Federal Court of Australia

Su, in the matter of Blue Mountains Natural Spring Water Australia Pty Ltd [2022] FCA 799

ORDERS

THE COURT ORDERS THAT:

1.    There be judgment in favour of the plaintiff against the first defendant in the sum of $398,834.52.

2.    The first defendant pay the plaintiff’s costs of:

(a)    this application; and

(b)    the remainder of this proceeding to the extent such costs are referable to the plaintiff’s case against the first defendant.

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

REASONS FOR JUDGMENT

GOODMAN J

Introduction

1    The plaintiff seeks an order for judgment in the sum of $345,486.29 plus interest against the first defendant, together with an order that the first defendant pay the plaintiff’s costs.

BACKGROUND and findings of fact

2    In support of that application, the plaintiff relies upon an affidavit affirmed by the plaintiff on 24 February 2022; and affidavits of Ms Qingqing Dai affirmed 5 September 2019; Mr Perry Gamsby sworn 15 March 2022; Ms Iris Law affirmed 16 March 2022; and Mr Yin Chen affirmed 12 April 2022.

3    On the basis of that evidence and this Court’s file, I make the following findings of fact.

4    Since 21 December 2017, the first defendant has been a company registered in New South Wales. The second defendant is, and has at all relevant times been, its sole shareholder and director. The registered address of the first defendant and its principal place of business as recorded by the Australian Securities and Investment Commission since 31 July 2019 until at least August 2019 are an address in Bowen Mountain, New South Wales (Bowen Mountain address).

5    On 7 August 2019, the plaintiff commenced a proceeding in the Supreme Court of New South Wales against the first defendant, the second defendant, and others. By Statement of Claim filed on that date, the plaintiff alleges, in so far as is presently relevant, that:

(1)    on or about 26 June 2018, the plaintiff entered into a loan agreement with the first defendant;

(2)    the second defendant agreed to guarantee the first defendant’s performance under the loan agreement;

(3)    it was a term of the loan agreement that the first defendant was to fully repay all amounts owing (including sums advanced and interest) from the date which was six months after entry into the loan agreement;

(4)    following an extension of time of 30 days, the amounts owing under the loan agreement became due and payable on 26 January 2019;

(5)    the plaintiff has received no payment from either the first or second defendants; and

(6)    as at 6 August 2019, the total owing by the first defendant to the plaintiff was $425,486.29.

6    On 8 August 2019, an employee of the plaintiff’s then solicitor sent, by express post, a letter addressed to the first defendant at the Bowen Mountain address. That letter enclosed a sealed copy of the Statement of Claim.

7    On 16 August 2019, according to the records of Australia Post, that letter was:

Delivered to post office box

GROSE VALE NSW

Fri 16 Aug * 10:53am

8    On 20 March 2020, the Supreme Court of New South Wales ordered, pursuant to s 6 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), that the proceeding be transferred to this Court. On 4 May 2020, an order to that effect (Transfer Order) was filed in this Court and on the same day, the plaintiff’s solicitor sent a copy of the Transfer Order by email to an email address used by the second defendant and to the trustee of the second defendant’s bankrupt estate.

9    On 22 October 2021, pursuant to leave granted by the Court on 23 September 2021, the plaintiff filed an Amended Statement of Claim. No amendments of substance relevant to the claim against the first defendant were made.

10    On 11 January 2022, the plaintiff received $80,000 from the second defendant’s trustee in bankruptcy. The $80,000 paid by the second defendant’s trustee in bankruptcy to the plaintiff is the only amount received by the plaintiff from any of the defendants in satisfaction of the claims made in the Statement of Claim.

11    The first defendant has not filed a Defence or taken any other step in the proceeding.

CONSIDERATION

The application of the Federal Court Rules 2011 (Cth)

12    As noted above, the proceeding was transferred to this Court from the Supreme Court of New South Wales. Rule 27.23 of the Federal Court Rules 2011 (Cth) provides:

27.23      Transfer of proceeding to the Court

(1)      If a court makes an order transferring a proceeding to the Court, the party who applied for the order must file a copy of the order in:

(a)      the District Registry named in the order;

(b)      if no District Registry is name named in the order—the District Registry of the State or Territory where the order was made.

