Beep 1 Judgement No. ITD PRACTICE AND PROCEDURE - motion for judgment in default of appearance - relief claimed under s.82 and s.87 Trade Practices Act - no appearance by respondent ~ notice of motion by certified mail to registered office - requirement for direct admissible evidence - inadequacy of statement of belief - motion adjourned. Trade Practices Act 1974 s.52, s.82, s.86, s.87 Federal Court Rules 0.20 r.1(1), 0.33 r.2 Warea Pty Ltd v Waterloo Industries Pty Ltd [1986} ATPR 65-323 Yorke v Lucas (1985) 61 ALR 307. CYRIL GEORGE O'BRIEN, ELIZABETH O'BRIEN v RANDY'S MOTOR WRECKERS PTY LTD and RONALD FREDERICK HEELAN NO. WAG 119 of 1986 FRENCH J. 18 March 1987 Perth 1G MAK 1987 AUIGTRALIA RAINCIPAL REGISTRY IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION wee NO. WAG 119 of 1986 BETWEE N: CYRIL GEORGE O'BRIEN First Applicant and ELIZABETH O'BRIEN Second Applicant and RANDY'S MOTOR WRECKERS PTY LTD First Respondent and RONALD FREDERICK HEELAN Second Respondent MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 18 MARCH 1987 WHERE MADE: Perth THE COURT ORDERS THAT: 1. The motion be adjourned to a date to be fixed. NOTE: Settlement and entry of orders 1s dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) ) GENERAL DIVISION NO. WAG 119 of 1986 BETWEEN: CYRIL GEORGE O'BRIEN First Applicant ELIZABETH O'BRIEN Second Applicant and RANDY'S MOTOR WRECKERS PTY LTD First Respondent and RONALD FREDERICK HEELAN Second Respondent CORAM: FRENCH J. March 1987 REASONS FOR JUDGMENT On 1 December 1986 the applicants instituted proceedings in this court claiming against the respondents:- 1. A declaration that a written agreement between the parties designated an Indenture and Collateral Agreement had been rescinded. 2. Alternatively an order pursuant to s.87 of the Trade Practices Act rescinding the Indenture and Collateral Agreement. 3. The sum of $60,000 from the first respondent. 4. Damages from the first respondent and the second respondent at common law and further or alternatively pursuant to s.82 of the Trade Practices Act. 2. The application arose out of what was i1n substance a partnership agreement between the applicants and the first respondent and precontractual representations which had been made on behalf of the first respondent by one of its directors who is named as the second respondent. According to the statement of claim, the applicant negotiated with the first respondent through the second respondent, an agreement to carry on in partnership with the first respondent a motor wrecking business at Lot 11 Aggett Road, Malaga. According to the applicants the second respondent made the following representations on behalf of the first respondent:- (a) The First Respondent was lessee of the Premises which would be available for use by the Partnership. (b) The Local Shire had approved the use of the Premises for the purpose of carrying on the business of motor wrecking; (c) the First Respondent possessed the necessary licence and the Motor Vehicle Dealers Licensing Act (sic) to carry on the business of buying and selling vehicles. (d) If the Applicants paid $60,000.00 to the First Respondent :- (i) the First Respondent would provide to the Partnership all moneys required by the Partnership; (ii) the First Applicant would be the managing partner of the Partnership at a salary of $1,000.00 per week commencing from the commencement of the Partnership on lst July 1986. 3. Acting in reliance upon these representations it 1s said that the applicants on 13 June 1986:- l. Executed an Indenture with the First Respondent creating the partnership in consideration of the First Respondent entering into the Indenture. 2. Agreed to pay the First Respondent $60,000.00 ("the Collateral Agreement") and paid the sum of $60,000 to the First Respondent. The representations were said in paragraph 7 of the statement of claim to be false and their falsity was particularised as follows:- "(a) The premises were not leased to the First Respondent and available for use by the Partnership. (b) The Shire had not approved the use of the Premises. (c) The First Respondent did not hold the necessary licence. (d) The First Respondent never intended to pay any moneys to the partnership to enable it to arry (sic) on business as to pay the salary of the First Applicant." Further, the first respondent failed and refused after 13 June 1986:- "(a) To pay moneys necessary to enable the Partnership to carry on business; and (b) to attend a meeting with the Applicants to enable the Partnership to carry on business." 4. A further plea 1s made that at the time' the representations were offered, the second respondent knew them to be false or made them with reckless indifference to their truth or falsity. In paragraph 9 of the statement of claim it is alleged:- "The intentional making of the false representations the first pleaded in paragraph 4 is conduct' by respondent which, in trade and commerce, was misleading or deceptive or likely to mislead or deceive." The reference to intention 1s puzzling as there 1s no need to prove intent in order to establish a contravention of S.52.- Yorke v Lucas (1985) 61 ALR 307 at 309. The applicants complain that the first respondent failed to honour its obligations to "pay moneys necessary to enable the partnership to carry on business" and to "attend a meeting with the applicants to enable the partnership to carry on business". The applicants say that by a notice dated 20 August 1986 they rescinded the agreement and demanded repayment of the sum of $60,000.00. The application and statement of claim were served on the registered office of the first respondent on 8 January 1987. 