FEDERAL COURT OF AUSTRALIA

KerryJ Investment Pty Ltd v Xiamen Fengwei Energy Technology Co Ltd [2013] FCA 361

THE COURT ORDERS THAT:

1.    Pursuant to Rule 10.48 of the Federal Court Rules 2011 (“the Rules”), each of the following documents:

(a)    the Orders made in this proceeding on 1 March 2013;

(b)    the Reasons for Judgment published in this proceeding on 1 March 2013; and

(c)    the Affidavit of Joel Brady Masterson sworn on 1 March 2013,

be taken to have been served on the First Respondent on 4 March 2013, by the Applicant having:

(d)    sent an email to the First Respondent annexing copies of those documents at the email addresses info@gracesolar.com and sales021@gracesolar.com and sales@gracesolar.com (collectively, “the Grace Solar Email Addresses”); and

(e)    sent copies of those documents by registered international post addressed to the First Respondent at 1st Floor Building E, No. 195 Gaoqi Village, Dianqian St, Huli District, Xiamen, Fujian, China (“the Grace Solar Postal Address”).

2.    Pursuant to Rule 10.48 of the Rules, each of the following documents:

(a)    the Affidavit of Thomas Gertsch affirmed on 14 October 2011;

(b)    the Affidavit of Grant Guzzi affirmed on 10 November 2011;

(c)    the Affidavit of Mario Guzzi affirmed on 10 November 2011;

(d)    the Affidavit of Martin Earley affirmed on 24 November 2011;

(e)    the Applicant’s written submissions dated 5 April 2013; and

(f)    the Affidavit of Joel Brady Masterson sworn on 5 April 2013,

be taken to have been served on the First Respondent on 5 April 2013, by the Applicant having:

(g)    sent emails to the First Respondent annexing copies of those documents at the Grace Solar E-mail Addresses; and

(h)    sent copies of those documents by registered international post addressed to the Grace Solar Postal Address.

3.    Pursuant to Rule 10.48 of the Rules, the Applicant’s draft orders dated 16 April 2013 be taken to have been served on the First Respondent on 16 April 2013, by the Applicant having:

(a)    sent an email to the First Respondent annexing a copy of that document at the Grace Solar E-mail Addresses; and

(b)    sent a copy of that document by registered international post addressed to the Grace Solar Postal Address.

4.    The First Respondent appoint a lawyer and:

4.1    file a notice of acting in accordance with Rule 4.04 of the Rules; and

4.2    file a notice of address for service in accordance with Rule 11.01, 11.02 and 11.07 of the Rules,

by 10 May 2013.

5.    In the event that the First Respondent does not comply with Order 4;

5.1    judgment be entered for the Applicant against the First Respondent pursuant to Rule 5.23(2) of the Rules, in terms that the Court shall direct.

5.2    the Applicant submit a minute of the terms of judgment and any consequential orders on or before 17 May 2013.

6.    In the event that the First Respondent complies with Order 4, the parties have liberty to apply.

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

REASONS FOR JUDGMENT

INTRODUCTION

1    In an interlocutory application dated 20 November 2012 (“First Interlocutory Application”) the applicant, KerryJ Investments Pty Ltd (“KerryJ”) sought various orders, including a self-executing order for a default judgment against Xiamen Fengwei Energy Technology Co Ltd trading in Australia under the name Grace Solar (“Grace Solar”). The First Interlocutory Application was supported by the affidavit of Joel Brady Masterson sworn on 20 November 2012. The First Interlocutory Application was adjourned on 23 November 2012 because it had not been served on Grace Solar in accordance with the Federal Court Rules 2011 (Cth) (“the Rules”).

2    On 14 February 2013, KerryJ filed another interlocutory application (“Second Interlocutory Application”), an amended version of the First Interlocutory Application (“the Amended Interlocutory Application”) and another affidavit of Mr Masterson sworn on 14 February 2013, which was filed in support of the Second Interlocutory Application.

