Grey v Mango Pre Paid Calling Cards Pty Ltd

nature of the application and claim 2 The applicants' claim, which was lodged on 10 February 2004, sought relief pursuant to s 82 and s 87 of the Trade Practices Act 1974 (Cth) ('the Act') or, alternatively, damages for breach of contract. The legislative basis for the applicants' primary claim is s 86 of the Act. The legislative basis for the alternative claim is asserted to be the accrued and associated jurisdiction of the Court. 3 The applicants seek an order declaring the whole of an agreement in writing dated 11 June 2003 between them of the one part and the first respondent of the other part ('the Agreement') to be void ab initio pursuant to s 87(2)(a) of the Act. Further, they seek an order that all or any one or more of the respondents refund to them the sum of $157 500. Alternatively, they seek that damages be awarded and, to the extent necessary, an order be made varying the Agreement. The Agreement involved the sale from the first respondent to the applicants of 10 Mango Express phone card vending machines together with the right to resell 'Mango Calling Cards' from certain retail outlets to be established pursuant to the Agreement. The claim alleges the making of 18 pre-contractual representations. It is pleaded that certain of those representations were misleading or deceptive, or likely to mislead or deceive, contrary to s 52 of the Act. It is also alleged that the first respondent exerted undue pressure on the applicants to sign the Agreement and used unfair tactics against the applicants within the meaning of s 51AC(3)(d) of the Act. In relation to the second respondent, who was at all material times the sole appointed director of the first respondent, liability for unconscionable conduct is pleaded as a consequence of what is said to have been the second respondent aiding, abetting, counselling or procuring that conduct, or otherwise being knowingly concerned in, or a party to, such conduct. Against the third respondent, who was a director, employee or agent of the first respondent and held himself out to the applicants as the 'marketing director' of the first respondent, it is likewise pleaded that he was involved in unconscionable conduct. 4 In relation to the liability arising independently of the Act, it is claimed that the vending machines were not reasonably fit for their purpose and were not of merchantable quality. Further it is claimed that the first respondent failed to establish the retail outlets and the locations for the vending machines. Additionally, it is alleged the first respondent failed to provide to the applicants all necessary point of sale advertising material with respect to the 'Mango Calling Cards' and sold such cards to another person so that the first respondent repudiated the Agreement. These circumstances are said to be contrary to the pre-contractual representations.

evidence 5 The affidavits relied upon by the first respondent in support of its motion is the affidavit of Thaw Thaw Htin sworn on 13 May 2004; the affidavits of Mr McConnell (of the Sydney solicitors for the first respondent) sworn on 23 June 2004 and 20 July 2004, as admitted into evidence; and the affidavit of Mr Yates (the current sole director of the first respondent) sworn on 21 July 2004. 6 The applicants rely on the affidavits of a solicitor, Ms Cowan, sworn on 14 May 2004 and 5 July 2004 as admitted into evidence.

