District Court New South Wales Medium Neutral Citation: Stone & Glass Equipment Limited v Aussie Strength Pty Ltd [2020] NSWDC 488 Hearing dates: 21 August 2020 Date of orders: 28 August 2020 Decision date: 28 August 2020 Jurisdiction: Civil Before: Abadee DCJ Decision: See paragraphs 61-64 Catchwords: PRACTICE AND PROCEDURE – summary judgment application – claim by seller of gymnasium equipment for unpaid price – cross-claim for buyer's alleged damages following resale of gym equipment earlier acquired by buyer – discretionary considerations –whether summary judgment should be stayed in light of cross-claim PRIVATE INTERNATIONAL LAW – obligation of buyer of goods to purchase in foreign currency – currency of judgment for seller – date of conversion for currency – currency for claim for pre-judgment interest Legislation Cited: Civil Procedure Act 2005 (NSW), ss 21, 90, 96 Corporations Act 2001 (Cth), s 1335 Reserve Bank Act 1959 (Cth), s 85A Sale of Goods Act 1923 (NSW), s 51 Uniform Civil Procedure Rules 2005 (NSW), rr 9.10, 13.1, 13.2, 42.21 Cases Cited: Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448 Cummeragunja Local Aboriginal Land Council v Nicholson [2017] NSWSC 394 Daewoo v Suncorp Metway (2000) 48 NSWLR 692 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 ITC Distribution Ltd v Filmpac Holdings Ltd (unreported, Supreme Court of Victoria, 6 March 1990) Maschinenfabrik Augsburg-Nurenburg Aktiengesellschaft v Altikar Pty Ltd (1984) 3 NSWLR 152 Miliangos v George Frank (Textiles) Ltd [1976] AC 443 O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71; 16 BPR 31705 Re Walsh; Ex parte The Flying Tiger Line Inc (1985) 7 FCR 579 State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350 Swiss Bank Corporation v State Bank of New South Wales (1993) 33 NSWLR 63 Vlassons Shopping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2) [1998] VSC 135 Texts Cited: Davies, Bell & Brereton, Nygh's Conflict of Laws in Australia (8th ed), LexisNexis Butterworths Ritchie's Uniform Civil Procedure New South Wales, LexisNexis Seddon and Bigwood, Cheshire & Fifoot Law of Contract (11th Australian ed, 2017), LexisNexis Butterworths) Sutton, Sales and Consumer Law (4th ed, 1995), LBC Information Services Category: Principal judgment Parties: Stone & Glass Limited (Plaintiff/Applicant) Aussie Strength Pty Ltd (Defendant/Respondent) Representation: Counsel: Mr J Rose for the plaintiff/applicant Mr N Li for the defendant/respondent Solicitors: Paladin Legal for the plaintiff/applicant Advanta Legal for the defendant/respondent File Number(s): 2019/341615 Publication restriction: Nil Judgment INTRODUCTION 1. The plaintiff is a distributor of sports equipment. It is incorporated in Hong Kong. Between October 2018 and April 2019 it supplied sports equipment to the defendant. The defendant appears to be an entity which re-sells that equipment to gyms in Australia. The plaintiff rendered invoices (in USD denomination) to the defendant in relation to the supplies of equipment on 8 October 2018 ($43,460), 13 December 2018 ($32,119), 19 December 2018 ($9,000) and 18 April 2019 ($49,907). On 19 July 2019, the defendant made only a partial payment ($9,000). The plaintiff sues, in debt, to recover payment of the balance of its debt, being USD$125,486, plus interest. By its originating process, it sought to recover that debt in Australian Currency. 2. The plaintiff's Statement of Claim was filed on 31 October 2019. The defendant filed a Defence on 2 December 2019. In that original Defence, the defendant admitted the agreement for the supply, the issue of the invoices, and its partial payment. Other than that, it denied or put the plaintiff to proof of its asserted entitlement to receive payment of the balance of the invoices. It did not, however, spell out any positive reason for why it should be entitled to withhold such payment. 3. Unsurprisingly, on 17 June 2020, the plaintiff filed a notice of motion seeking summary judgment, pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'), for payment of the balance of the debt. 4. On 29 July 2020, the defendant filed an Amended Defence. On the same day, it filed a Cross-Claim. By means of these documents, the defendant has made plain that which was obscure from the original iteration of its Defence, which is that it relies upon the defence of a statutory set-off, under s 21 of the Civil Procedure Act 2005 (NSW) (the 'CP Act'). The plea in the Amended Defence substantially incorporates the facts of a cross-claim. 