Phirex Middle East Co v Invention Technologies Pty Ltd
[2017] WADC 48
•20 MARCH 2017
PHIREX MIDDLE EAST CO -v- INVENTION TECHNOLOGIES PTY LTD [2017] WADC 48
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WADC 48 | |
| Case No: | CIV:2484/2016 | 20 MARCH 2017 | |
| Coram: | PARRY DCJ | 20/03/17 | |
| PERTH | |||
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| PDF Version |
| Parties: | PHIREX MIDDLE EAST CO INVENTION TECHNOLOGIES PTY LTD |
Catchwords: | Appeal from registrar Practice and procedure Application to set aside default judgment Whether default judgment irregularly obtained Electronic filing Writ of summons transmitted electronically to District Court for filing after close of registry Writ of summons issued by District Court next day but electronic form of writ of summons generated by computer system instantaneously and able to be printed by plaintiff's solicitors Plaintiff's solicitors printed copy of writ of summons on day before it was issued and purported to serve document on defendant by post on that day Whether writ of summons served on defendant Whether default judgment should be set aside in exercise of discretion |
Legislation: | Corporations Act 2001 (Cth) s 109X(1)(a) District Court Rules 2005 r 7, r 15, r 15(1), r 15(6) Evidence Act 1995 (Cth) s 160(1) Supreme Court Rules 1971 O 13, O 13 r 1, O 13 r 14 |
Case References: | Nil |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
INVENTION TECHNOLOGIES PTY LTD
Defendant
Catchwords:
Appeal from registrar - Practice and procedure - Application to set aside default judgment - Whether default judgment irregularly obtained - Electronic filing - Writ of summons transmitted electronically to District Court for filing after close of registry - Writ of summons issued by District Court next day but electronic form of writ of summons generated by computer system instantaneously and able to be printed by plaintiff's solicitors - Plaintiff's solicitors printed copy of writ of summons on day before it was issued and purported to serve document on defendant by post on that day - Whether writ of summons served on defendant - Whether default judgment should be set aside in exercise of discretion
Legislation:
Corporations Act 2001 (Cth) s 109X(1)(a)
District Court Rules 2005 r 7, r 15, r 15(1), r 15(6)
Evidence Act 1995 (Cth) s 160(1)
Supreme Court Rules 1971 O 13, O 13 r 1, O 13 r 14
Result:
Appeal dismissed
Representation:
Counsel:
Plaintiff : Mr W G Spyker
Defendant : Mr M S Crawford
Solicitors:
Plaintiff : Cornerstone Legal
Defendant : Arns & Associates
Case(s) referred to in judgment(s):
Nil
1 PARRY DCJ: (This judgment was delivered extemporaneously on 20 March 2017 and edited from transcript.)
Introduction
2 Phirex Middle East Co. (Phirex) appeals, pursuant to r 15(1) of the District Court Rules 2005 (DCR), from the decision of Deputy Registrar Hewitt made on 3 November 2016, setting aside default judgment against Invention Technologies Pty Ltd (Invention). Default judgment was given on the basis that Invention did not enter an appearance within the time limited for appearing, that is within a 10-day period from service of the writ of summons on it. The deputy registrar set aside the default judgment on the basis that it had been irregularly obtained, because the writ of summons had not been served properly on Invention.
3 The default judgment was entered by the court on 4 August 2016 pursuant to O 13 r 1 of the Supreme Court Rules 1971 (RSC). The RSC apply to and in respect of any case in this court, pursuant to r 6(1) DCR. Order 13 r 1 of the RSC states as follows:
(1) This Order applies only to proceedings commenced by writ.
(2) If a defendant does not enter an appearance within the time limited for appearing, the plaintiff may enter judgment against that defendant in accordance with this Order.
(3) Judgment must not be entered against a defendant under this Order unless -
(a) an affidavit is filed by or on behalf of the plaintiff proving service of the writ on the defendant and indorsement of service in accordance with Order 9 rule 1(4); or
(b) the plaintiff produces the writ indorsed by the defendant's solicitor with a statement that the defendant's solicitor accepts service of the writ on the defendant's behalf.
(4) The Court may require to be satisfied in whatever manner it thinks fit that the defendant has failed to enter an appearance.
