FEDERAL COURT OF AUSTRALIA

Delta Metallics Pty Ltd v King [2012] FCA 1119

THE COURT ORDERS THAT:

1.    The first respondent’s application made on 7 August 2012 be dismissed.

2.    The first respondent pay the applicant’s costs of and incidental to the first respondent’s application made on 7 August 2012, to be payable forthwith.

3.    The costs allowed under Order 20 of the Orders made on 23 September 2011 be payable forthwith.

4.    The further hearing of this proceeding be adjourned for directions only to 9.30am on 23 November 2012.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    Application has been made by the first respondent, Joshua Nathan King (trading as White Collar Boxing Inc), to set aside a default judgment previously entered against him pursuant to an order made on 23 September 2011 under the Federal Court Rules 2011 (Cth) (‘the Rules’).

2    The Application now before me to set aside this default judgment was made on 7 August 2012 and brought pursuant to r 39.05(a) of the Rules, which provides that:

The Court may vary or set aside a judgment or order after it has been entered if:

(a)    it was made in the absence of a party ...

3    Before going to consider that Application, I should mention that application was made today by Mr King for an adjournment, on the basis that he wanted time to obtain further evidence, and that his legal representatives were not available to appear today to argue on his behalf. I should indicate at the outset: seeking further evidence going to the potential merits of his case will be of no importance, for reasons which will become apparent when I deal with the Application to set aside the default judgment. Further, whilst I am mindful that Mr King’s legal representatives are not present today, Mr King has the considerable advantage of a written submission that was provided to the Court previously and prepared by Counsel then representing Mr King. This written submission was effectively relied upon by Mr King’s father, whom I permitted to act as a ‘McKenzie friend’ for the purposes of the hearing of Mr King’s Application.

4    In these circumstances, I do not think any disadvantage was visited upon Mr King by reason of the fact that his legal representatives were not able to appear, having regard to the material and the written submissions before the Court which were effectively relied upon today.

5    I then turn to the Application to set aside the default judgment previously entered against Mr King pursuant to the order made on 23 September 2011.

6    Numerous statements have been made in relation to the discretionary power to set aside a default judgment. Comments were made by the House of Lords in Evans v Bartlam [1937] AC 473 in this regard. There it was said that while there are no hard and fast rules, it is usual for the defendant to give some satisfactory explanation for his failure to take the step that led to judgment being entered, bring his application to set aside the judgment without undue delay, and show that he had some serious or prima facie defence to the action. These observations were referred to in the Deputy Commissioner of Taxation v Annesley Plant Hire Pty Ltd [2010] FCA 755 by Finkelstein J.

7    Of course, care must always be taken in dealing with authorities which concern the setting aside of a judgment or order. Everything will depend upon the circumstances of the case in which the application is being made.

8    It has been said that the jurisdiction to set aside a judgment or order after it has been entered is exceptional and there is some authority in this regard: see Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543 at 552; Australian Competition & Consumer Commission v Black on White Pty Ltd (2004) 138 FCR 314 at 318 to 319; and Wu v Avin Operations Pty Ltd (No 2) [2006] FCA 792 at [25].

9    I do not think that there is any advantage in referring to the need for exceptional circumstances, other than recalling that to set aside an order or judgment is something that needs to be done on a proper juridical basis. Again, it will depend on all the circumstances, which will include – relevantly in this Application – the actions of Mr King, and the circumstances of any prejudice that may arise in relation to the party that has an order or judgment in its favour.

10    It has properly been said that where a party — relevantly here, a respondent — has an apparently good defence, they should not be refused the opportunity of defending the claim against them even where there has been a lengthy delay in bringing an application to set aside a judgment or order. It is important to remember that the obligation of the Court is to allow the parties the opportunity of coming before the Court to put arguments and present his or her case.

11    Having said that, however, in the era in which we now operate, it is also important to take into account the actions of the parties, including that of an authorised solicitor, and to visit upon the parties the consequences of the actions taken in the course of litigation.

12    Further, there is undoubtedly a public interest in the finality of litigation: see Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, and s 37M(1) of the Federal Court of Australia Act 1976 (Cth), where it is dictated that the facilitation of the just resolution of disputes according to law needs to be done as quickly, inexpensively and efficiently as possible.

13    This is not to say that the interests of justice are to be overridden, but expedition, expense and efficiency are to be taken into account in determining the ambit of what justice requires in any particular case.

14    The other observation I make is this. The authorities make reference to the primary consideration being for a respondent to show a prima facie defence on the merits: see, for example, the case of NBGQ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1513 at [20] per Jacobson J. All this is referring to is the fact that if there is no prima facie defence, then there will be no utility in setting aside a judgment or order. By referring to this primary consideration of demonstrating a prima facie defence on the merits, this does not mean that that is the only consideration, or is a consideration that necessarily trumps other matters that go to the discretionary exercise that one has to undertake in applying r 39.05(a) of the Rules.

15    One of the first submissions put by Mr King is that there is a good and valid defence and possibly a cross-claim available to him, which so far has not been formally ventilated in this Court.

16    In relation to the claim that Mr King infringed the trademark of Delta Metallics Pty Ltd (‘Delta’), it was submitted that the evidence filed on behalf of Mr King demonstrated that the expression “White Collar Boxing” was a common expression used to describe a particular form of boxing. That is to say, it was argued the expression “White Collar Boxing” is descriptive in its nature and was not used as a so-called ‘badge of origin’.