Background circumstances 7 The proceeding was set down for directions on 8 March 2004 but there was no appearance for the respondents who were not served until 10 March 2004. The directions hearing was adjourned to 16 March 2004. On this latter date there was again no representation for the respondents so the directions hearing was further adjourned to 6 April 2004. 8 On 1 April 2004 the first respondent's solicitors wrote to the applicants' solicitors and sought their consent to have the proceedings transferred to the New South Wales Registry. In a letter dated 5 April 2004 the applicants' solicitors stated that they would not agree to the request and that 'further, unless your client instructs solicitors in Western Australia to appear at the hearing on 6 April 2004, we will request that the application be heard in the absence of your client'. 9 On 6 April 2004 there were no appearances for any of the respondents. However, on that day the first respondent's solicitors sent a letter by facsimile to the applicants' solicitors advising that they had instructions to appear for the first respondent and to file a notice of motion seeking a transfer of the proceedings to the New South Wales Registry. They requested that in the meantime the applicants' solicitors appear on their behalf and obtain a timetable allowing the first respondent two weeks to seek further particulars appropriate to preparation of its defence and four weeks from the date the particulars were provided to file and serve the defence. 10 At the directions hearing on 6 April 2004 the applicants applied for judgment in default of appearance against the first respondent. They also informed the Court of the faxed letter from the first respondent's solicitors of that day. In consequence the following orders were made: '1. The applicants' minute of proposed orders dated 6 April 2004 be held over for any further submissions on 29 April 2004 at 11.15 am. 2. The first respondent file and serve any application for transfer of the proceedings by 22 April 2004. 3. Further programming orders be held over for directions on 29 April 2004. 4. Costs be reserved.' 11 Following the directions hearing on 6 April 2004 the applicants' solicitors informed the first respondent's solicitors, on that day, of the orders made and provided a copy of the applicants' minute of proposed orders which were stood over to 29 April 2004. That minute read as follows: '1. In default of appearance by the first respondent, there be judgment for the applicants against the first respondent in the terms sought in paragraphs 1 and 2 of the relief sought in the application herein, together with interest on the sum of $157,500 at the rate of 6% per annum from 1 July 2003 to the date of judgment herein, and costs. 2. The application otherwise be adjourned to 2004 for hearing as to relief sought in paragraph 3 of the application against the first respondent, and for further directions with respect to the relief sought against the second and third respondents herein, such hearing to take place in the absence of the first respondent unless it shall have filed and served an appearance not less than 7 days before the date.' 12 On 29 April 2004, the Court again convened for directions in the proceeding in accordance with the directions previously made. The applicants were represented but there were no appearances for any of the respondents. The Court amended the minute of proposed orders seeking default judgment by inserting a provision of 14 days for the first respondent to make payment into court. The resulting order in relation to judgment therefore read as follows: '1. Unless within 14 days the first respondent pays into court the sum of $157,500 together with interest at the rate of 6% per annum from 1 July 2003 to the date of payment and the sum of $3,000 on account of costs, there be judgment for the applicants against the first respondent in the terms sought in paragraphs 1 and 2 of the relief sought in the application herein, together with interest on the sum of $157,500 at the rate of 6% per annum from July 2003 to the date of judgment herein, and costs including reserved costs.' Supplementary orders were made otherwise adjourning the application for directions before the Registrar and allowing for substituted service on the third respondent. 13 Oral reasons were delivered in relation to the directions made. Those reasons recited the foregoing events and stated that no application for transfer of the proceedings on the part of the first respondent had been lodged with the Court by 22 April 2004 or at all. It was then stated that the Court, in the circumstances, proposed to make directions pursuant to FCR O 10 r 3(3). That subrule provides that 'if no respondent appears before the Court on a directions hearing, the Court may give such directions as it thinks fit'. The reasons then continued: 'I propose pursuant to O 10 r 3(3) to give directions arising from the circumstances referred to earlier in these reasons. It seems to me that the first respondent has ignored the real seriousness of the orders sought