4 The application by Invention to set aside the default judgment was filed on 29 August 2016 and was made pursuant to O 13 r 14 RSC, which states as follows:
The Court may, on whatever terms it thinks just, set aside or vary any default judgment entered under this Order.
5 Rule 15(1) DCR confers a right of appeal to a judge upon a party who is 'dissatisfied with a decision of a registrar'. Rule 15(6) DCR states that 'The appeal is to be by way of a new hearing of the matter that was before the registrar'. In other words, an appeal under r 15 DCR involves a hearing de novo, that is a fresh consideration of the matter that was before the registrar on the basis of the evidence and submissions before the judge, which includes, but is not confined to, the evidence and submissions that were before the registrar.
6 As the nature of an appeal under r 15 DCR involves a hearing de novo, the appellant plaintiff does not have to establish any error of law, fact or discretion on the part of the registrar. Rather, the question for determination on appeal is whether the application that was before the registrar should be granted or refused. Relevantly, in this case, the appeal is by way of a new hearing of Invention's application under O 13 r 14 RSC to set aside the default judgment entered under O 13 r 1 RSC.
7 In the appeal, Phirex relies on the affidavit of Elmoatazbellah Ahmed Hamed Moussa, sworn on 5 October 2016, and the affidavit of Khalil Ihdayhid, sworn on 9 February 2017. Invention relies on the affidavits of Mate Bebich, sworn on 29 August 2016 and 20 October 2016.
Background
8 This proceeding was commenced by Phirex by way of a writ of summons. Phirex's solicitors transmitted the form of the writ of summons to the District Court Registry for filing in electronic form at 4:39 pm on Tuesday 12 July 2016. At that time, the District Court Registry was closed for the day.
9 The writ of summons was issued by the court in electronic form and bears a facsimile of the court's seal. Rule 7 DCR states as follows:
If the Court issues a document in an electronic form that bears a facsimile of the Court's seal, the sealed document as it appears electronically, or as it appears when printed on paper, is to be taken to have the same effect as if the Court's seal had been lawfully applied to it by hand by an officer of the Court.
10 The writ of summons issued by the court states 'Date of filing (and valid for service from): 13/07/2016'.
11 Furthermore, the Queen's command to Invention in the writ of summons:
… that within 10 days after the service of this writ on you, exclusive of the day of such service, you cause an appearance to be entered for you in our District Court …
- is stated to have been witnessed by the Chief Judge of the District Court 'on Wednesday, the 13th day of July 2016'.
12 It is clear from the date of filing of 13 July 2016 and from the date on which the Chief Judge is stated to have witnessed the Queen's command, namely on Wednesday 13 July 2016, that the writ of summons was issued by the court on Wednesday 13 July 2016.
13 Furthermore, as indicated earlier, the form of the writ of summons was transmitted to the court registry for filing in electronic form at 4:39 pm on Tuesday 12 July 2016, by which time the court registry was closed for the day. As the registry was closed by the time when the writ of summons was transmitted for filing, the writ of summons could not have been issued on 12 July 2016, but only on the next business day, that is on 13 July 2016.
14 However, it appears that the electronic form of the writ of summons was created by the computer system in an electronic instant after it was transmitted to the court for filing and Phirex's solicitors were physically able to print the writ of summons at some time after 4:39 pm on 12 July 2016, even though it was only issued by the court on 13 July 2016.
15 Phirex's solicitors then purported to effect service of the writ of summons on Invention by printing a copy of the writ of summons later on 12 July 2016 and sending it by post that day to the registered office of Invention.
16 The affidavit of service of the writ of summons sworn by Phirex's solicitor, Mr Warnar Geert Spyker, on 26 July 2016 and a supplementary affidavit of service of Mr Spyker sworn on 4 August 2016 both state as follows:
I did on 12 July 2016 duly serve Invention Technologies Pty Ltd being the Defendant with a true copy of the Writ of Summons dated 12 July 2016 and filed 13 July 2016.
I served the Writ of Summons by posting it to the Defendant's registered office at Suite 2, 4 Dellamarta Road, Wangara 6065 in the State of Western Australia.
