Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216 | Case summary

2242/06 Northumbrian Icecream Company Limited & ors v Breakaway Vending Pty Limited & ors JUDGMENT 1 HIS HONOUR: According to the Statement of Claim, the first plaintiff Northumbrian Ice Cream Company Limited manufactures ice drink machines and consumables under the brand names and trade marks "Polar Krush" and "Ice Devil", and maintains an internet website with the domain name "polar krush". The second plaintiff Impact Design Accessories Pty Ltd is its head distributor in Australia. On 21 February 2006, Northumbrian and Impact entered into a Sub-Distribution Agreement with the first defendant Breakaway Vending Pty Limited. By motion filed on 4 September 2006, the plaintiffs ask the court to enter judgment by default in their favour for damages to be assessed for breach of contract. breach of fiduciary duty, and for defamation, arising out of the maintenance of a website by Breakaway named "polarkrushsucks.com", which contains material adverse to the plaintiffs. In the summons, the plaintiffs also claim related declaratory and injunctive relief. 2 The plaintiffs applied ex parte to Nicholas J as Duty Judge on 5 April 2006, when his Honour granted leave to the plaintiffs to file a summons, abridged time for service, made the summons returnable on 10 April 2006 before the Duty Judge, and granted an ex parte injunction. The plaintiffs filed their summons on 6 April 2006. On 10 April 2006, Barrett J granted leave to the defendants to file in court a Notice of Appearance, which was filed that day on their behalf by Chapman & Chapman, solicitors. The ex parte injunction was continued by consent, and the proceedings were stood over to 24 April 2006 before the Registrar. 3 On 24 April 2006, the proceedings were stood over to 8 May 2006 before the Registrar. On 8 May 2006, there was an appearance for the plaintiff, who mentioned the matter for the defendant. Directions were made that a Notice to Produce may be made returnable on 22 May, and the proceedings were stood over to that date. 4 On 22 May, there was again an appearance for the plaintiff, mentioning the matter for the defendant. Directions were made, apparently by consent, that a Statement of Claim be filed by 5 June, a Defence by 19 June, and the proceedings were stood over to 26 June. 5 The plaintiffs filed their Statement of Claim on 22 June. When the matter returned before the Registrar on 26 June 2006, it had not been served (although an unsealed copy had been forwarded to the defendants' solicitors on 21 June). There was an appearance by counsel for the plaintiff, who is recorded on the file as having mentioned the matter for the defendant. The file records that directions were made by consent that a Defence be filed by 17 July, and the proceedings were stood over to 24 July. 6 The evidence of service of the statement of claim is contained in an affidavit of Alexander Francis Xavier Moriarty, solicitor, sworn on 1 September 2006. Relevantly, he deposes: 7. On 11 July 2006, I served Chapman & Chapman solicitors, the solicitors for the defendants, with a sealed copy of the plaintiffs' Statement of Claim in the proceedings by express post. A copy of the covering letter under which the sealed copy of the Statement of Claim was posted to Chapman & Chapman is annexed at page 5 of this affidavit. The Statement of Claim itself is over 100 pages long and I crave leave to refer to the sealed Statement of Claim enclosed with the letter without annexing a copy to this affidavit. 8. On 11 July 2006, I served the defendants, with the document referred to in the preceding paragraph in the following manner: (a) I caused the document to be placed in an express post envelope addressed to Chapman & Chapman as solicitors for the defendants; and (b) I caused the envelope addressed to Chapman & Chapman to be placed with Tucker & Cowen's outgoing mail on 11 July 2006. 7 It will be necessary to return to the adequacy of this affidavit in due course. 8 On 24 July 2006, there was no appearance by either party. A letter issued addressed to the solicitors for both parties to the effect that if there was no appearance by the plaintiff on 24 August 2006, the court may dismiss the proceedings. 9 On 24 August, before the Registrar, counsel appeared for the plaintiffs and there was no appearance for the defendant. A direction was made that the plaintiffs file and serve any motion for default judgment by 1 September, and the proceedings were stood over to 21 September. It does not appear that there was any notification of this to the defendants. 10 On 4 September, the plaintiffs filed a Notice of Motion, returnable before the Registrar in chambers, in which they sought judgment for damages to be assessed and costs. The Motion for Default Judgment has not been served, as is permitted in the circumstances by Uniform Civil Procedure Rules 2005 (NSW), r 16.3(1A). When the matter came before the court on 21 September, that Motion was referred to me as Duty Judge. The court file was not available that day, and I referred the matter to be dealt with by me in chambers. 11 Whether the defendants are in default so as to authorise the entry of default judgment depends on whether they have failed to file a defence within the time limited by r 14.3(1) or within such further time as the Court allows. The Court fixed 17 July for the filing of a defence, which became the time limited by r 14.3(1). Accordingly default is established. 12 However, there is no absolute entitlement to default judgment, and where no notice has been given of the application, strict satisfaction of the requirements is necessary. That has not been established in respect of service of the Statement of Claim As proceedings had already been commenced and an appearance filed, only ordinary service as distinct from personal service, was required. But Mr Moriarty's affidavit, the relevant part of which I have extracted above, does not prove that the envelope containing the Statement of Claim was posted, let alone duly posted with the appropriate postage affixed. Proof of service by post requires, at least: · Proof that the envelope bore the correct name and address; · Proof that the envelope contained the relevant document to be served; · Proof that the envelope bore the correct cost of postage; and · Proof that the envelope was placed in the post. 13 Precedents may be found in Neville & Ashe, Equity Proceedings with Precedents (NSW), Butterworths, 1981, precedent 19(2), Court Forms Precedents & Pleadings (NSW), "Service of Process", precedents 40.5, 40.15. 14 While Mr Moriarty's affidavit proves that the envelope contained the relevant document, it does not prove how the envelope was addressed (except the name of the firm of solicitors), it does not prove that it bore any postage stamp, and it does not prove that it was placed in the post: a solicitor's statement that the envelope was placed with the outgoing mail does not prove at least on its own that it was posted. 15 I am therefore not satisfied that Mr Moriarty's affidavit proves service of the Statement of Claim. I am not, without more, prepared to act on the Short Minutes of Order dated 26 June 2006, which although they are expressed to be by consent and provide for that the defendants serve their Defence by 17 July, were not signed on behalf of the defendants. 16 It is necessary to bear in mind that, so far as the evidence goes, the last communication the defendants received was the notice from the Court dated 24 July 2006 to the effect that the Court may dismiss the proceedings if there was no attendance by the plaintiff on the next occasion. While an applicant for default judgment is not bound to give notice of the application unless the Court otherwise orders [UCPR r 16.3(1A)], it is usually prudent to do so [Bushby v Mackenzie (1919) 19 SR (NSW) 104; Reid v Taylor (1929) 46 WN (NSW) 171; Emibarb Pty Ltd v Commonwealth Bank (NSWSC, Greenwood M, 2 March 1992]. In light of the non-appearance by both parties on 24 July, the unsatisfactory evidence of service of the Statement of Claim, and the absence of any evidence of communication between the parties since the Statement of Claim was filed, I decline to enter default judgment on the present state of the evidence without notice to the defendant. I propose to "otherwise order" for the purpose of r 16.3(1A), and to adjourn the motion to enable notice to be given and any further evidence to be adduced. 17 My orders are:

Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd

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