on the part of the applicants and has failed to respond to the directions made by the Court on 6 April 2004. No appearance is made for the first respondent or no attempt made to explain to the Court whether the first respondent intends to answer the case against it. In those circumstances I consider that the orders sought for the applicants would be appropriate subject to the qualification that the first respondent should have the opportunity to [put] further evidence to the Court that it has a wish to contest the application, none of which is apparent at the moment. It seems to me that the way it should do that in these circumstances is by way of payment into court in the sum in contest together with an estimate of costs in the sum of $3000 and a sum to cover interest at the rate of 6 per cent per annum on 1 July 2003. Accordingly I propose to qualify the first order sought for the applicants by a provision in that respect and to also make the second order sought for the applicants. That will allow further aspects of the litigation in the event of the payment into court not being made to be subject to directions to carry them forward in fruition.' 14 On that day the applicants' solicitors sent a facsimile attaching a minute of the orders to the first respondent's solicitors. The sealed orders were provided to the applicants' solicitors on 6 May 2004 and served on the first respondent's solicitors on 7 May 2004. 15 On 12 May 2004 the first respondent's Sydney solicitors instructed a firm of Perth solicitors. On 13 May 2004 the first respondent's Perth solicitors filed a notice of appearance. 16 On 13 May 2004 the 14 days time limit allowed for in direction 1 made on 29 April 2004 for payment into court expired. The first respondent applied to extend the time to 29 May 2004 and did so by way of motion. This was heard by Lee J on 14 May 2004. His Honour gave the first respondent leave to amend the motion to seek orders under O 35 r 7(2)(a) by 4.00 pm on 14 May 2004. He further ordered that in the interim, judgment pursuant to the order made on 29 April 2004 not be entered. The respondents' notice of motion before Lee J initially sought extension of the time limit for payment into court. The amended motion (which was filed in accordance with the leave ordered by Lee J) sought to set aside the orders of 29 April 2004. 17 On 20 May 2004 the first respondent's Perth solicitors filed a notice of appearance for the second respondent. 18 On 9 June 2004 the solicitors for the applicants filed an affidavit swearing to compliance with the orders for substituted service of the third respondent made on 29 April 2004. 19 On 9 June 2004 a directions hearing was held before the District Registrar at which the applicants and the first and second respondents were represented. It was then ordered that 'unless within 14 days of today the first respondent file and serve its affidavit or affidavits in support of the amended notice of motion dated 14 May 2004, the amended notice of motion is dismissed'. Other consequential orders were made and a settlement conference was scheduled. 20 On 23 June 2004 an affidavit of a solicitor for the first respondent was filed. It stated that due to pressures of other professional commitments in the solicitor's office, the firm had overlooked the date of the directions hearing on 29 April 2004. It was stated that the oversight was that of the solicitors and not of their client. The affidavit continued: '9. From my instructions the First Respondent has a defence available to it on the basis that: (a) Representations alleged to have been made by it were either true, or if subsequently incorrect, there was a reasonable basis for them at the time they was (sic) made; furthermore, some of the representations will be denied. (b) The vending machines were manufactured by Abberfield Pty Ltd whose officers advised representatives of the First Respondent that the vending machines were "state of the art" vending machines and would be of the latest technology. (c) Shortly after the vending machines were installed at locations they malfunctioned due to what was believed to be faulty bill acceptors, whereupon the First Respondent caused the manufacturer to initiate repairs of the faults. New bill acceptors replaced the original bill acceptors but some of the faults continued. At this point the Applicants demanded a refund of the purchase price and refused to co-operate in attempts at further repairs. (d) The operational problems with the machines was, in accordance with my instructions, the real basis of the complaints by the Applicants. (e) The First Respondent had secured 9 of the 10 locations for the machines which the First Respondent considered to be good locations and the tenth location was in the course of negotiation. (f) The First Respondent had arranged for 38 outlets for over the counter sale of cards but was then advised by the Applicants not to arrange two further outlets as they did not wish to continue the business.' 21 Subsequent directions were aimed at bringing the first respondent's motion on for hearing.