17    It was also submitted that the expression “White Collar Boxing” was not likely to deceive or cause confusion; and it was said in relation to the other causes of action brought against Mr King that Mr King did not hold his services out as being those of or authorised by Delta, so that confusion with Delta could not arise.

18    I do not propose to enter into this debate. I proceed, in determining this Application to set aside the default judgment, on the basis that there is an arguably good defence which could be raised by Mr King.

19    However, it seems to me that the Application should be refused for two very good reasons, which I put in the balance in relation to this matter. The first — very significantly — is the fact of the communication from Mr King’s solicitors, Goldsmiths, to Delta’s solicitors, Pointon Partners Lawyers, Melbourne, on 9 August 2011. At that time, Goldsmiths were retained by Mr King as his solicitors. In that letter it was stated as follows (omitting formal parts):

We are instructed as follows:

1.    Our client does not have any funds or assets from which he is able to pay our ongoing legal costs.

2.    Consistently, he does not have any funds or assets from which any judgment could be satisfied, if one were entered against him.

3.    We are to file a notice of ceasing to act.

4.    Out client will not, in the circumstances, be taking any further steps in the proceedings.

5.    In the event that a judgment is entered against our client, he is willing to be adjudicated bankrupt.

20    There is no doubt that letter was sent and received, and there is no doubt that what it does is to inform Delta that no further steps are to be taken in the proceeding, and in effect, invites judgment to be entered against Mr King on the basis set out.

21    On 17 August 2011 it would appear that Goldsmiths no longer acted for Mr King, although this was after the letter of 9 August 2011 was sent.

22    It is important in litigation that parties can rely upon letters written by authorised solicitors; case management would not survive without that regime being in place. Mr King, as with other litigants, cannot escape his responsibility as a party with respect to the conduct of litigation by hiding behind either poorly-instructed lawyers or information provided to an opponent that may prove, as between the client and the solicitor, to be in error. Nor can they excuse themselves by relying upon financial inadequacies, or other extraneous matters, where a letter sent to an opposing party is clear on its face: see the comments made in KM & A Chadwick Pty Ltd v Yeung (unreported, Tamberlin J, 2 June 1995) at [15] by Tamberlin J, and in Wu (2006) FCA 792 at [34] by Kenny J.

23    There was some suggestion that this letter was sent at a time when Mr King was not well and in ill health. There is no relevant evidence before the Court in relation to that suggestion. In any event, what has been relied upon by Mr King does not demonstrate, in my view, that the letter of 9 August 2011 was sent and based upon instructions unable to be properly given by Mr King at the time.

24    It has also been contended by Mr King that the delay in bringing the Application can be attributed in whole or part to the fact that his solicitors ceased to act in August 2011.

25    It will be apparent from what I have already said that this did not occur till 17 August 2011. I do not think, whilst undoubtedly Mr King has had moments where he may have been self-represented, that what has occurred can be attributed to that fact. Even the delay in filing the Application for the default judgment to be set aside (between February 2012 and August 2012) cannot be attributed to the solicitors ceasing to act in August 2011, after, as I have said, there was a deliberate decision to cease participating in these proceedings.

26    I then come to another important matter that is relevant to denying the relief sought by Mr King. The default judgment was obtained many months ago, and it has been many months more since the proceedings were commenced. Since the default judgment was entered, Delta settled against the second and fourth respondents and discontinued against the third respondent. It is true that we cannot know – or at least, the Court does not know – the terms of those settlements, and the terms upon which there has been discontinuance. However, it is clear that each of these events occurred after the entry of default judgment.

27    I may properly infer that the terms of settlement and of discontinuance were entered into with a backdrop, at least, of Delta knowing that it had a judgment against Mr King, a major party to the litigation. On that basis, it seems to me that there would be a serious prejudice to Delta if the default judgment was now to be set aside in circumstances where those settlements have proceeded on the basis of a known and important fact, namely, judgment being entered against Mr King.

28    I observe that in many ways this has been an unfortunate piece of litigation, and attempts have been made to resolve it by mediation, which have failed. In this event, this Application to set aside a default judgment regularly entered needs to be determined according to principles of law, which it now has been. The Application for the default judgment to be set aside is dismissed.

29    As to the question of costs, application has been made for Mr King to pay Delta’s costs of or incidental to the Application forthwith, and on an indemnity basis. The Court has power to make an order for costs on an indemnity basis: the question is whether the Court should so exercise its discretion in a particular case. The Court may award indemnity costs in respect of misconduct which causes loss of time to the Court and to other parties, or where an obviously hopeless application is made. In the circumstances of this Application I do not think Mr King should be ordered to pay indemnity costs, and I propose not to order such costs. I have come to a firm view in relation to this Application, but at the end of the day it was a discretionary decision to make, and part of the basis upon which I made that decision was an assumption that there was in fact at least an arguable defence that could be raised by Mr King. I did not have to go into that in any detail because of the strong view I took in relation to the other criteria relevant to the exercise of my discretion. However, as Mr King has lost his Application, I will order that Mr King pay Delta’s costs of and incidental to the Application to set aside the default judgment, and that such be paid forthwith. So, the orders I make will be:

1.    The first respondent’s application made on 7 August 2012 be dismissed.

2.    The first respondent pay the applicant’s costs of and incidental to the first respondent’s application made on 7 August 2012, to be payable forthwith.

3.    The costs allowed under Order 20 of the Orders made on 23 September 2011 be payable forthwith.

4.    The further hearing of this proceeding be adjourned for directions only to 9.30am on 23 November 2012.

Associate:

Dated:    16 October 2012