Maggie Sottero Designs LLC v Loner

NICHOLAS J: 1 Before me is an application for default judgment pursuant to r 5.23(2)(c) and (d) of the Federal Court Rules 2011 (Cth) ("the Rules"). The applicant, Maggie Sottero Designs LLC, is a company based in the United States of America engaged in design, manufacture and sale of bridal gowns under the names, inter alia, "Maggie Sottero", "Sottero & Midgley" and "Rebecca Ingram". The respondent, Mr Jack Loner, is an individual who has operated a business manufacturing, promoting and selling bridal gowns from the website at www.maggiesotterodress.com (the "website"). 2 The applicant commenced this proceeding on 22 May 2017 seeking relief for trade mark infringement, copyright infringement, contraventions of Schedule 2 of the Competition and Consumer Act 2010 (Cth) ("ACL") and passing off. Before commencing this proceeding, the applicant had filed another proceeding against PayPal Australia Pty Ltd ("PayPal") for preliminary discovery of documents held by PayPal which revealed the identity of the account holder of an account used by the respondent in connection with the business he conducted through the website. The documents produced by PayPal, pursuant to orders made in that proceeding on 11 May 2017, revealed the respondent's name, his street address in the United States of America and his email address. 3 On 30 May 2017, the applicant served the originating application and statement of claim in this proceeding on the respondent pursuant to orders for service made on 23 May 2017 granting the applicant leave to serve the respondent out of the jurisdiction. The originating application included prayers for interim relief, including interlocutory injunctions. The applicant's application for interlocutory relief was heard on 19 June 2017. The respondent was notified of the hearing date but did not appear. Orders were made on 19 June 2017 granting the interim relief substantially in the form sought by the applicant. 4 The respondent has failed to file a defence, or file an address for service or to attend any hearings in the proceeding. 5 Rules 5.22 and 5.23(2)(c)-(d) of the Rules provide: 5.22 When a party is in default 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. 5.23 Orders on default … (2) If a respondent is in default, an applicant may apply to the Court for: … (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; … 6 In Engineered Thermal Systems Pty Ltd v Salmon, In the Matter of Salmon and Speck Pty Ltd (In Liq) [2012] FCA 1159 Foster J, summarising the observations of Flick J in Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 ("Speedo"), said at [36]: [36] In Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227, Flick J discussed the correct interpretation of r 5.23(2)(c) of the general rules at [15]-[26] in his Honour's Reasons for Judgment. At those paragraphs, his Honour collected the more important relevant authorities and summarised the appropriate principles. These principles may be further summarised as follows: (a) The power afforded to the Court is discretionary. The discretion should generally be exercised with caution (at [20]-[21]); (b) The discretionary power to enter a judgment by default is enlivened when an applicant makes application to the Court for an appropriate order. In the absence of such an application, the power cannot be invoked (at [22]); (c) There is a difference in the terms by which the limits of the power conferred by former O 35A r 3(2)(c) are expressed and the wording of the current r 5.23(2)(c). Notwithstanding that difference in language, the requirement imposed is not that an applicant prove by way of evidence the claim which is 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. The facts as alleged in the Statement of Claim are deemed to have been admitted by the respondent who is in default (at [23]); (d) In order to be satisfied that an applicant is entitled to the relief claimed in the Statement of Claim, the Court needs to be satisfied that each element of the relevant civil wrong involved is properly and discretely pleaded in the Statement of Claim (at [24]); and (e) In addition to the facts alleged in the Statement of Claim, the Court may permit recourse to limited further evidence. But it may not admit evidence which would alter the case as pleaded (at [25]). 7 Relevantly, once a respondent is in default, an applicant is not required to prove the claim by evidence but is only required to establish that on the face of the statement of claim there is a claim for the relief sought and that the claim falls within the jurisdiction of the Court: see Yeo v Damos Earthmoving Pty Ltd, in the matter of Beachwood Developments Pty Ltd (in liq) [2011] FCA 1129 at [9]. 8 In BJ International Limited v Ashgar (No 2) [2013] FCA 580 at [13] and [14], Flick J said with respect to r 5.23(2)(d): [13] Where a party is in default - be it an applicant or a respondent - the opposing party need not make an application for an order pursuant to r 5.23(1) or (2). And if an application is made, the Court retains a discretion as to whether or not to make any order or an order of a particular kind. Whether that discretion should be exercised would depend upon (inter alia) the nature of the default itself, any explanation provided for the default, the manner in which the party in default has conducted the proceeding to-date and whether the Court could have any confidence that a proceeding would henceforth be conducted in an orderly and proper manner. [14] Without being exhaustive, an order may be made entering judgment against a respondent pursuant to r 5.23(2)(d) in those circumstances where the default which has occurred is such as to manifest an intention on the part of a respondent not to comply with orders which have been made with a view to preparing a case for hearing. A single act of default may be sufficient; in other circumstances a single act of default may not warrant an order being made. Much may also depend upon whether a respondent has been given adequate notice of an intention to make an application for judgment to be given and an opportunity for the respondent to remedy a past act of default. 