Tulip Bay Pty Ltd v Structural Monitoring Systems Ltd

[2012] WADC 160

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   TULIP BAY PTY LTD -v- STRUCTURAL MONITORING SYSTEMS LTD [2012] WADC 160

CORAM:   DEPUTY REGISTRAR HARMAN

HEARD:   14 SEPTEMBER 2012 & 11 OCTOBER 2012

DELIVERED          :   12 NOVEMBER 2012

FILE NO/S:   CIV 1052 of 2012

BETWEEN:   TULIP BAY PTY LTD

Plaintiff

AND

STRUCTURAL MONITORING SYSTEMS LTD
Defendant

Catchwords:

Practice - Practice under the Rules of the Supreme Court of Western Australia - Application to set aside judgment - Turns on its facts

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Plaintiff:     Mr M Noonan-Crowe

Defendant:     Mr A Rumsley

Solicitors:

Plaintiff:     Valenti Lawyers

Defendant:     Alan Rumsley

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

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457

1. DEPUTY REGISTRAR HARMAN:  By writ issued on 10 April 2012 endorsed with its claim, the plaintiff commenced action to recover a royalty payable pursuant to a technology agreement dated 29 November 1999 and damages for breach of agreement to made in October and November 2010 to transfer shares to the plaintiff.

2. On 11 May 2012, in default of appearance the plaintiff obtained judgment for the amount of each claim. The defendant now seeks to have judgment set aside and to stay the proceedings pursuant to s 53(1) of the Commercial Arbitration Act 1985.  On each part of the application it bears the onus of persuasion that it is appropriate to make the order sought.

3. The first question raised in the application to set aside the judgment is whether judgment was regularly obtained.  According to the evidence upon which the judgment was founded, on 11 April 2012 the plaintiff had posted the writ to the defendant's registered office at Unit 5, 15 Walters Drive, Osborne Park.  In an affidavit filed after the application was made the plaintiff's solicitor deposes that an ASIC search reveals that the defendant's registered office was changed to a different address with effect from 24 April 2012. 

4. The defendant's secretary Sam Michael Wright deposes that in April 2012 the defendant changed its registered office and principal place of business from Unit 5, 15 Walters Drive, Osborne Park, to 50 Derby Road, Subiaco.  He deposes to an arrangement with Australia Post that took effect 'from or about 20 April 2012' for redirection of mail addressed to the defendant to the Subiaco address.  He also deposes that '(d)uring April (the defendant)'s Suzanne McMeekin, of (the defendant) routinely checked the Osborne Park premises for mail and brought any received to the Subiaco office'.  He then deposes to the receipt of a statutory demand on 31 May 2012; the first notice or correspondence received by the defendant in relation to the proceedings. 

5. Doubts about Wright's evidence are generated by the lack of precision in undertaking the task of bringing evidence before the court.  Firstly none of what I have canvassed is put with sufficient precision to support a finding in the defendant's favour.  To illustrate my point, although there is scope to consider that the writ may not come to the defendant's notice, there is no clear evidence.  Secondly, in part it is contradicted by evidence of Suzanne Janet McMeekin who identifies herself as having been the person mentioned by Wright.  She deposes that unspecified parts of the affidavit of Wright do not give an accurate account of the facts.  She deposes that there was no redirection in place for mail addressed to the defendant's registered office and that on 10 April 2012 she last attended the Osborne Park premises and delivered to the occupants a number of 'Return to Sender' stickers. 

6. On the same question the defendant also raised the fact that prior to entering judgment the plaintiff had not notified it of its intention to enter judgment.  As I understand the proposition it advances, the plaintiff ought to have been aware that the defendant was represented and accordingly, the plaintiff's solicitor was bound to alert the defendant's solicitor of his client's intention.  There was some debate about the proposition that the plaintiff's solicitor would then have known either whether the defendant would be represented or by whom.  In my opinion, the more significant consideration is that there is neither any rule of practice nor any binding authority to the effect that the defendant proposes.  There is no reason to consider that it is for the court to enforce professional courtesies. 

7. I am satisfied that the plaintiff duly served the writ by posting it on 11 April 2012 to the defendant at its registered office at Unit 5, 15 Walters Drive, Osborne Park.  That it may not have come to the attention of the defendant and that the plaintiff did not provide a warning to the defendant that in default of appearance it would enter judgment have no bearing upon the regularity of the judgement.

8. In an application to set aside a regular judgment the fundamental question to be determined is whether there is good reason that it be set aside: whether on the merits of the application the court is satisfied that there is good reason to put the plaintiff's claim to trial.

9. It is undisputed that the claim drew upon the terms of an agreement executed in November 1999 whereby beneficial ownership of particular technology was assigned to the defendant.  For present purposes the agreement provides that an annual royalty payment be made by the defendant to the plaintiff commencing the year ending 30 June 2000 and thereafter each year until a date when there is no longer a relevant patent in existence owned by the defendant.     

10. As I understood the position of the defendant, the only questions raised by the claim were whether on the date the writ issued, the plaintiff was entitled to rely on the agreement and whether it had been open for it to make the claim in the District Court.

11. As to the first of those matters, according to the defendant's submissions filed on 1 August 2012, it maintains that in the period from 2006 to 2009, and in August 2011, the plaintiff acted in breach of the agreement and that those breaches constituted repudiation of the agreement by the plaintiff.  It then relies on a passage from the reasons for decision of Dixon J in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 as follows:

    When a party to a simple contract, upon breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning.  Both parties are discharged from further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired.  Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. 

12. Putting aside the question whether the plaintiff had by particular acts or omissions breached the agreement, the issue raised upon that extract is whether it so elected. 

13. One feature of the evidence is that the parties had engaged in arbitration that had led to a finding that a particular invention had been an enhancement of the technology the subject of the technology agreement.  It is evident that that determination was communicated to the defendant by letter dated 10 May 2010.  Another feature of the evidence appears in an affidavit of Sam Michael Wright of 29 July 2011 filed by the defendant in proceedings in the Federal Court of Australia.  In it he deposes that the defendant had repudiated alternatively lawfully terminated the agreement by failing to remit amounts due to the plaintiff under the agreement in the months of February and March 2011.  The significance of those characterisations and their bearing upon the substantive question before ne is not clear.  Be that as it may, in my opinion whatever the defendant would contend for must be undermined by Wright's evidence of the truth of the content of a document described as the points of claim that relate to proposed arbitration proceedings.  It reveals that subsequent to March 2011 the defendant paid royalties under the agreement in August and November 2010 and last did so in February 2012. 

14. I am not persuaded that the defendant has established a basis upon which it could be considered that it had ever elected.   

15. According to the affidavit of the plaintiff's solicitor the royalty claim was for the royalty payable for the year 2010/2011.  I take that to mean the royalty payable for the year ending 30 June 2011.  A director of the plaintiff, Kenneth John Davey deposes that on 24 October 2011 the plaintiff issued an invoice to the defendant and that the defendant failed to pay the amount the subject of that invoice.  In the circumstances I have no difficulty either with the accuracy of the content of the invoice attached to the affidavit or that it founds the relevant claim.  I note that the invoice does not specify a date for payment but recites the relevant specification for payment established by the agreement.  There is no evidence that bears upon that issue.

16. In my opinion there is nothing to suggest that the plaintiff was not entitled to rely on the agreement in the year to June 2011.

17. As for the second question raised by the defendant, despite the fact that the parties had agreed to refer any disputation between them to arbitration, there is nothing to preclude the plaintiff from seeking relief in the District Court. 

18. No issue emerged in the course of the application that related to the balance of the judgment. 

19. In my opinion the application is without merit.