17 The indorsement of claim on the writ of summons alleges that Invention breached a contract with Phirex, entered into in June 2009, under which Phirex either assigned to Invention a contract with a third party, Alsaad General Contracting (Alsaad), for installation, testing and commissioning of water mist firefighting systems at four sites located in Saudi Arabia, in exchange for the payment of a commission, or, alternatively, engaged Invention as subcontractor for the performance of works under the contract with Alsaad. The affidavit evidence indicates that the four sites comprised helicopter hangars in Riyadh, Jeddah, Abha and Dahran.
18 Phirex alleges that Invention completed the works under the contract with the third party, Alsaad, and was paid US$1,591,001 by Alsaad.
19 Phirex alleges that Invention breached the contract with Phirex by failing to remit to Phirex its commission or, alternatively, by failing to pay Phirex the balance of moneys paid by Alsaad to Invention. Phirex alleges that, by reason of the breach of contract, it has suffered loss in the sum of US$405,583, which equates to $534,505.80.
20 Invention's defence to the claim is that Phirex remained responsible, under the contractual arrangements between Phirex and Alsaad and between Phirex and Invention, for supervision, testing, training of personnel, commissioning and project handing over, and addressing and remedying concerns and problems raised by Alsaad and by Saudi Arabian government authorities. Invention contends that Phirex failed to carry out project supervision, inspection, testing, training, commissioning and handing over, and failed to respond to and address the problems experienced by the customers. Invention also contends that, in consequence, it has suffered loss and damage and it has foreshadowed a counterclaim and set-off.
21 The affidavits of Mr Bebich support Invention's defence to the proceeding. The affidavit sworn on 29 August 2016 attaches a number of customer complaints about problems addressed to Mr Moussa of Phirex, and copied to Invention, which Mr Bebich says Mr Moussa did not address, or properly address.
22 Mr Bebich gives evidence in his affidavit that, owing to Mr Moussa of Phirex's failure to respond to the clients, failure to attend and supervise the projects and test and commission the system, and his failure to travel to Saudi Arabia to oversee the projects, to test and commission the system, and to train the clients' personnel as to how to operate and service the systems, Alsaad and Saudi Arabian government authorities expressed concerns and, indeed, lost faith in the projects.
23 Mr Bebich describes the projects, which were the subject of the contractual arrangements, as phase or stage 1, and foreshadowed the potential for phases or stages 2 and 3. Mr Bebbich gave evidence that 'This in turn led to the Defendant losing Phase 2 and Phase 3 of the contract and losing around 25 other projects'.
Should the default judgment be set aside?
24 In my view, the default judgment should be set aside for each of two reasons.
25 The first reason is that the default judgment was irregularly obtained, because Phirex has not served the writ of summons on Invention.
26 The document that Phirex's solicitors printed on 12 July 2016 and purported to serve on Invention by post was not in fact issued by the court. Indeed, at the time when Phirex's solicitors printed the document that they purported to serve on Invention, the court had not yet issued a writ of summons in this proceeding.
27 The fact that the form of the writ of summons issued by the court on 13 July 2016 was created in an electronic instant after the writ of summons was transmitted to the court for filing at 4:39 pm on 12 July 2016, and was able physically to be printed by Phirex's solicitors later on 12 July 2016, does not change the fact that the document printed by the solicitors had not been issued by the court, and that when the solicitors printed the document they purported to serve, the court had not yet issued a writ of summons in this proceeding.
28 As Phirex has not yet served the writ of summons issued by the court, the 10-day period from service, excluding the day of service, within which Invention is required to file an appearance, has not yet commenced. The default judgment was, therefore, irregularly obtained, and should consequently be set aside.
29 Phirex submits that:
In accordance with Rule 7(1) of [DCR], the Writ was issued out of the District Court by being electronically marked with the seal of the District Court and printed from the Plaintiff's solicitor's computer on 12 July 2016.
Since electronic filing is an approved mode of filing in the District Court, the ordinary consequence is that the sealed document sent from the electronic registry is deemed to be an original.
30 This submission is incorrect, because it ignores the opening words of r 7 DCR 'If the court issues a document in an electronic form …'. As indicated earlier, in this case, the court did not issue a document in electronic form on 12 July 2016 when the plaintiff's solicitors printed the form of the writ of summons and purported to serve that document on Invention by post. The document printed and purportedly served by Phirex's solicitors on Invention was not a document issued by the court.
