Easy Way Station Co., Ltd v Meetfresh Franchising Pty Ltd

RARES J: 1 The applicant, Easy Way Station Co. Ltd, is incorporated in Taiwan and carries on a business of franchising a worldwide chain of dessert shops. It has filed interlocutory applications in two proceedings seeking (in order of filing) first, default judgment against the respective respondents, Meetfresh Franchising Pty Limited and Eternity Trading Pty Limited (that appear to be related companies, having a common registered office address and sole director, a Shu-Ming Hsu, who has an address at a home unit in central Sydney), and, secondly, confirmation of service on each of them. 2 Easy Way specialises in the sale of beverages, desserts and other food products associated with the name and four Australian trademarks of "MeetFresh". Easy Way has registered those trademarks here to protect the MeetFresh mark. It entered into franchise agreements with both Franchising and Eternity.

Background 3 Easy Way first commenced the Franchising proceeding by filing an originating application and statement of claim and subsequently commenced the Eternity proceeding the same way. The pleadings are in substantially the same terms in both proceedings. I will summarise the pleadings in the Franchising proceeding for convenience. 4 The originating application sought declaratory relief that Franchising (or Eternity) had infringed the MeetFresh marks, and that its use of the MeetFresh marks was unlawful from at least the termination of a master franchise agreement between Easy Way and Meet Fresh Australia Pty Ltd (the Australian franchisor) on 4 April 2019, or on the expiry of its 10-year term on 12 October 2019, together with injunctive relief restraining Franchising (or Eternity) from further infringement. Easy Way also sought damages or an account of profits. 5 Neither Franchising nor Eternity has appeared at any stage of either proceeding. Both proceedings had first case management hearings on 19 March 2021. I adjourned those to 23 April 2021, and subsequently listed them today to hear all the interlocutory applications for default judgment and confirmation of service that Easy Way had attempted on Franchising and Eternity at their registered office addresses. 6 Up to 5 April 2021, the registered offices of Franchising and Eternity were at a common address, being a unit numbered B7 at Condell Park, New South Wales, according to searches of the Australian Securities and Investments Commission registers. The solicitors for Easy Way served, at the Condell Park address, the originating application and statement of claim on Franchising by express post sent on 22 January 2021, and on Eternity by express post on 4 March 2021. I find that those postal articles were served on the seventh business day after posting, in accordance with s 109X(1)(a) of the Corporations Act 2001 (Cth) and s 160(1) of the Evidence Act 1995 (Cth), namely 3 February 2021 and 15 March 2021 respectively. 7 On 19 March 2021, I ordered Franchising to file its defence by 26 March 2021, and Eternity to do so by 1 April 2021. I also ordered Easy Way to serve those orders on each respondent by 24 March 2021. 8 I am satisfied on the evidence that Easy Way complied with the orders for service made on 19 March 2021 because a process server, Alex Taylor, left copies of those orders in each proceeding together with the originating application, statement of claim and copies of the four trade mark registrations within the front door of the Condell Park address. Mr Taylor said that he spoke to a male employee there and enquired whether it was the registered office of each of Franchising and Easy Way. That person replied that it, unit B7, was, and so was a neighbouring unit A7. Mr Taylor said he noticed, after he had left the documents inside the front door to unit B7, that the male retrieved the documents and took them to the office at unit A7, which had been identified to Mr Taylor. 9 On or about 25 March 2021, the documents that Mr Taylor had served were returned to the offices of the solicitors for Easy Way, accompanied by a handwritten note from a person who identified himself as "Warren". The note asserted that neither Franchising nor Eternity was any longer at the Condell Park address. 10 I am satisfied by the evidence of Yue (or Kiera) Wang, one of the solicitors acting for Easy Way, that the registered office of both Franchising and Eternity remained at unit B7 at the Condell Park address until it changed on 6 April 2021 to a common registered office at a North Strathfield address. 