3    On 1 March 2013, pursuant to Rule 10.48 of the Rules, for reasons published as KerryJ Investment Pty Ltd v Xiamen Fengwei Energy Technology Co Ltd [2013] FCA 141 (“Deemed Service Reasons”), the Court ordered that:

[T]he interlocutory application dated 20 November 2012 (“the First Interlocutory Application”) and the affidavit of Joel Brady Masterson dated 20 November 2012 (“the First Masterson Affidavit”) be taken to have been served on the First Respondent on 20 November 2012, by the Applicant having sent emails to the First Respondent on that date annexing a copy of the First Interlocutory Application and the First Masterson Affidavit at the email addresses info@gracesolar.com and sales021@gracesolar.com.

4    The Court further ordered that:

[T]he interlocutory application dated 14 February 2013 (“the Second Interlocutory Application”), the amended version of the First Interlocutory Application dated 14 February 2013 (“the Amended Interlocutory Application”) and the affidavit of Joel Brady Masterson dated 14 February 2013 (“the Second Masterson Affidavit”) be taken to have been served on the First Respondent on 14 February 2013, by the Applicant having:

(a)    sent emails to the First Respondent on 14 February 2013 annexing copies of the Second Interlocutory Application, the Amended Interlocutory Application and the Second Masterson Affidavit at the email addresses info@gracesolar.com, sales021@gracesolar.com and sales@gracesolar.com; and

(b)    sent the Second Interlocutory Application, the Amended Interlocutory Application and the Second Masterson Affidavit by registered international post addressed to the First Respondent at 1st Floor Building E, No 195 Gaoqi Village, Dianqian St, Huli District, Xiamen, Fujian, China.

5    The Court was satisfied, for the reasons outlined in the Deemed Service Reasons at [8]-[12], that it was not practicable to serve the documents on Grace Solar in China in accordance with the Hague Convention and that the documents had been brought to the attention of Grace Solar.

PRESENT APPLICATION

6    By the Amended Interlocutory Application, KerryJ now seeks orders requiring that Grace Solar appoint a lawyer and by 3 May 2013:

(a)    file a notice of acting in accordance with Rule 4.04 of the [Rules]; and

(b)    file a notice of address for service in accordance with Rules 11.01, 11.02 and 11.07 of the Rules.

Further, KerryJ seeks orders that:

In the event that the First Respondent does not comply with [the above] Order …, judgment be entered for the Applicant against the First Respondent pursuant to Rule 5.23(2) of the Rules.

In the event that the First Respondent complies with [the above] Order …, the Applicant have liberty to apply.

7    The Amended Interlocutory Application, upon which KerryJ presently relies, is supported by the affidavits of Thomas Gertsch affirmed on 14 October 2011, Grant Guzzi affirmed on 10 November 2011, Mario Guzzi affirmed on 10 November 2011, Martin Earley affirmed on 24 November 2011, as well as the five affidavits sworn by Joel Masterson on 20 November 2012, 14 February 2013, 1 March 2013, 5 April 2013 and 16 April 2013.

8    At the hearing today, 19 April 2013, KerryJ was represented by counsel. There was no appearance for Grace Solar. There were no responsive documents filed on its behalf. As explained below, there has been no communication by Grace Solar with the Court since 4 September 2012.

Deemed service orders

9    I interpolate here that KerryJ also seeks orders that the orders of 1 March 2013; the reasons for judgment of that date; the affidavits of Mr Masterson sworn on 1 March 2013 and 5 April 2013, each of the other affidavits on which it now relies (as listed above); KerryJ’s written submissions dated 5 April 2013; and the draft orders of 16 April 2013 be taken to have been served on Grace Solar, again pursuant to Rule 10.48 of the Rules.

10    Having regard to Mr Masterson’s affidavits, including his most recent affidavits of 5 and 16 April 2013, I am satisfied that each of the above documents has been brought to Grace Solar’s attention and that it is not practicable to serve these documents in accordance with the Hague Convention. For essentially the same reasons as stated in the Deemed Service Reasons, I would make the orders sought by KerryJ in paragraphs 1 to 3 of its draft orders.

11    Accordingly, I turn to the other orders that KerryJ seeks.

Appointment of a lawyer

12    Grace Solar is a company incorporated under the laws of the People’s Republic of China. Between 30 March 2012 and about 4 September 2012, Grace Solar was represented in this proceeding by the firm of Minter Ellison, solicitors. Since about 4 September 2012, Grace Solar has been unrepresented.