REASONING 22 It is necessary to consider the factors arising in the circumstances relevant to the exercise of the discretion to set aside par 1 of the orders of 29 April 2004 pursuant to FCR O 35 r 7(2)(a). 23 Although the first respondent's solicitors stated clearly in the relevant period that they were instructed to act on behalf of the first respondent and intended to enter an appearance, they did not do so. I therefore find that at the hearing on 29 April 2004 the first respondent had retained solicitors but had no representation on record as its solicitors had not filed an appearance. 24 The first respondent contends that neither the notice of the adjournment from 6 April 2004 to 29 April 2004 nor the orders made on the latter date were duly served on the first respondent because they were each served upon the first respondent's solicitors (who were not then on the record). Notice of the assumption of instruction having been given to the applicant's solicitors, they were professionally bound to communicate with the solicitors for the first respondent. Nevertheless the first respondent contends that in the case of service of documents in the proceeding, the rules required personal service upon the first respondent.

Appearance 25 It is provided in FCR O 4 r 5 as follows: '5 Where there is a respondent, an application shall bear a note that: (a) if there is no attendance before the Court by the respondent or his counsel or solicitor at the time and place stated in the application, the proceeding may be heard and the respondent will be liable to suffer judgment or an order against him; and (b) before any attendance at that time the respondent must enter an appearance in the Registry.' 26 The first respondent contends that non-compliance with this rule in respect of entry of appearance for the first respondent had the consequence that the applicants were bound to serve the first respondent personally. The rule is one directed to the form of an application and to establishing a pre-condition to appearance by a respondent. The application filed by the applicant complied with the rule and there was no appearance by the respondents or any of their counsel or solicitors. The rule was not transgressed by the applicant. There was no relevant non-compliance.