5. The Cross-Claim refers to the supply of gym equipment in July 2016. The respondent says that, in breach of the conditions of fitness for purpose and merchantable quality contained in the contract, and implied by Sale of Goods legislation, the equipment was defective. 6. The Cross-Claim also contains the contention that in October 2016 and in September 2017, it re-supplied gym equipment which the respondent received from the applicant and received complaints from two of its customers ('CrossFit Zelos', a gym in Jamisontown (west of Sydney), and 'Fitness Playground Darwin', respectively) that that equipment was defective and that, as a consequence, the respondent lost future business opportunities with its customers. 7. It is not the respondent's case that the equipment it resupplied was the same equipment it received from the applicant relating to the applicant's action in debt. If it was, there might have been scope for the respondent to invoke the common law 'rule in Mondel v Steel' (reflected in the Sale of Goods legislation) to extinguish or limit the unpaid purchase price. Under the operation of that legislation, the buyer can ensure that the seller does not recover the unpaid price where the damages for the breach of warranty are equal to or exceed the price (Sutton, Sales and Consumer Law (4th ed, 1995), LBC Information Services, pp 670-671). 8. As it is, the plea of set-off under s 21 of the CP Act is misconceived. The Cross-Claim is a claim for unliquidated damages. The statutory right of set-off under s 21 does not extend to unliquidated claims. It is confined only to liquidated claims and the right to set-off is limited only to mutual debts. The respondent has not identified any debt which it asserts the applicant owed to the respondent. Paragraph 14 of the Amended Defence should be struck out. 9. Insofar as it concerns the Defence, this leaves the respondent in the position where it is relying upon a Defence as originally filed and a Cross-Claim in which it brings what used to be regarded as a true counter-claim. THE APPLICATION 1. The plaintiff, as applicant on the motion, invokes r 13.1 of the UCPR. By that rule, the applicant must establish the facts on which its claim is based and evidence of the belief, on the part of a responsible person for the claimant, that there is no defence to the claim, or no defence to the claim except as to the amount of the damages. 2. If the Court is inclined to exercise its discretion in the applicant's favour, it may give such judgment for the plaintiff, or make such order on the claim, or that part of the claim, as the case requires. 3. Where, as here, there is a cross-claim, it is open to the Court to enter judgment on the original claim, then allow the cross-claim to be separately prosecuted (r 9.10 of the UCPR). It is also possible to stay judgment on the original claim whilst the cross-claim is determined (r 13.2 of the UCPR). Counsel for the respondent also relies upon ss 90 and 96 of the CP Act, which concern the Court's power to set-off judgments and give a single judgment. 4. The applicant accepts the high threshold which it needs to attain to persuade the Court to award summary judgment, being the 'General Steel' test (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129). The test has been more recently interpreted to require consideration of whether there is an underlying defence that has a more than fanciful prospect of success. It is not enough to plead such defence: O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71; 16 BPR 31,705 per Macfarlan JA at [3]; Ward JA at [68]. Established authorities show that once it is shown that facts exist to support a judgment, an evidentiary onus shifts to the defendant to show some triable issue, being an arguable defence; and that a mere denial of a plaintiff's claim will not sustain a defence to the application. 5. For this application, the applicant read the affidavit of Ms Helen Holani, who was the Administration Manager for the plaintiff, and a resident in Honk Kong. The exhibit to her affidavit was tendered (Exhibit A). It also read an affidavit of Ms Elizabeth Caswell, which went to quantification of the debt in Australian currency. The exchange rates of foreign countries (including relevantly the United States) against the Australian dollar as at 18, 19 and 20 August 2020 were also proved (Exhibit B). 