(2)      A Registrar will attach a notice to the order, in accordance with Form 49.

(3)      The party who files the order must serve a sealed copy of the order, and the notice that has been attached by the Registrar, on each party to the proceeding in the court that has made the order transferring the proceeding:

(a)      at the party’s address for service; or

(b)      if the party does not have an address for service—personally.

(4)      After an order is filed and the notice is attached, these Rules apply to the proceeding as if it had been started in the Court.

(5)      The party who files the order must, as soon as practicable after service of the order and the notice attached to the order, and before taking any further step in the proceeding, apply to the Court for directions in relation to the further conduct of the proceeding.

13    The Transfer Order was filed in accordance with r 27.23(1). However, there is no evidence that a Form 49 Notice was attached as is required by r 27.23(2). In circumstances where this step was not one which the plaintiff was required to take and where this proceeding has proceeded in this Court in any event, I dispense, in accordance with r 1.34, with any requirement to comply with r 27.23(2) and consequently with r 27.23(3) to (5) to the extent that such rules depend upon compliance with r 27.23(2). It follows that the filing of the Transfer Order was sufficient to enliven r 27.23(4) with the result that the Rules apply to the proceeding as if the proceeding had been started in this Court.

Preconditions to the exercise of the discretion to order the entry of judgment

14    Rule 5.23(2)(b) allows a plaintiff to apply to the Court for an order giving judgment against a defendant in respect of a claim for debt or liquidated damages if the defendant is in default.

15    The plaintiff’s claim is a claim in debt and thus the issue for determination is whether the first defendant is in default. One species of default is the failure to do an act required to be done, or to do an act in the time required, by the Rules: r 5.22(a). The plaintiff relies in this regard upon the absence of a Defence filed by the first defendant.

16    Thus, it is necessary to consider whether the first defendant was required to file a Defence and, if so, when such a Defence was due to be filed.

17    Rule 16.32 requires a Defence to be filed within 28 days after service of a Statement of Claim. Rule 8.06 requires that the Statement of Claim be served personally.

18    The plaintiff relies upon the sending of the 8 August 2019 letter sent by express post (enclosing the Statement of Claim) to the Bowen Mountain address as constituting personal service of the Statement of Claim upon the first defendant.

19    Rule 10.2 provides that a document that is to be served personally on a corporation must be served in accordance with s 109X of the Corporations Act 2001 (Cth). Section 109X provides in so far as is presently relevant:

Service of documents

(1)    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; or

…

20    Section 29 of the Acts Interpretation Act 1901 (Cth), being that section in its form as at the date of enactment of the Legislative Instruments (Transitional and Consequential Amendments) Act 2003 (Cth) on 1 January 2005 (see s 5C of the Corporations Act), provides:

29     Meaning of service by post

(1)     Where an Act authorizes or requires any document to be served by post, whether the expression “serve” or the expression “give” or “send” or any other expression is used, then unless the contrary intention appears the service shall be deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post.

(2)     This section does not affect the operation of section 160 of the Evidence Act 1995.

21    The combined effect of s 109X of the Corporations Act and s 29 of the Acts Interpretation Act is to deem – from the act of properly addressing, prepaying and posting the letter to the registered office of a company – that service has been effected; and that such service occurred at the time at which the letter would be delivered in the ordinary course of post. I am satisfied that the letter was properly addressed, pre-paid and posted.

22    Such deeming operates unless the contrary is proved. The only evidence that might be considered contrary to the proposition that service was effected on the registered office is the record of Australia Post indicating that the letter was:

Delivered to post office box

GROSE VALE NSW

Fri 16 Aug * 10:53am

23    I infer from this record, and from the evidence of the posting of the letter to the first defendant, that the letter was delivered to a post office box of the first defendant.

