emails were sent by the solicitor for the Plaintiff which enclosed the Notice of Motion and affidavit which are the subject of the present application and judgment. The email directed to the Defendant's email address indicated that delivery had failed. An email addressed to Michael Gertner (a person associated with the Defendant) resulted in a response:

“Mail to this email address is now read very infrequently. Please redirect mail to [a post office box in the United States of America]."

17. I am well satisfied that the Plaintiff has complied with all orders of the Court and has made every reasonable attempt to place the Defendant on notice that the application being heard today would proceed.

18. The pattern of non-appearance and non-compliance with Court orders by the Defendant over recent months leads to the irresistible inference that the Defendant is effectively not participating in this litigation, and has withdrawn from it. It no longer has instructing lawyers in this jurisdiction, and is not indicating any intention to become actively involved again.

19. The first order sought in the Notice of Motion is that the Defendant's Defence filed on 22 August 2017 be dismissed pursuant to Rule 12.7(2) UCPR. That provision states that, if a defendant does not conduct the defence with due dispatch, the Court may strike out the Defence either in whole or in part or make such other order as the Court sees fit. The Court has a discretion as to whether to make that order. There is, in my view, an overwhelming case of lack of due dispatch on the part of the Defendant, certainly since September of 2017.

20. To allow the Defence to remain on foot will lead to obvious prejudice to the Plaintiff. At this stage, the Plaintiff is the only party engaging in the litigation which has been on foot since 2016. The Plaintiff has taken every reasonable step to progress it. There have been some changes in solicitor for the Plaintiff, but that does not cause any complication so far as this application is concerned. The delay is significant. The amount of money involved is such that it is appropriate that the Court grant the relief sought in this respect. The provisions of s.56 Civil Procedure Act 2005 clearly point in that direction.

21. In accordance with Rule 12.7(2) UCPR, the Plaintiff seeks that the Defence be struck out. I am well satisfied that this order should be made. In taking this approach, I express my satisfaction that nothing that the Plaintiff has done involves any acquiescence to the delay of the Defendant. In fact, the Plaintiff has been taking every reasonable step to progress this litigation.

22. Accordingly, I will in due course make an order striking out the Defence.

23. The Plaintiff then makes application for default judgment to be entered in favour of the Plaintiff against the Defendant. Rule 16.6(1) UCPR provides for default judgment on a debt or liquidated claim. The present claim is a liquidated claim or debt. The requirements of Rule 16.6 involve the provision of an affidavit under Rule 16.6(2) which states a number of things. I express my satisfaction that the affidavit of Mr Wong, sworn 9 February 2018, satisfies the requirements of Rule 16.6 UCPR.

24. There is an element of discretion in Rule 16.6(1) in that it provides that, if the Plaintiff's claim against the Defendant in default is for a debt or liquidated claim, judgment may be given for the Plaintiff against the Defendant.

25. I note that the Defendant is now clearly “in default” in that the Defence which was filed will be struck out. Rule 16.2(1)(c) UCPR defines the concept of being “in default” as including the situation where, if the Defendant has filed a Defence, the Court orders the Defence be struck out. That is what is happening in this case. The sum involved in this case is relatively small. I am prepared to give default judgment against the Defendant.

26. The default judgment for the Plaintiff against the Defendant will include the sum of $62,793.96, being the amount of the principal claim before the application of interest. I will, in due course, indicate the total figure which will be the subject of the order.

27. The Plaintiff seeks an order as well that the Defendant pay the costs of the proceedings by way of a gross sum costs order. Section s.98(4)(c) Civil Procedure Act 2005 provides for the Court to make a specified gross sum order instead of an assessed costs order in an appropriate case.

28. In my view, this is an appropriate case for such an order. Firstly, the amount of costs involved is, on the scale of things, a relatively confined sum. Secondly, the very process of attempting to have costs assessed with a Defendant which is a corporation in the United States of America is likely to be protracted and difficult. This would be even more so if the Defendant maintains its current stance of disinterest in these proceedings. The Plaintiff should not be put to the expense and further delay of travelling down that track. This is an appropriate case for a gross sum costs order.

29. Some calculations have been made to assist the Court on this aspect. The evidence indicates that the solicitor’s fees and disbursements (including GST) at the present time for the Plaintiff amounts to $46,292.07. Counsel’s fees (including GST) are $6,132.50. I put to one side filing fees of $5,902.00, which should be allowed in their entirety and do not fall as an aspect that might be discounted in some way for the purpose of the assessment of the gross sum costs order.

30. I am satisfied that it is appropriate to approach the calculation of costs on the basis of a percentage of the total sum of $52,424.57, that is, solicitor’s and barrister’s fees. I am satisfied that 80% of that sum is an appropriate figure in this case. I will include in the order which I make, the sum of $41,939.66 as the component for the gross sum costs order.

31. Drawing together the various amounts which I have mentioned, the evidence before the Court satisfies me that the total figure which should be incorporated in the default judgment which reflects the sum claimed, interest up to judgment and costs, will be in the amount of $143,911.96. That figure is reached by adding up the principal sum claimed together with interest, costs, and the filing fees.

32. Before moving to make final orders, I should note one aspect which bears on the issue of costs. I have mentioned that the Registrar on 15 December 2017 made a costs order against the Defendant in favour of the Plaintiff in the sum of $2,000.00 which was to cover the four directions hearings in November and December 2017. I have approached the Plaintiff’s application for a gross sum costs order upon the basis that the total figure which I have allowed, which is 80% of the solicitor and counsel’s fees, would also include that $2,000.00 figure. In moving to make final orders today, I will make an order revoking the costs order made by the Registrar on 15 December 2017 on the understanding that it is now overtaken by the costs order which I will make today.

33. Accordingly, I make the following orders:

1. The Defendant’s Defence filed 22 August 2017 is struck out pursuant to Rule 12.7(2) Uniform Civil Procedure Rules 2005.

2. I give default judgment for the Plaintiff against the Defendant in the total sum of $143,911.96 pursuant to Rule 16.6(1) Uniform Civil Procedure Rules 2005.

3. I note that that figure comprises the sum claimed, interest up to the day of judgment, costs and filing fees.

4. I note that in making that order, I have determined the application for costs by way of a specified gross sum costs order under s.98(4)(c) Civil Procedure Act 2005.

5. As the costs’ component of the default judgment is intended to cover all costs, I revoke the order made by Registrar Bradford on 15 December 2017 that the Defendant pay the Plaintiff’s costs of various directions hearings in the sum of $2,000.00.

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Decision last updated: 27 February 2018