13    Rule 4.01(2) of the Rules provides that a company must not proceed in the Court other than by a lawyer, subject to the Court’s discretion to dispense with compliance with the Rules under Rule 1.34.

14    On 13 September 2012, my associate wrote to Grace Solar by email (copied to the other parties) indicating, by reference to Rule 4.01, that Grace Solar was required to appoint a lawyer to represent it in the proceeding unless it obtained the Court’s permission to proceed without a lawyer. Grace Solar has not responded to that email.

15    The affidavit evidence before me shows that lawyers for KerryJ have also sent numerous letters and emails to Grace Solar since 14 September 2012, in which Grace Solar was notified that KerryJ would seek a self-executing order for a default judgment if it did not formally appoint a lawyer. This correspondence included emails dated 19 and 20 November 2012. On 21 November 2012, KerryJ’s lawyers received an email from a Grace Solar representative, presumably in response to their email dated 19 November 2012, stating (amongst other things):

Thank you very much for the remind info.

We are negotiating with the lawyer representing issue and will confirm to you ASAP.

16    KerryJ has not received any other communication from Grace Solar since Minter Ellison’s retainer was terminated on 4 September 2012.

17    As already stated, there was no appearance for Grace Solar at the 23 November 2012 directions hearing.

18    The evidence before the Court shows that, during the afternoon of 14 February 2013, KerryJ’s lawyers sent a letter and a copy of the Amended Interlocutory Application to Grace Solar by email and by registered international post. Amongst other things, the letter stated:

We filed the Amended Interlocutory Application earlier today and it seeks orders requiring your company to formally appoint an Australian lawyer to represent it in the proceeding by 3 May 2013, failing which our client will be automatically entitled to judgment against your company.

19    On 1 March 2013, there was a hearing in the proceeding: see the Deemed Service Reasons. There was no representative of Grace Solar at this hearing. As noted already, KerryJ’s lawyers emailed and sent by registered international post copies of the orders made that day, my reasons and relevant affidavit material. An automated delivery confirmation email was later received. On 5 April 2013, KerryJ emailed to Grace Solar a copy of the written submissions in support of its current application.

20    As noted above, the Court has had no communication from Grace Solar since Minter Ellison’s retainer ended. No representative of Grace Solar has attended the hearing of this application or any other application in the proceeding since then.

21    This is a case of alleged patent infringement. This circumstance and the circumstances outlined above clearly indicate that Grace Solar should appoint a lawyer to represent it, as Rule 4.01 of the Rules requires. In any event, Grace Solar has made no application for the Court to dispense with this requirement. Accordingly, I would make the order that Grace Solar appoint a lawyer, as KerryJ seeks. I would also order that Grace Solar file a notice of address for service in accordance with Rule 11.01, 11.02 and 11.07 of the Rules.

Self-executing order contemplating default judgment

22    Rule 5.22 of the Rules provides:

A party is in default if the party fails to:

(a)    do an act required to be done, or to do an act in the time required, by these Rules; or

(b)    comply with an order of the Court; or

(c)    attend a hearing in the proceeding; or

(d)    prosecute or defend the proceeding with due diligence.

23    Rule 5.23(2) relevantly provides:

If a respondent is in default, an applicant may apply to the Court for:

(a)    an order that a step in the proceeding be taken within a specified time; or

    …    

(c)    if the proceeding was started by an originating application supported by a statement of claim or if the court has ordered that the proceeding continue on pleadings – an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled; or

(d)    an order giving judgment against the respondent for damages to be assessed, or any other order; or

(e)    an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order.

24    Grace Solar is in default. The company has failed to attend hearings in the proceeding on 23 November 2012, 1 March 2013 and today. This is a default under Rule 5.22(c). The company has failed to appoint a lawyer to represent it (or seek leave to proceed without one) during the seven months that have passed since Minter Ellison’s retainer was terminated on 4 September 2013. On one view, this is a default under Rule 5.22(a); alternatively, if it were said that Grace Solar had not taken any step to “proceed” in the proceeding since that date, there would be a default within Rule 5.22(d) of the Rules. Further factors constituting a default under Rule 5.22(d) would include failing to respond to any of the correspondence sent to Grace Solar by the Court and by KerryJ’s lawyers since 4 September 2012, as well as Grace Solar’s failure to attend hearings.