24    It is well established that evidence of a delivery to a post office box of the party to whom a document has been sent by post addressed to its registered office is insufficient, of itself, to displace the presumption: see Bellway Corporation Ltd v Ausdrill Ltd (1995) 13 ACLC 1663 at 1,668 (Owen J); Deputy Commissioner of Taxation v Barroleg Pty Ltd [1997] NSWSC 428; (1997) 25 ACSR 167 at 171 (Young J as his Honour then was); and In the matter of Watson Road Moss Vale Developments Pty Ltd [2013] NSWSC 783 at [9], [11] (Black J). See also Deputy Commissioner of Taxation v Trio Site Services Pty Ltd, in the matter of Trio Site Services Pty Ltd [2007] FCA 776 at [26]-[27] (Lindgren J) and Szepesvary v Weston (Trustee), in the matter of Szepesvary (Bankrupt) (No 2) [2018] FCA 87 at [16]-[18] (O’Callaghan J). There is also a common law presumption of fact that an envelope addressed and posted and not afterwards returned reached its destination in the ordinary course of post: Australian Trade Commission v Solarex Pty Ltd [1987] FCA 701; (1987) 78 ALR 439 at 443 (Beaumont J) and 446 (Wilcox J); Leveraged Equities Ltd v Goodridge [2011] FCAFC 3; (2011) 191 FCR 71 at 119 [399] (Jacobson J; Finkelstein and Stone JJ agreeing).

25    It follows that the presumption in s 29 of the Acts Interpretation Act operates and deems service to have occurred. As to the date of upon which such service was effected, there is no evidence as to when the letter would have been delivered in the ordinary course of post. However, I am comfortably satisfied that this would have occurred in August 2019. From that date, the first defendant was required to file a defence within 28 days: r 16.32. As noted above, no defence has been filed. It follows that the first defendant is in default: r 5.22(a).

26    Thus, the Court’s discretion to make an order for judgment is enlivened.

Exercise of the discretion

27    In Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606, Yates J explained at [13]:

13    The power to give judgment against a defaulting party is undoubtedly discretionary. The discretion must be exercised cautiously. Where the defaulting party is a respondent to a pleaded claim, the giving of judgment for final relief on the application will deliver complete success to the applicant without investigation of the merits of the pleaded claim: ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]. There is no requirement that the act or acts of default be intentional or amount to contumelious conduct. There is no requirement that the act or acts of default result in inordinate or inexcusable delay. That said, such features, if present, will be relevant to the exercise of the Court’s discretion. So too will conduct that persuades the Court that the defaulting party is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding.

28    The essential allegations in the Statement of Claim are set out at [5] above. I am satisfied on the face of the Statement of Claim, and on the basis that all of the facts alleged therein are taken to have been admitted, that the plaintiff is entitled to the relief that it seeks.

29    I have taken into account r 27.23(3). There is no evidence that service of the Transfer Order has occurred as required by that rule. Thus, there was no formal notification to the first defendant of the transfer of the proceeding from the Supreme Court of New South Wales to this Court. However, I do not regard this as a matter of significance in the exercise of the discretion in circumstances where, as found above, service of the Statement of Claim had been effected; and where the Transfer Order had been sent to the email address of the sole director of the first defendant (see [8] above).

30    Thus, I am satisfied that the plaintiff is entitled to judgment against the first defendant.

Quantum

31    I turn now to the quantum of the judgment. The amount due under the loan agreement as at 6 August 2019 was $425,486.29. As noted above, the plaintiff received $80,000 from the second defendant on 11 January 2022, which reduced the principal owing to $345,486.29 from that date.

32    The plaintiff is also entitled to prejudgment interest on $425,486.29 from 7 August 2019 to 11 January 2022; and on $345,486.29 from 12 January 2022 to 14 July 2022. That amount, calculated in accordance with s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) and the Court’s Interest on Judgments Practice Note is $53,348.23 ($46,108.16 plus $7,240.07). Thus, the plaintiff is entitled to judgment in an amount of $398,834.52 ($345,486.29 plus $53,348.23).

CONCLUSION

33    There should be judgment for the plaintiff against the first defendant in the sum of $398,834.52. The plaintiff seeks an order that the first defendant pay his costs. It is appropriate that a costs order be made with respect to this application. As to the plaintiff’s other costs of this proceeding, the first defendant should pay such costs to the extent such costs are referable to the plaintiff’s case against the first defendant.

Associate:    

Dated:    14 July 2022