11 On 9 April 2021 Easy Way filed an interlocutory application in each proceeding seeking default judgment against each of Franchising and Eternity, and served those by express post to the North Strathfield address on 15 April 2021, together with affidavits in support, affidavits of service, the originating application, statement of claim, previous orders and the trademark registration certificates. 12 In addition, the solicitors for Easy Way arranged for a process server to serve the director at his central Sydney unit in an attempt to serve him personal under s 109X(1)(b) of the Corporations Act. Process servers attempted to do so by leaving documents there, however, they were not able to effect personal service on the director. They were informed by the concierge of the building that the director had not been seen, and not used his access card, for a number of months. The process servers noticed a considerable body of uncollected mail in the mailbox for the director's unit. Easy Way's solicitors also served the director by express post at the same unit and those documents were delivered on 20 April 2021. 13 On 23 April 2021, I fixed both interlocutory applications in each proceeding for hearing today and ordered that Easy Way serve the orders made on that day. I am satisfied that Easy Way served Franchising with those orders by express post sent on 27 April 2021, that was delivered to the North Strathfield address on or about 28 April 2021. Easy Way's solicitors, also on 27 April 2021, sent the orders in the Eternity proceeding to the North Strathfield address by express post but, on 11 May 2021, Australia Post reported that the express post envelope addressed to Eternity had been lost in transit. 14 In the meantime, on 28 April 2021, a person who identified himself as Charlie Chan, the "managing officer" of both Franchising and Eternity, contacted Ms Wang asking her urgently to send him a copy of the statement of claim against each of Franchising and Eternity. Ms Wang responded on the same day, saying that those documents had been served on each company at its registered office, and on the director at his address recorded on the ASIC register. She asked for Mr Chan's relationship to each of the two companies to enable her to determine whether she was in a position to provide him with the copies of the pleadings he had sought. He responded that he was the managing officer of both respondents and asked if Ms Wang could confirm whether the statements of claim and originating applications "are identical to the copies you have posted to" the North Strathfield address. Ms Wang responded later on 28 April 2021 to say that, because Mr Chan was not recorded by ASIC as a director or officer of Franchising or Eternity, she could not provide copies of the documents to him directly without a proper indication of his authority to act on their behalf. However, she confirmed to him that the statements of claim and originating applications in both matters were included with documents served on Franchising and Eternity at the North Strathfield registered office address, together with the interlocutory applications, and said that they were returnable today for hearing. No more has been heard from Mr Chan or anyone else acting on behalf of either Franchising or Eternity. 15 The evidence establishes that the trading address for Franchising's business had been in Eastwood. A partner in Easy Way's solicitors, Vincent Cheng, attended at the Eastwood shop in about January 2021, and later on 16 April 2021. He had observed those premises trading on his January 2021 visit, but when he arrived at about 3:00pm on 16 April 2021, he observed that the Eastwood premises were empty, and that signage and the doors, which were locked, were all covered by black vinyl. Mr Cheng said that he could not see any signage at those premises displaying the trademarks. 16 Mr Cheng also deposed that, on 8 April 2021, he was driving through Chinatown in Sydney, when he observed Eternity's shop located on the corner of Goulburn and Dixon Streets whilst stopped at traffic lights there. He said that he observed patrons entering and exiting the shop which appeared to be open for business, with people seated with food items at the outdoor seating area on Dixon Street. He saw three signs using the word MeetFresh, two hanging from the canopy facing each street and the third above the main entrance on Dixon Street. He said that the signage using the mark "MeetFresh" was identical to two of the registered marks. He drove around the block and then passed Eternity's shop for a second time, observing customers going in and out, some of whom had beverages in their hands, and others who were dining inside the shop.