service 27 FCR O 9 r 4 provides that a notice of appearance shall show 'an address for service in accordance with rule 6 of Order 7'. That latter rule is examined below. The scheme of FCR is that the mechanism by which an address for service is entered on the record is by lodgement of the notice of appearance. The consequence is that where no such notice is filed by a party who is otherwise legally represented, there is no notice of an address for service on those solicitors. There is thus a direct link between appearance and service. The failure of the first respondent to file a notice of appearance therefore had the consequence that there was no address for service on the record for the first respondent. 28 The principal order in respect of service is FCR O 7. That provides in r 1 that an originating process shall be served personally on each respondent. FCR O 7 r 2 provides the manner in which personal service is to be effected. FCR O 7 r 3 dispenses with the need for personal service unless expressly required. It is not in contention here that the originating process was properly served. 29 Where personal service is not required, FCR O 7 r 4(1) provides the manner in which the document may be served. Included in that rule is provision for the leaving or posting of a document at 'the proper address' of the person to be served. FCR O 7 r 4(2) provides that for the purposes of sub-rule (1) the proper address of a person shall be the address for service of that person in the proceeding but if, at the time when the copy is left or posted, the person has no address for service in the proceeding, the person's usual or last known place of business or of abode shall be the person's address. In the circumstances pertaining to this present proceeding, there was no address for service in the proceeding so that service in accordance with FCR O 7 r 4 should have been to the first respondent's usual place of business. I agree with the first respondent that there is no evidence adduced by the applicant that this course was impractical. 30 FCR O 7 r 4A provides differently where the person to be served has a solicitor acting and that solicitor has another solicitor as agent whose address is the person's proper address. There was no such agent at the relevant time so the preconditions of this rule are not satisfied here. 31 FCR O 7 r 6(1) requires that an address for service must be the address of a place within the District of the Registry in the proper place. FCR O 1 r 4 defines 'proper place' to mean (relevantly where there has been no transfer) the place at which the proceeding was commenced. However, FCR O 7 r 6(2) provides that 'if a person is represented by a solicitor, the address for service must be the address of the solicitor or of the solicitor's agent located within the District for the Registry in the proper place'. Read in the context of FCR O 7 r 6(1), I consider FCR O 7 r 6(2) should be read as if the words 'located within the District for the Registry in the proper place' qualified not only the reference to the solicitor's agent but also the reference to the solicitor. The consequence is that the first respondent did not have an 'address for service' in the proper place in accordance with this rule. 32 FCR O 7 r 8 provides that where a solicitor makes a notation on a copy of a document served that he or she accepts service, the document is taken to have been duly served unless the solicitor is shown not to have had the requisite authority. There is no evidence of such a notation here so the rule cannot assist the applicants. 33 Both FCR O 7 r 9 and O 7 r 10 recognise instances where service in accordance with the rules may be impractical. Neither is applicable on the facts. 34 That brings attention to FCR O 7 r 11 which reads: '11(1) Unless the Court otherwise orders, the filing of a document has effect as service of the document on a person, if personal service is not required and: (a) the person to be served: (i) is in default of appearance; or (ii) has entered an appearance but has no address for service in the proceeding; or (b) there is proof of non-delivery of the document, being a document sent by the Court to the person's proper address. 11(2) For paragraph (1)(b), the proper address of a person is: (a) the address for service of the person in the proceeding; or (b) if, when the document is left or posted the person has no address for service in the proceeding, the person's last known place of business or of abode.' 35 The applicants contend that the filing of the order of 29 April 2004 on 6 May 2004 constituted the filing of a document to which this rule applied. The relevant portion of the rule is in par (a)(i). I agree with the applicants that - seemingly contrary to what is stated in the Explanatory Statement to Statutory Rules 2003 No. 35 - pars (a) and (b) of this rule are to be read disjunctively in subrule 11(1) and are also applicable to documents other than those being sent by the Court. The order of 29 April 2004 was not a document of which personal service was required. None of the orders made on 29 April 2004 was an 'otherwise order' under FCR O 7 r 11(1)(a). Therefore paragraph 11(1)(a) of the rule is not excluded from having application. For FCR O 7 r 11(1)(a) to have application (as the way the applicants contend) it is necessary for the order of 29 April 2004 to come within the description of 'document'. That term is defined in O 1 r 4 and would include an order, that being a record of information on which there is writing. The person to be served, the first respondent, was in default of appearance. Therefore, unless the Court now otherwise orders, the filing of the order 'has effect as service of the document on' the first respondent. 36 However, it is necessary for the Court to reconcile the result of the application of FCR O 7 r 4(2) and of the application of FCR O 7 r 11(1)(a). In my view the application of the latter rule must yield to the application of the former. This is because where the usual place of business of the person in default is known to the party seeking to serve the document, it cannot be thought that it was the intention of the latter rule to undercut the possibility of service taking place through application of the former rule. The latter rule is clearly intended by its terms to provide a last ditch method for the processes of litigation in the Court to continue when all else has failed to effect service. While it remains possible for service to be effected in accordance with another rule, it could not be said that there is any room intended for the operation and application of the latter rule to the exclusion of the former rule. 37 Furthermore, the address of the first respondent's solicitors was known to the applicants' solicitors and they caused those solicitors to be served. By the applicants' own actions, they negated any possibility of an inference that they considered that the mere filing of the document would effect service in the circumstances. 38 These considerations support a conclusion that in the event it were material to do so, the Court should 'otherwise order' that the provisions of FCR O 7 r 11(1)(a) do not apply to the filing of the order of 29 April 2004 on 6 May 2004. 39 The submissions for the first respondent refer to FCR O 7 r 12. This provides that where the rules or a court require service by the court, the notice or document shall, unless the rules otherwise provide or the court otherwise orders, be sufficiently given or served in any manner in which the document not requiring personal service may be served under the order. I agree with the applicants that this rule is applicable only where the rules of court or a court order require service by the court, that not being the case here. This rule does not therefore support the first respondent on the facts as no rule or court order required court service. 40 The consequence is that the obligation upon the applicants in respect of service of the orders of 29 April 2004 was to serve them at the first respondent's usual place of business: FCR O 7 r 4(2). Failure to so serve would be a relevant consideration for the Court to consider on in the exercise of its discretion pursuant to FCR O 35 r 7(2)(a) to set aside par 1 of the orders made on that date. 41 There is no inconsistency between the resulting conclusion that the orders should have been served by the applicants' solicitors upon the first respondent at its usual place of business and the rule of professional conduct requiring the applicants' solicitors to communicate with the first respondent's solicitors, of whom they had notice. The professional conduct rule relates to communications. The rule of the Court relates to service. Service is placed by the FCR into a different category from the conduct of communications in the course of discharging professional instructions.