5. The matter was initially listed for directions on 17 December 1986 but was then adjourned to a date to be fixed by the District Registrar as service had not been effected. It came on again before Toohey J. on 20 January at which time there was no appearance for the respondents. It was again adjourned to 26 February 1987 at 9.30 am. It was further adjourned on that occasion to enable an affidavit proving service to be filed and a copy of a motion for default judgment to be forwarded to the office of the first respondent. A copy of the motion returnable on 11 March was posted on 5 March to the first respondent at its registered office. The motion gave notice of the applicants' intention to seek the following orders:- 1. Judgment be entered against the First Respondent for the sum of $60,000.00. 2(a) A declaration be made that the Applicant rescinded the Indenture and the Collateral Agreement referred to in the Statement of Claim; or alternatively (b) The Indenture and the Collateral Agreement be rescinded pursuant to Section 87 of the Trade Practices Act. 3. The First Respondent pay to the Applicants damages to be assessed. tye 6. 4. The First Respondent pay the costs of this Application and of the action in any event. The original application served on 8 January 1987 had carried the following endorsement:- "A directions hearing on this application will be held at the court at the time and place specified below. If there 1s no attendance before the court by you or by your counsel or solicitor, the application may be dealt with and judgment may be given or an order made in your absence." Order 10 provides:- "10(1) If the court thinks fit and the parties agree, the court may hear and determine the proceedings on a directions hearing. (2) If no applicant appears before the court ona directions hearing, the court may dismiss' the application or make any other order which it thinks proper. (3) If no respondent appears before the court on a directions hearing, the court may give such directions as it thinks fit." The power of the court to award summary judgment upon non appearance by a respondent is found in 0.20 sub-r.1(1) which is in the following terms:- "Where in relation to the whole or any part of the applicant's claim for relief, there is evidence of the facts on which the claim or part is based, and -— (a) there 1s evidence given by the applicant or by some responsible person that, in the belief of the 7. person giving the evidence, the respondent has no defence to the claim or part; (b) the respondent's defence discloses no answer to the applicant's claim or part; or (c) the respondent 1s in default of appearance, the applicant may move on notice for such judgment to the applicant on that claim or part and the court may Pronounce such judgment and make such orders as the nature of the case requires. Ww . In this case there has been notice of the motion for judgment, it having been sent to the first respondent by certified mail addressed to its registered office on 5 March 1987, the mode of service being 1n accordance with directions which I gave on 26 February 1987. The motion 18 required to be supported by an affidavit (0.19 r.1(2)). In this case the affidavit 1s sworn by the first applicant who exhibited a copy of the partnership agreement and also a copy of the notice of rescission dated 20 August 1986. In relation to the statement of claim his affidavit said:- "I refer to the statement of claim filed herein and verily believe that the contents are true and correct." An affidavit in support of a motion for an interlocutory order can include hearsay evidence - 0.33 r.2. However a motion 8. for summary judgment 1s not of an interlocutory character and cannot rely upon such evidence - Warea Pty Ltd v Waterloo Industries Pty Ltd [1986] ATPR 65~323. Having regard to the exclusion of hearsay evidence, a bare statement of belief in the truth of the facts alleged in the statement of claim will ordinarily be insufficient to support a motion for summary judgment. Such a statement might be supported with equal facility by hearsay as by direct evidence. In this case a perusal of the statement of claim shows that many of the allegations are of such a character that the statement as to belief could only be made if 1t were based on the direct knowledge of the deponent. There are however certain critical allegations which fall outside this category, namely the particulars of falsity of the pleaded representations. It is necessary for the applicants in this case to establish the falsity of one or more of the representations in order to establish a cause of action within the jurisdiction conferred on this court by s.86 of the Trade Practices Act. Unless there is evidence of such a cause of action, the applicant will not be entitled to relief under ss.82 and 87 of the Trade Practices Act 1974. ae 9. To establish the falsity of the representations the applicant must adduce direct admissible evidence of the following facts:- l. That the premises in question were not leased to the first respondent. 2. That the local shire had not approved the use of the premises. 3. That the first respondent did not hold the necessary licence. 4. The first respondent never intended to pay any moneys to the partnership to enable it to carry on business or to pay the salary of the first applicant. It may be that in this case it will be sufficient to establish a cause of action under s.82 if any one of those elements can be established. In the circumstances however the applicants have not adduced sufficient direct evidence to make out all the elements of their cause of action and entitle them to summary judgment. In the circumstances [ think the appropriate course, rather than dismissing the motion, is to adjourn it to a fixed date to give the applicants the opportunity to file further affidavit material in proper form to support the claim for a default judgment. 10. I certify that the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice French. Associate: Vaite Uff Hereleris, Date: i& ltiicch [VE 7 Counsel: - for the applicants P. Laskaris instructed by Phillips Fox Date of Hearing: 11 March 1987 Date Judgment Delivered: 18 March 1987 sprmeie termes