Scott Printers Pty Ltd v INTOOWISHON Pty Ltd - [2010] WADC 70

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: SCOTT PRINTERS PTY LTD -v- INTOOWISHON PTY LTD [2010] WADC 70

CORAM: REGISTRAR KINGSLEY

HEARD: 22 FEBRUARY & 16 MARCH 2010

DELIVERED : 11 MAY 2010

FILE NO/S: CIV 2866 of 2008

BETWEEN: SCOTT PRINTERS PTY LTD (ACN 008 719 515)
Plaintiff
AND
INTOOWISHON PTY LTD (ACN 118 167 552)
Defendant

Catchwords:

Practice - Application to set aside judgment - Claim of set-off by defendant

Legislation:

Nil

Result:

Application to set aside judgment dismissed
Enforcement suspended until determination of set-off

Representation:

Counsel:

Plaintiff: Mr R C Ioppolo
Defendant: Mr B L Oakley

Solicitors:

Plaintiff: Talbot Olivier
Defendant: Wojtowicz Kelly Legal

Case(s) referred to in judgment(s):

Hall v Hall [2007] WASC 198
Parker v Transfield Pty Ltd [2000] WASCA 382

REGISTRAR KINGSLEY: The plaintiff's writ claims $87,813 being the balance due for goods sold and delivered, and services rendered, by the plaintiff to the defendant. The plaintiff entered default judgment on 12 December 2008 and gave notice of a means inquiry dated 1 July 2009.
In August 2009 the defendant brought an application to set aside judgment. The evidence consists of the affidavits of Elle Holland sworn 26 August 2009, 22 September 2009 and 4 March 2010, and of Brenton Leonard Oakley sworn 22 September 2009.
At the outset I give leave to bring the application. Oakley deposes that on 11 December 2009 there were communications between the plaintiff's solicitor and the defendant's solicitor to the effect a memorandum of appearance would be filed. Oakley deposes that in February 2009 the plaintiff was put on notice that the defendant had a claim against the plaintiff for loss and damage. Attempts to settle the matter proceeded and it appears neither party pursued their legal options whilst there was a prospect of settling the action. For these reasons I give leave to bring the application.
At the hearing of the defendant's application on 22 February 2010 the plaintiff objected to the majority of Holland's affidavit sworn 26 August 2009 and a substantial portion of Holland's 22 September 2009 affidavit. The common theme in the 26 August 2009 affidavit was that statements made by Holland were irrelevant or inadmissible information/belief or there was no source or ground. A similar theme pervades Holland's 22 September 2009 affidavit, although, as to the emails in the attachments to the deponent's affidavit, the complaint is there is no evidence of the truth of the matters asserted in the emails. One email the plaintiff claims privilege.
After hearing from plaintiff's counsel as to the objections, and defendant's counsel responding, it is fair to say that the majority of the plaintiff's objections to the affidavits were upheld, including the claim of privilege.
The substantive issues in the defendant's application were adjourned, and in the meantime the defendant was to file and serve a further affidavit as to the truth of the facts in the emails in attachments EH‑1 and EH‑24 and attachment EH‑25 to Holland's 22 September 2009 affidavit. The matter came on for further hearing on 16 March 2010.
The plaintiff has not filed any affidavits in opposition. Plaintiff's counsel submits that the correct approach is that the court makes a finding on the credible evidence before the court.
The essence of the defendant's complaint is that pages in a bridal magazine printed by the plaintiff and caused to be bound by the plaintiff fell out causing their clients to become disgruntled. Further, the defendant suggests that subsequent reprints of the 2008 edition experienced faulty colour setting.
In the admissible portions of her affidavit sworn 26 August 2009, Holland deposes that the plaintiff was engaged to print and provide the 2008 edition of the Bridal Options magazine ("the magazine"). Holland goes on to depose that the binding of the magazine was faulty as pages fell out when the magazine was opened. Holland deposes the defendant has suffered loss and damage by reason of clients failing to pay for advertising in the 2008 edition, clients refusing to readvertise for 2009, staff costs and lost sales revenue for 2008 and 2009. No particulars are given of the losses.
Plaintiff's counsel submits that the defendant has not established a credible defence to the claim for payment. Broadly the allegations of breach of contract and statutory warranty are too vague and generalised to support a defence. No particulars have been given as to the contractual term alleged to have been breached nor the quality and/or fitness said to be the subject of any warranty pursuant to s 14 Sale of Goods Act 1895 (WA).
As to the allegation by the defendant that the defendant's client advertisers were unhappy with the colour of their advertisements plaintiff's counsel submits there is no evidence of a breach of a contractual term, nor evidence forming a factual basis for a colour benchmark for the advertisers or even that the plaintiff is responsible for any alleged colour error.
The defendant's counsel submits that on the admissible evidence a sufficient factual basis can be made out to show that the defendant has a defence.