whether service on solicitors sufficient 42 The applicants alternatively contend that even if FCR O 7 r 11(1)(a) does not apply in their favour, service on the first respondent's solicitors nevertheless constituted proper service on the first respondent. In support of this the applicants point to a number of circumstances. First, the first respondent's solicitors had written to the applicants' solicitors on 1 April 2004 advising that they had received instructions to act for the first respondent, and on 6 April 2004 advising that they had instructions to appear for the first respondent. Second, a director of the first respondent confirmed that those solicitors were duly instructed on behalf of the first respondent on or about 12 March 2004. Third, the first respondent's solicitors admit that they were on notice of the applicants' intention to seek the orders. Fourth, there is no dispute that the first respondent's solicitors were sent a copy of the order made on 29 April 2004 by facsimile on that date and were sent the sealed order on 7 May 2004. Fifth, the first respondent's solicitors did not object to documents being served on it on behalf of the first respondent, nor did it request that any of the papers be sent directly to the first respondent. Sixth, it would have been unprofessional for the applicants' solicitors to write directly to the first respondent. In short, it is said there was nothing to put the applicants' solicitors on notice of any need to serve or inform the first respondent directly, having served or informed its duly appointed solicitors. In these circumstances the applicants submit the first respondent's solicitors were its agents for service: Ditfort v Temby (1990) 26 FCR 72 at 77-80. Alternatively it is submitted that the first respondent is estopped from denying that the service was valid and has also waived its right to any further service: Ditfort at 80. 43 The applicants' submissions on estoppel and waiver did not develop beyond assertion and so were not made out. Ditfort may be distinguished as a case where personal service was required under the Bankruptcy Rules. In relation to agency, the applicants rely on the presumption of imputation of knowledge of agent to principal. That cannot assist compliance with the rules (where a distinction is drawn between service of a solicitor and of a party) but it is an issue relevant to the exercise of discretion under FCR O 35 r 7(2)(a).

uncertainty in order 44 It is in any event also submitted for the first respondent that the form of order failed to comply with FCR O 35 r 4. This reads: '4 (1) Subject to subrules (3) and (4), an order which requires a person to do an act shall specify the time within which he is required to do the act. (2) The time shall, unless the Court otherwise orders, be 14 days after the date of service of the order on the person required to do the act. (3) Subrules (1) and (2) apply to an order which requires a person to pay money into Court, but otherwise do not apply to so much of an order as requires a person to pay money. (4) Where an order requires a person to do an act within a specified time, the Court may, by order, require him to do the act within another specified time. (5) Where an order requires a person to do an act but does not specify a time within which he is required to do the act, the Court may, by order, require him to do the act within a specified time.' 45 In Skahill v Kestral Holdings Pty Ltd [2000] WASCA 185 at [12] it was stated by Owen and Heenan JJ that the order ought normally to be framed so that the party is required to comply within a specified number of days after the order has been served on the party. In Vipond v Masters (unreported, Supreme Court of Western Australia, Master Staples, 28 January 1987) it was stated that it must be clear whether the time for doing the act runs from the making of the order or service of it. He also stated that where the order is not served until after the expiration of the time fixed for the doing of the act, there may be a doubt concerning the time for compliance. 46 Here the entered order was served on 7 May 2004, that is within the time for compliance if that time ran from the making of the order. The order did not specify that time ran from the service of the order. (Notification to the first respondent's solicitors on the day the order was made was not service because the order had not then been entered: see FCR O 36 r 8(2)(b)). However, although the order did not refer to time running from service, it was not so uncertain that compliance with it was not possible. The order was an order 'otherwise ordering' so that FCR O 35 r 4(2) requiring time to run from service would not have been applicable. In my view the order made on 29 April 2004 did require the first respondent to do an act, namely to pay money into Court. Therefore FCR O 35 r 4 applied and was satisfied.

