The Pokémon Company International, Inc v Pokemon Pty Ltd

YATES J: 1 The applicant seeks default judgment against the third respondent under r 5.23(2)(e) of the Federal Court Rules 2011 (Cth) (the Rules) on the basis of the third respondent's failure to: (a) file a notice of address for service as required by Order 3 made on 12 July 2023; (b) attend Court on 9 August 2023 for a case management hearing listed by Order 4 made on 12 July 2023; and (c) file a defence as required by r 16.32 of the Rules. 2 The third respondent has not participated in this proceeding since its joinder on 2 June 2023 pursuant to r 9.52 of the Rules. On 8 June 2023, a notice of discontinuance was filed in respect of the first and second respondents. On 3 October 2023, I made orders at the applicant's request providing for the filing of an interlocutory application seeking default judgment and the filing of written submissions by the parties in relation to that application. I also ordered that the application for default judgment be listed for hearing on 28 November 2023. 3 At the commencement of the hearing on 28 November 2023, the applicant informed the Court that the interlocutory application and supporting material had not been served on the third respondent. I was nevertheless prepared to entertain the application for three reasons. 4 First, as I have said, the third respondent has not participated in the proceeding. There is abundant evidence before the Court to show that the third respondent has been evading identification by various means, including by the adoption of other person's identities. In these circumstances, it seems most unlikely that, even if it had been served, the third respondent would have responded to the application for default judgment. 5 Secondly, the third respondent's ability to contest, substantively, the causes of action pleaded against it in the amended statement of claim dated 7 June 2023 could be preserved by making any final orders subject to the applicant serving the third respondent with the interlocutory application and supporting material within a limited period, and providing that the orders not take effect if the third respondent were to file, also within a limited period, a notice of address for service, as previously ordered to do. 6 Thirdly, given the circumstances I have outlined above, the efficient and cost-effective, but nevertheless fair and just, disposition of the interlocutory application strongly favoured the hearing on 28 November 2023 proceeding as appointed. 7 In Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606, I summarised the legal principles that apply in seeking default judgment under r 5.23(2)(c): 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. 14 Rule 5.23(2)(c) requires the Court to be satisfied that the applicant is entitled to the relief claimed in the statement of claim. This requirement has been interpreted as meaning that the Court must be satisfied that "on the face of the statement of claim" the applicant is entitled to the relief that is claimed. It is not a requirement that the applicant prove its claim by way of evidence. Put another way, the facts alleged in the statement of claim are taken to have been admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [42]. If, on inspection of the statement of claim, the Court is satisfied that the applicant would be entitled to the relief sought then this requirement of r 5.23(2)(c) will be met: CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 at [18] - [19]; Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23]. The Court may permit further evidence to be adduced, but not evidence that would alter the pleaded case: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665 at [45], [48] - [50]; United Broadcasting International Pty Ltd v Turkplus Pty Ltd (No 2) [2010] FCA 1413 at [42] - [44]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1 at [62] - [63]. 8 The principles apply equally to default judgment under r 5.23(2)(e). 9 The applicant has read a number of affidavits in support of its application. Those affidavits do not deal with the substance of the applicant's claims. Rather, they concern, in the main, the procedural steps that the applicant has undertaken in the proceeding to date, including investigations to ascertain the identity and whereabouts of the third respondent. These matters are relevant to the exercise of the discretion given to the Court to give judgment on default. 10 I do not propose to summarise the allegations made in the amended statement of claim in any detail. It is sufficient for me to record that the amended statement of claim pleads that the third respondent has made, in various ways, three groups of misrepresentations, defined as: (a) the Kotiota Representations - namely, that the third respondent is licensed to develop Pokémon Games by or on behalf of the applicant, or The Pokémon Company (Pokémon Company), or Nintendo Co. Ltd (Nintendo), or to authorise others to do so, and/or the third respondent is affiliated with, associated with, or otherwise connected in the course of trade with, approved by, or authorised by, the applicant or Pokémon Company or Nintendo; (b) the NFT Representations - namely, that Pokémon non-fungible tokens (NFTs) that are issued or offered by Pokemon Pty Ltd (an Australian company purportedly associated with the third respondent) are licensed by the applicant or Pokémon Company or Nintendo, and/or are affiliated with, associated with, or otherwise connected in the course of trade with, approved by, or authorised by, the applicant or Pokémon Company or Nintendo; and (c) the PokeWorld Representations - namely, that the virtual game PokeWorld is licensed by the applicant or Pokémon Company or Nintendo, and/or is affiliated with, associated with, or otherwise connected in the course of trade with, approved by, or authorised by, the applicant or Pokémon Company or Nintendo. 11 The amended statement of claim pleads that these representations are false, misleading, and deceptive. It pleads further that, by making them, the third respondent has, in trade or commerce, engaged in conduct that is misleading or deceptive or likely to mislead or deceive, and has contravened ss 18, 29(1)(g) and 29(1)(h) of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)). 12 The amended statement of claim also pleads that the third respondent threatens to continue to make the Kotiota Representations, the NFT Representations, and the PokeWorld Representations. 13 All these allegations are taken to have been admitted. 14 I am satisfied that the third respondent is in default (see r 5.22) as the applicant contends, and that orders on default should be made. In this regard, I am satisfied that declaratory relief and injunctive relief should be granted, particularly in circumstances where consumer interests are involved and the third respondent's unlawful conduct continues to be threatened. 15 The injunctions that are now sought are narrower than the injunctions claimed in the amended originating application dated 7 June 2023. During the hearing, I discussed with counsel for the applicant various matters of drafting which will be reflected in the orders I propose to make. 16 I record that, although the amended originating application claims relief by way of damages, and the amended statement of claim pleads that the applicant has suffered loss or damage by reason of the third respondent's conduct, the claim for damages is not pursued. An order for costs is pursued. 17 Relief will be granted accordingly. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.