25    The authorities have to date stated that the differences between Rule 5.23(2) of the Rules and its predecessor in O 35A r 3(2)(c) of the Federal Court Rules 1979 (Cth) are largely immaterial: see the discussion in Cafe2U Pty Limited v Bishambu Pty Ltd [2013] FCA 191 at [9]-[13] and the authorities there cited. The power conferred by Rule 5.23(2), like the previous conferral of power, is discretionary and is generally to be exercised cautiously: see, for example, Engineered Thermal Systems Pty Limited v Salmon, In the matter of Salmon & Speck Pty Ltd [2012] FCA 1159 (“Engineered”) at [36], citing Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 (“Speedo”) at [2]-[21].

26    Rule 5.23(2) does not require the applicant to prove by evidence the claim made against the respondent. As Flick J said in Speedo [at 23]:

… the requirement imposed is not that the applicant prove by way of evidence the claim sought to be advanced; the requirement is that the Court needs to be ‘satisfied’ on the face of the statement of claim that the applicant is entitled to the ‘relief’ claimed …

27    In order to be satisfied that the applicant is entitled to the relief claimed, the Court must be satisfied that each element of the cause of action is properly pleaded: see Speedo at [24]. Further, the Court may, and in a case seeking injunctive and/or declaratory relief, may be obliged to, have regard to evidence, although the Court may not have regard to evidence that would alter the case as pleaded: see Speedo at [25]; and Engineered at [36]-[38].

28    In its Second Amended Originating Application and Second Amended Statement of Claim, KerryJ seeks (among other things) an injunction restraining Grace Solar from infringing Australian certified innovation patent no. 2009101302 and a corresponding declaration. Gordon J held, in Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1 at 21 [63], that where a default judgment is sought in respect of discretionary relief (including injunctions and declarations) the Court “is entitled, if not obliged, to receive” evidence relevant to the discretion, providing the evidence does not relate to additional facts that should have been pleaded in support of the claim.

29    The Second Amended Statement of Claim pleads clearly each element of KerryJ’s infringement claim regarding certified innovation patent no. 2009101302. The affidavits of Thomas Gertsch affirmed on 14 October 2011, Grant Guzzi affirmed on 10 November 2011, Mario Guzzi affirmed on 10 November 2011, and Martin Earley affirmed on 24 November 2011 provide evidence in support of this claim. I accept that, as KerryJ submitted, this evidence is relevant to the Court’s exercise of discretion under Rule 5.23(2) and whether or not KerryJ should have the declaratory and injunctive relief that it also seeks. Having regard to the pleading and this evidence, subject to [30] and [31] below, I would order that there be a default judgment entered against Grace Solar (in the event that Grace Solar fails to appoint a lawyer and file a notice of address for service, as discussed at [12]-[21] above).

Self-executing orders contemplating default judgment

30    In the present case, as already noted, KerryJ seeks a self-executing order contemplating a default judgment. Orders such as these are made in appropriate circumstances. KerryJ referred to Strategic Financial and Project Services Pty Ltd v Bank of China [2012] FCA 701, where Robertson J made a self-executing order contemplating default judgment against two applicants under Rule 5.21, where the applicants had failed to provide security for costs pursuant to an earlier order. In this case, an order of the kind KerryJ seeks can be made under Rule 5.23(2)(e) because Grace Solar is already in default.

31    I consider that it is appropriate to make an order of the kind set out in paragraph 2 of the Amended Interlocutory Application, having regard to the circumstances of the case, including that Grace Solar: (1) was represented by Australian lawyers earlier in the proceeding; (2) was advised by the Court, more than six months ago, about the need to appoint a new lawyer or to seek leave to proceed without one; (3) has been put on notice by KerryJ on numerous occasions (including by way of services of two interlocutory applications) that KerryJ would seek a self-executing order for a default judgment against Grace Solar if it did not appoint a new lawyer; and (4) the history of the matter as disclosed in these reasons.

32    For the reasons stated, I would make the orders sought by KerryJ, as amended in discussion in court today.

Associate:

Dated:    19 April 2013