irregularity in order 47 In the first respondent's supplementary submissions it was sought to raise for the first time an argument that the default judgment could not have been properly based on FCR O 10 r 3 and should have been based on FCR O 10 r 7. The former rule (as it stood on 29 April 2004) permitted a court '(3) If no respondent appears before the Court on a directions hearing, the Court may give such directions as it thinks fit'. The latter (which was omitted by Statutory Rule No 281 of 2004, effective 30 August 2004) provided: '(1) If a party fails to comply with an order of the Court directing the party to take a step in the proceeding, the Court may: (a) if the party is an applicant - order that the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the party; or (b) if the party is a respondent - give judgment or make an order against the party; or (c) order that the step in the proceeding be taken within the time limited in the order. (2) The Court may make an order of the kind mentioned in subrule (1) or any other order or may give such directions, and specify such consequences for non-compliance with the order, as the Court thinks just. (3) This rule does not limit the powers of the Court to punish for contempt.' 48 FCR O 10 r 7 was considered in particular by Wilcox and Gummow JJ in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 396 - 397 where they said: 'The discretion conferred by O 10, r 7 is unconfined, except for the condition of non-compliance with a direction. … two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whatever the applicant's state of mind or resources - in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non-compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the judge that the applicant is either subjectively unwilling to co-operate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding. In the second of the two situations we postulate, a significant continuing default, it does not really matter whether there have been earlier omissions to comply with the Court's directions. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non-compliance is of the essence of this situation. If, when the Court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceeding solely because of the default.' 49 The applicants initially objected to the introduction of this issue on the ground that it was raised for the first time in supplementary final submissions. The Court subsequently invited written submissions from the parties. 50 The first respondent contends that even if the Court did or could act pursuant to FCR O 10 r 7 it would not have been open to the Court to make a default order except on the bringing of a motion on notice supported by evidence as to the merits of the application. That follows from the application of FCR O 19: see Australian Securities Commission v Macleod (1994) 54 FCR 309 at 312 - 313 per Drummond J. The reasoning in Macleod has been regularly followed in this Court. I agree with the submissions for the first respondent that the orders made on 29 April 2004 went beyond the giving of directions and so were not supportable by reference to FCR O 10 r 3. I also agree with the first respondent that for the applicants to be entitled to the orders made on that date the Court was required to a have before it the type of evidence referred to by Drummond J in Macleod at 312 - 313. It is therefore a significant consideration that the orders made on 29 October 2004 were made in the absence of such evidence and were beyond power (both on that basis and the basis they went beyond the giving of directions).

Whether defence arguable 51 It is argued for the applicants that no arguable defence is revealed by the first respondent. It is said that the first respondent must show a prima facie defence on the merits: Davies v Pagett (1986) 10 FCR 226 at 231; Registrar of Aboriginal Corporations v Murnkurni Women's Aboriginal Corporation (1995) 58 FCR 125 at 127-128. 'Arguable' in this context is said to mean a defence carrying some degree of conviction (Alpine Bulk Transport Co Inc v Saudi Eagle Shipping Co Inc [1986] 2 Lloyd's Rep 221 at 223) or one that is credible with real prospects of success: Rollond v Bank of Western Australia Ltd (unreported, Supreme Court of Western Australia, Full Court, 3 September 1988) per Malcolm CJ at 40-41, with whom Kennedy and Owen JJ agreed. It is also submitted that to establish an arguable defence the supporting affidavit must go beyond mere assertion: Murnkurni at 127. 52 This submission must be considered in the context of the prior submission concerning the need for the applicants to have brought an affidavit establishing evidence entitling them to judgment. The present evidence before the Court is that of the first respondent's solicitor, Mr Connell that a defence is available on the bases set out above. It raises a prima facie case for the defence and remains unrebutted by the applicants.