9 There is no question that the respondent is in default within the meaning of r 5.22. As I have already observed, the proceeding was commenced by the filing of an originating process on 22 May 2017. The originating application, the statement of claim and a number of affidavits were served on the respondent on 31 May 2017 by registered post and by email in accordance with the orders for service made 23 May 2017 ("service orders"). The respondent has also been served with further affidavit evidence, the orders made 19 June 2017 and the present application. The respondent has not filed an address for service as required by r 5.02 of the Rules, nor has he filed a defence as required by r 16.32 of the Rules. In fact he has not taken any step in the proceeding. 10 Furthermore, having regard to the affidavit evidence of Mr Davies and Ms Savio, I am satisfied that the respondent has been notified of the due date for filing a defence (namely 12 July 2017) and has been served with the pleadings, the present application and the applicant's evidence in support. Mr Davies deposed as to service of these documents on the respondent in accordance with the service orders by email and annexed to his affidavits copies of notifications of successful delivery of email correspondence and court documents to the email addresses for the respondent listed in the service orders. There has been no response from the respondent save for one particular email in which he wrote to the applicant's solicitors, Spark Helmore, asking them, in substance, to bring an end to the litigation. 11 As I have mentioned, the applicant's claim for relief includes allegations of trade mark infringement, copyright infringement, contraventions of the ACL and passing off. The causes of action pleaded in the statement of claim are plainly within the jurisdiction of this Court. In my opinion, having considered the originating application and statement of claim that has been filed by the applicant, it is apparent that there is on the face of the statement of claim a claim for the relief sought. In particular, I am satisfied that the elements of the applicant's claims for trade mark infringement, copyright infringement, contraventions of ss 18, 29(a), 29(g) and 29(h) of the ACL and passing off have been properly and distinctly pleaded. As a result of the respondent failing to file a defence, the allegations in the statement of claim are taken to be admitted: see r 16.07(2) of the Rules; Speedo at [23] and Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2007] FCAFC 146 at [42]. 12 The applicant relied on a substantial body of evidence in support of its application for default judgment, including affidavits from Mr Davies, a solicitor in the employ of the applicant's solicitors, Spark Helmore, and Ms Kym Bournes, the general manager of the applicant's Australian affiliate, Maggie Designs Pty Ltd. Much of this evidence was also relied upon by the applicant in support of its application for the interlocutory injunctions which I ordered on 19 June 2017. Although it is not strictly necessary for me to have recourse to this evidence for the purposes of the present application, the matters deposed by Mr Davies and Ms Bournes are consistent with, and support, the allegations in the statement of claim and, in my view, strongly favour exercise of the discretionary power under r 5.23 of the Rules to grant the injunctive relief sought. 13 The final injunctions that I propose to grant generally reflect the terms of the interlocutory injunctions I granted on 19 June 2017 though they are in slightly narrower terms than those that were sought by the applicant. 14 The applicant also sought an order that an inquiry be held to determine the extent of the applicant's loss and damage suffered by reason of the respondent's conduct and to assess the quantum of damages (including additional damages) to which the applicant may be entitled. I am not satisfied that it is appropriate to make an order for an inquiry in the absence of any details as to the nature or quantum of the claim for pecuniary relief. 15 What I will do is include in the orders that I make a provision allowing the applicant an opportunity to consider its position with regard to pecuniary relief. In the event that the applicant wishes to press its claim for pecuniary relief it can file its affidavit evidence in support of that claim. In the event that the applicant does not wish to proceed with its claim for pecuniary relief I will at some appropriate time make a further order "otherwise dismissing the proceeding" with a view to bringing the proceeding to finality. 16 The applicant also sought very broadly expressed declaratory relief. In circumstances where I am minded to grant injunctive relief substantially in the form sought by the applicant, I do not think it is either necessary or desirable to make the declarations sought by the applicant. 17 The applicant sought an order for payment of its costs of the proceeding on an indemnity basis. Counsel for the applicant submitted that a special costs order was warranted in view of the respondent's failure to defend the proceeding and the hopelessness of any defence he might have entered. 18 The principles applicable to an award of indemnity costs are well established: see eg Re Wilcox; Exparte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 per Cooper and Merkell JJ at 156-157 and Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J at 232-233. The respondent's failure to defend the proceeding or enter a defence is not, in my view, a special or unusual feature that would warrant a departure from the general rule that costs be payable on the ordinary basis. The case has not been defended and the respondent has not sought to delay or resist any of the applications brought by the applicant. The circumstances of this case do not, in my view, warrant the making of an order for the payment of costs other than on a party and party basis. 19 There will be orders accordingly. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.