31 Phirex submits, in the alternative, that if the court finds that the writ of summons was not in fact served 'it is sufficient to serve a true copy of the Writ'.
32 This argument is premised on the terms of s 109X(1)(a) of the Corporations Act 2001 (Cth) which states that:
For the purposes of any law, a document may be served on a company by:
(a) leaving it at, or posting it to, the company's registered office.
33 However, the document that was printed on 12 July 2016 by Phirex's solicitors and then posted to Invention's registered office is not 'a true copy of the Writ', because the writ had not been issued at the time when the document was printed. The document sent by Phirex's solicitors to Invention on 12 July 2016 was a true copy of the form of the writ of summons; however, it was not a true copy of the writ of summons issued by the court.
34 In further oral submissions, Mr Spyker submits that the court instantaneously issued an electronic copy of the writ of summons immediately after the form of the writ of summons was transmitted to the court by his firm for filing at 4:39 pm on 12 July 2016. Mr Spyker submits further that: 'The electronic registry was open 24 hours'.
35 In my view, this submission is incorrect. There is no 'electronic registry' which is 'open 24 hours' a day. As I have said, the writ was only issued electronically on 13 July 2016 even though it was created by the computer system on the afternoon of 12 July 2016 and could be printed that day.
36 Mr Spyker also submits that the writ of summons was in fact served, in this case, after 13 July 2016, and was therefore validly and effectively served on Invention. As Mr Spyker points out, the Evidence Act 1995 (Cth) s 160(1) enacts a presumption that, in the absence of evidence to the contrary, prepaid post is presumed to have been received on the fourth working day after it was posted. In this case, it is common ground that the document sent by Phirex's solicitors to Invention's registered office on 12 July 2016 was deemed, under this provision, to have been received on Monday 18 July 2016.
37 Mr Spyker submits that a writ of summons must be valid for service when it is received, because it is at that point that service is effected, and does not have to be valid for service when it is sent by post. He submits that provided that the writ of summons is valid when it is received, it has been validly served.
38 However, what was posted by way of service was, as I have said, not the writ of summons issued by the court, as the writ of summons was only issued by the court on 13 July 2016, the day after the document purportedly served on Invention was posted.
39 Furthermore, Mr Spyker properly concedes that the only acts done by Phirex or its solicitors to effect service of the document in question were done before the date on which service could have been effected. As indicated earlier, the affidavits of service state:
I did on 12 July 2016 duly serve Invention Technologies Pty Ltd being the Defendant with a true copy of the Writ of Summons dated 12 July 2016 and filed 13 July 2016.
40 Therefore, all acts done by Phirex and its solicitors to effect service of the document were complete on 12 July 2016.
41 Mr Spyker did not refer to any authority in support of his submission that valid service is effected where a document could not be validly served when it was sent by post, but can be validly served when it is received or deemed to be received in the ordinary course of the post.
42 In my view, in order to effect the valid service of a document, all acts necessary to effect service must occur after the document can be validly served. This is because service cannot occur without all of these acts occurring.
43 In this case, service of the writ of summons could not occur without Mr Spyker or someone in his firm printing out the writ of summons and leaving it at or posting it to the registered office of Invention. The printing and leaving or posting of the writ of summons are all essential steps to effect service; and so is receipt or deemed receipt of the document. In order to effect valid service, all of these steps must occur after service may lawfully occur. That did not occur in this case.
44 This is a further reason why the writ of summons in this proceeding has not been served by Phirex on Invention.
45 As the writ of summons has not been served on Invention, the 10-day period within which an appearance must be filed has not commenced, and, in consequence, the default judgment was obtained irregularly.
46 Finally, as indicated earlier, the affidavit of service clearly and appropriately deposed to the facts of service as follows:
I did on 12 July 2016 duly serve Invention Technologies Pty Ltd being the Defendant with a true copy of the Writ of Summons dated 12 July 2016 and filed 13 July 2016.