dispensation with compliance 53 FCR O 1 r 8 provides the Court with a discretion to dispense with compliance with any of the requirements of the Rules either before or after the occasion for compliance arises. The scope of the discretion was considered by the Full Court in Lazar v Taito (Aust) Pty Ltd (1985) 5 FCR 395. Relevant to the exercise of the discretion in Lazar was the fact that documents were served on the party's solicitors who did not refuse to accept service or disclaim any instruction to receive them or accept service and the error to not effect personal service was held to be one of procedure: at 403-404 per McGregor J and at 413-414 per Neaves J. Neaves J, with Fox J agreeing on this issue, accepted that FCR O 1 r 8 confers a very wide discretion to dispense with compliance (in that case with personal service in a contempt of court prosecution). McGregor J considered the power may be exercised particularly where there is no apparent injustice and the alleged error is only one of procedure. 54 The application of the reasoning in Lazar leads to this position. The requirement for the applicants to serve the first respondent at its usual place of business is a requirement which, consistently with Lazar, could be dispensed with. However, the making of the orders for entry of judgment without compliance with FCR O 19 is not such a requirement; it is an irregularity, not a matter of procedure. This is because compliance with FCR O 19 on the reasoning in Macleod is directed to the substantive issue of whether the applicants can make out their case.

discretionary considerations 55 Nevertheless, the applicants contend that even if the judgment is irregular that should not mean that it must be set aside, for the following reasons. First, FCR O 35 r 7(2)(a) is discretionary in its terms. Second, in the context of FCR O 1 r 8, an irregular judgment will not be set aside in the absence of substantial prejudice: Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245 at 250-251; Australia & New Zealand Banking Group Ltd v Kostovski (unreported, Supreme Court of Victoria, Chernov J, 2 July 1997) at 5-7; Lynn v Dronspace Pty Ltd (unreported, Federal Court of Australia, Einfeld J, 25 June 1992) at [15] and [27]. Third, an irregular judgment will not necessarily be set aside: Dependable Database Data Pty Ltd v ABI-Australian Business Information Pty Ltd (unreported, Federal Court of Australia, Burchett J, 16 June 1995) at [9] and [10]. Fourth, the first respondent has not adduced any evidence of prejudice, in circumstances where it is open to the Court to infer that the first respondent had the knowledge through its solicitors: Baker v Shire of Albany (1994) 14 WAR 46 at 56; Dal Pont, Law of Agency, Butterworths, Australia, 2001 at [22.43]-[22.44]. Fifth, the applicants rely on their earlier submissions that the first respondents have not adduced evidence to support the existence of any defence. Sixth, the first respondent did not raise the issue of power to make the orders until three months after the order was made. Seventh, the first respondent has not made payment into Court nor given any explanation for that failure. 56 These submissions raise important considerations. Yet I do not consider they can outweigh the necessity for the Court to consider the evidence referred to in Macleod at 720. The orders were made and the judgment consequently entered in circumstances where the Court has not considered such evidence. That consideration occasions the balance of factors present here to tip in the first respondent's favour when considered in all the circumstances. It is also of relevance that FCR O 35 r 7(2)(a) is, in terms, a rule which gives rise to a discretion which may be exercised 'whether or not the absent party had notice of the motion for the order'; that is, even if notice to the first respondent's solicitors had led to knowledge in the first respondent of the impending motion.

conclusion 57 For these reasons I consider the first respondent's motion should be granted. Counsel should be heard as to costs. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice RD Nicholson.

Counsel for the Applicants: MD Cuerden

Solicitor for the Applicants: Hammond Worthington

Counsel for the First Respondent: SK Shepherd

Solicitor for the First Respondent: Bennett & Co

Counsel for the Second, Third and Fourth Respondents: There was no appearance for the Second, Third and Fourth Respondents

Date of Hearing: 22 July 2004

Date of Last Written Submissions: 22 November 2004

Date of Judgment: 17 December 2004