In my opinion no satisfactory foundation has been made out to show there has been a breach of contract or of any statutory warranty. The defendant has not provided any particulars of the contractual relationship between the plaintiff and defendant so as to factually demonstrate there is a breach of a contractual term. There is no evidence of quality or fitness for purpose to fall within s 14 Sale of Goods Act (1895) (WA).
The defendant says that it has an equitable set‑off, and therefore leave to defend should be given. As the plaintiff's counsel submits, a proposed defence arising by way of an equitable set‑off must be shown by way of a credible damages claim that would have a real prospect of success at trial. This is because, in substance, the damages claim is in fact the defence.
Paragraph 7.3 of Holland's 22 September 2009 affidavit attaches copies of invoices that Holland deposes are those advertisers that refused to pay for advertisements in the 2008 edition. Criticism has been made of the invoices, which plaintiff's counsel submits goes to the issue as to whether there is credible evidence of a set‑off likely to be successful. (The following page references are to Holland's 22 September 2009 affidavit.)
At p 39 is a tax invoice/booking form for the client Pallas Brides. Holland deposes Pallas Brides placed an advertisement to the value of $7,000. In fact, the value is $8,000 and a deposit of $1,000 was paid. The balance unpaid is $7,000.
At p 40 is a tax invoice/booking form for the client Studio MBF. The total cost is $8,800 and a deposit of $880 has been paid with the balance to be paid by four payments of $1,980 the first payment being 22 December 2007 and thereafter quarterly payments. The second payment was to be made on 22 March 2008 with the magazine launch being 5 March 2008. In my opinion, having regard to the time frame, it is not remote or fanciful that Studio MBF may decline the second and subsequent payment on the basis of purported defects in the magazine.
At p 42 there is an email from Jane at Queen of Theme dated 4 September 2009 explaining that she will not advertise in the 2010 edition. In my opinion, this does not go to show any unpaid invoices but does go to the issue of loss of clients.
At p 45 is a tax invoice/booking form for Renaissance Clinique. Holland deposes that this invoice is unpaid. However the invoice suggests that the total cost of $3,650 was paid on booking.
Page 47 is a tax invoice/booking form for Brides By Design which relates to the 2009 year but stated on the invoice that there is to be "no charge due to binding issue in 2008". Holland deposes that the attachment at p 47 is a copy of the unpaid tax invoice which of course it is not. However it does go to the issue of loss of clients.
Paragraph 8.3 of Holland's 22 September 2009 affidavit details the various clients whom the defendant gave free advertising or discounted advertising and par 9.2 details those clients who have declined to readvertise with the defendant.
The general rule is that when a regular judgment has been entered, the Court needs to be satisfied there is a defence on the merits before that judgment will be set aside. It is for the defendant to present a credible defence which shows that if the matter were argued on its merit the defendant would have a real prospect of success (Parker v Transfield Pty Ltd [2000] WASCA 382).
In Hall v Hall [2007] WASC 198 Newnes J reviewed the authorities in relation to setting aside a regular judgment. His Honour concluded there are two fundamental principles: firstly, that the discretion is unfettered and secondly, the discretion is to be exercised so as to do justice as between the parties having regard to the particular circumstances of the case. At [67] Newnes J comments that as he understands the authorities, it must appear from the affidavit material before the Court that the defendant's case is not inherently incredible, and that if the defendant's evidence were accepted at the trial, the defendant would have a real prospect of success.
In my opinion, the evidence presented by the defendant in this action falls short of that required to persuade me to exercise my discretion to set aside judgment. I accept that the defendant is to put forward credible evidence which does not mean that the defendant has to proof each, in this case, disgruntled client to fulfil the requirement of credible evidence. However once the hearsay and irrelevant material is stripped from the defendant's evidence I am not satisfied that the defendant has presented sufficiently credible evidence to which I can give weight to enable me to exercise my discretion to set aside judgment.
As to the set-off in relation to the damages claim, there is some evidence of unpaid invoices as well as compensation by way of free or discounted advertising and loss of clients. Unhappily there are some inconsistencies in the evidence, but there is enough to be gleaned from Holland's affidavit to suggest that there may well be a set-off.
Accordingly to do justice between the parties, I intend not to set aside judgment but to suspend the enforcement of judgment until determination of any claims the subject of the set-off. I will hear counsel as to orders programming the issue of set-off and on costs.