47 As Mr Crawford submits on behalf of Invention, what is said in that paragraph is 'an impossibility' and should have alerted the court registry to there being a real issue about whether the writ of summons was, in fact, served on Invention, the defendant in this proceeding.
48 Furthermore, and in any case, even if the writ of summons was served on Invention by the printing and posting of the document on 12 July 2016, in my view, the default judgment should be set aside in the exercise of the court's discretion under O 13 r 14 RSC for the following reasons.
49 First, there was a relatively short period of delay between when the document was deemed to have been received in the ordinary course of the post, that is Monday 18 July 2016, and when the notice of appearance was filed by Invention's solicitors, that is on 4 August 2016. The 10-day period within which the notice of appearance had to be filed ended on Thursday 28 July 2016. Consequently the notice of appearance was filed only seven days out of time.
50 Secondly, there is a reasonable explanation for that relatively short period of delay in this case. The explanation is that officers of Invention were under the misapprehension that the company could appear in this proceeding without a solicitor and they sought to file a notice of appearance on 20 July 2016, that is well within the 10-day period of deemed service of the document. The court did not accept that document and returned it to Invention on around 25 July 2016.
51 Invention then wrote to the court on 28 July 2016 in effect requesting to proceed without a solicitor. It does not appear that there was any response to that correspondence and ultimately, on 4 August 2016, Invention instructed its solicitors in this matter. On that very day, in the afternoon, Invention's solicitors filed the notice of appearance. In my view, that provides a reasonable explanation for the default in this case.
52 Thirdly, although this is disputed by Phirex, in my view, Invention has a good and arguable defence on the merits in this case and therefore a prospect of success in defending the proceeding in terms of its proposed counterclaim and set-off, which I have referred to earlier.
53 I referred earlier to the affidavit evidence of Mr Bebich. In my view, that evidence establishes a good and arguable defence arising out of Phirex's alleged failure to carry out its responsibilities under the contractual arrangements between the parties and the third party, Alsaad, and in particular the alleged failure to carry out project supervision, inspection, testing, training, commissioning and handing over, and the failure to respond to customers' concerns and, indeed, complaints.
54 Phirex submits that the arguments by way of counterclaim are, in fact, irrelevant when Invention has, as it admits, in fact, received payment under the contract between Phirex and Alsaad, or at least it has received substantially all payments under that contract. In my view, the arguments by way of counterclaim are not irrelevant as they may be, if this proceeding were reinstated, maintained by way of effective counterclaim and for set-off.
55 Certainly Invention accepts that the project, which it refers to as stage or phase 1, was completed and accepts that it received substantially all payments in relation to that project. However, it contends that there were matters that were required to be done by Mr Moussa of Phirex under the contractual arrangements that were not done and that in consequence it has suffered loss and damage. Whether it can establish such loss and damage is a matter for trial.
56 Furthermore, Phirex submits that none of the reasons given for non-payment are in correspondence between the parties in the period 2011 to 2013, when Mr Moussa of Phirex was seeking payment from Invention, involved or raised allegations of the nature that are foreshadowed by way of counterclaim and set-off. In correspondence referred to by Phirex, Invention in effect conceded that it owed the sum of money sought by Phirex from it in this proceeding and gave as its reasons for non-payment essentially economic reasons.
57 However, there is evidence in the form of documents in 2013 and 2015 annexed to Mr Bebich's affidavits, which indicate that there were complaints and a consideration by Invention that it had suffered a substantial loss in terms of the loss of further stages of the project and, indeed, 25 other projects in consequence of Mr Moussa and Phirex's conduct. There is also evidence, in terms of correspondence between Invention and Alsaad during that period, which confirms Invention's position that it suffered a loss in consequence of Phirex's conduct well before its foreshadowed counterclaim after the commencement of this proceeding.
58 Fourthly, Invention acted promptly to seek to set aside the default judgment. It did so on 29 August 2016, after undertaking consultations with Phirex's solicitors which did not resolve the issue of the default judgment having been entered.
59 Finally, there would be no irreparable prejudice to Phirex if default judgment were set aside.
60 For these reasons, in my view, the appeal from the deputy registrar's decision made on 3 November 2016 should be dismissed. The effect of this decision is that the deputy registrar's order setting aside the default judgment entered on 4 August 2016 is affirmed.
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