The pleaded case 17 Each statement of claim pleaded that at all material times Easy Way has been the registered owner of the following four Australian trademarks associated with the trade name "MeetFresh", namely: Number Trademark Class Status 1193373 Meet Fresh 29, 30, 43 Protected - (figurative) from 16/08/2007 until 16/08/2027 1913147 Meet Fresh 16, 43 Protected - (figurative) from 14/03/2018 until 14/03/2028 194871 Meet Fresh 16, 21 Protected - (figurative) from 15/08/2018 to 15/08/2028 1948481 Meet Fresh 21 Protected - (figurative) from 15/08/2018 until 15/08/2028

18 Each statement of claim pleaded that the MeetFresh name, style and trademarks were well known across Asia and around the world, are associated with the MeetFresh business, and that: Easy Way had developed a valuable reputation in the provision of goods and services related to the sale of beverages, desserts and other food products associated with the MeetFresh trademarks in Australia; by the master franchise agreement dated 13 October 2009 between Easy Way and the Australian franchisor, Easy Way had granted the Australian franchisor exclusive franchise rights in the territory of Australia that included the rights, among others, to use, license and sub-franchise the MeetFresh business and MeetFresh trademarks to sub-franchisees; the term of the master franchise agreement would expire on 12 October 2019, unless terminated beforehand; the Australian franchisor could only grant rights and licenses to use the MeetFresh trademarks if it had an authority and license in writing that Easy Way granted to it; on or about 24 January 2017, Easy Way initiated arbitration proceedings in Taiwan against the Australian franchisor for breach of the master franchise agreement; on about 27 December 2019, Easy Way obtained an arbitration award against the Australian franchisor that declared that the master franchise agreement had been terminated with effect from 4 April 2019; by reason of the award, on 4 April 2019, the Australian franchisor had ceased to be an authorised user or licensee of the trademarks, or of any of Easy Way's intellectual property rights, and ceased to have any rights to use, assign or licence the MeetFresh trademarks; alternatively, the Australian franchisor's rights to use the trademarks ceased on the expiry of the term of the master franchise agreement on 12 October 2019; on or about 12 March 2020, Easy Way issued cease and desist letters to each of Franchising and Eternity to put them on notice of the infringement of its intellectual property rights, and demanded that each of them cease and desist from using any products, signage, packaging or promotional materials and fit out consisting of any intellectual property relating to the MeetFresh marks, and demanded that such products be removed or destroyed from the public domain by no later than 27 March 2020; each of Franchising and Eternity had continued to carry on a beverage, dessert and other food products business at their respective trading premises, and used the MeetFresh marks in the course of their respective business, selling and offering goods under or by reference to the name "MeetFresh", and providing, or offering to provide, services under or by reference to that name, and advertised or promoted the goods and services under or by reference to the name "MeetFresh"; the signage that each of Franchising and Eternity used was substantially identical and deceptively similar to the MeetFresh marks, and their conduct in respect of the goods and services involved the use of those marks as a trademark; the goods and services in respect of which the marks were registered were goods and services of the same description as those in respect of which the marks were registered; accordingly, each of Franchising's and Eternity's conduct was without the licence or authority of Easy Way, at least from either 4 April 2019 or 19 October 2019 (which appears to be a typographical error for 12 October 2019); the use of the marks after the termination or expiry of the master franchise agreement was without Easy Way's licence or authority, so that each of Franchising and Eternity had infringed the MeetFresh marks within the meaning of s 120 of the Trademarks Act 1995 (Cth); Easy Way was entitled to an injunction to restrain continuing infringement by each of Franchising and Eternity; Easy Way had suffered loss and damage and each respondent would continue to make profits while continuing to infringe; Easy Way sought damages or an account of profits under s 126(1)(b) of the Act, together with additional damages under s 126(2); each of Franchising and Eternity was passing off Easy Way's name, mark, products and store fit outs as its own, and each had engaged in corresponding, misleading or deceptive conduct.

Consideration 19 In Searson v Salmon [2014] FCA 748 at [6]-[9], I set out the following principles on which an applicant can seek relief under r 5.23 of the Federal Court Rules 2011, namely: A plaintiff or applicant who seeks relief in proceedings started by an originating application supported by a statement of claim is entitled upon a default by a defendant or respondent, under r 5.23, to seek judgment based on the statement of claim without needing to rely on evidence supporting that claim. The Court may give judgment in the party's favour provided that the pleading, on its face, makes that claim and the claim falls within the jurisdiction of the Court: Australian Competition and Consumer Commission v dataline.net.au Pty Ltd (2006) 236 ALR 665 at 677-678 [45] per Kiefel J; Yeo v Damos Earthmoving Pty Ltd; in the matter of Beachwood Developments Pty Ltd (in liq) [2011] FCA 1129 at [9] per Gordon J; Sanko Steamship Co Ltd v Australia Gloria Energy Group Pty Ltd [2012] FCA 798 at [6] per myself. However, as Kiefel J noted in Dataline 236 ALR at 678-679 [49]-[51], the Court could permit the applicant to lead some evidence in relation to the relief sought. That is because r 5.23 operates on the premise that the defaulting party has admitted the facts of the claims as pleaded and the Court then considers whether those facts establish an entitlement to the relief claimed. Her Honour held that the analogue of the rule required that the face of the statement of claim must show a right to some form of relief (236 ALR at 679-680 [53]). Kiefel J held that the matters alleged in the statement of claim must permit the conclusion that some relief may be granted, even if its grant were subject to other considerations. Such a conclusion is at least possible in cases where a declaration and an injunction are sought. An applicant may establish some right or legal interest or legal conclusion capable of resolving a controversy that might properly be expressed in the form of a declaration or establish the infringement of a right or a standard set by a statute. Subject to considerations that might weigh against the grant of relief of those kinds, the applicant may be said to have an "entitlement". It does not have to be absolute for the purposes of the rule, which is discretionary in nature in any event. Her Honour suggested that, in an appropriate case, such as one brought by a regulator in respect of protecting the public interest, the court might make a qualified declaration, notwithstanding the traditional restraint exercised by courts in making binding declarations without having held a contested hearing of the disputed facts (236 ALR at 680-681 [54]-[59]). She suggested that, in a default judgment context, such declarations might be prefaced by a statement (236 ALR at 681 [59]): "Upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the court." 20 I am satisfied on the evidence that each of Franchising and Eternity was served by the methods, and in the ways that I have found above, in Franchising's case not later than 3 February 2021 and in Eternity's case not later than 15 March 2021. In any event, I am satisfied that each was served on or by 28 April 2021 and that it had notice of the proceeding against it and the application for default judgment. 21 I am also satisfied on the evidence before me and by reference to the allegations in each statement of claim that Easy Way is entitled to the declarations and injunction that it seeks against each of Franchising and Eternity as relief that it claimed in the respective originating application, as well as an order that it is entitled to damages or an account of profits at Easy Way's election, together with costs.

Conclusion 22 For these reasons, I will make orders in the form sought by Easy Way in each proceeding. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rares.