6. On this application, the respondent broadly advanced two points. First, there were some triable issues which should await later determination, with its cross-claim. Secondly, and alternatively, if summary judgment is to be imposed, it should be stayed until its cross-claim is determined. TRIABLE ISSUES? 1. Consistent with his client's Defence, Counsel for the respondent conceded that subject to certain matters, the applicant had made out its action in debt. The only issues insofar as the respondent was concerned was the quantum of principal and interest on the debt. Those issues, in turn, were affected by the circumstance that the respondent's obligation to pay the applicant was in a foreign currency. 2. Those triable issues were identified as being: 1. What is the currency in which judgment should be given? 2. What is the date upon which the currency conversion should apply? 3. What is the applicable interest rate? 1. An important discretionary factor, in my view, as to whether summary judgment can or should be imposed is whether the Court is in any different position now to what it would be if it would be if it deferred the resolution of certain issues so as to enable the parties to compile evidence and, if necessary, invoke the Court's coercive processes to do so. Evidence for the plaintiff 1. The four invoices to the respondent to sustain the applicant's debt claim were in evidence. They, and the other evidence in this application, indicated that the gym equipment was shipped to Australia from Vietnam. 2. Ms Caswell, a law graduate of the plaintiff's solicitors, deposed that as at 20 August 2020, the sum of USD$125,486 was the equivalent to AUD$174,926.23 (Annexure EAC-1). That calculation was unchallenged at the hearing this application. 3. An extract from the Reserve Bank of Australia indicated the exchange rate value of the Australian dollar on 18, 19 & 20 August 2020 [1] . The choice of currency of judgment issue 1. Payment under the invoices was stipulated to be in US currency. But the respondent took no issue with the applicant bringing its action in Australia, or the application of Australian law. Indeed, as is apparent in the cross-claim, the respondent seeks to rely upon Australian law. As indicated, at the date the action commenced, the applicant sought a judgment in Australian currency. 2. It was common ground between the parties that the Court has a choice as to which currency a judgment may be made in. The test has been described as the currency which "best expresses the loss of the party which has sued": Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448 per Kirby P at 463-4. However, no sooner had Kirby P enunciated that test than his Honour acknowledged that this test rather begged, and did not solve, the question. The President went on to observe that each country is entitled to expect that, special provision apart, a debt will be settled in the currency of that country if a party entitled to sue there so claims. 3. The respondent did not suggest any such 'special provision'. Having chosen an Australian Court to sue against an Australian defendant under Australian law, in my view it is plain from legal authority that the plaintiff is entitled to demand the debt be settled in Australian currency. 4. In my view, there is no triable issue that the respondent is entitled to deny the applicant a judgment in Australian currency. The date for currency conversion 1. In Miliangos v George Frank (Textiles) Ltd [1976] AC 443 at 463, Lord Wilberforce determined that when an issue arises in an action for debt expressed in a foreign currency about the mechanics of giving judgment in a foreign currency, or the local currency, it was open for a Court to order a judgment debtor to either pay the amount in the foreign currency or the local equivalent "at the time of payment". That time was the time when the defendant voluntarily paid the judgment amount, but otherwise, at the point when the judgment was enforced [2] , rather than when it was ordered. That practice has been followed in Australia [3] . 2. It is open for the plaintiff to elect to have judgment with the conversion from US currency to Australian currency being given as at the date of the judgment: ITC Distribution Ltd v Filmpac Holdings Ltd (unreported, Supreme Court of Victoria, 6 March 1990). In the Vlassons decision I have footnoted below, Byrne J of the Supreme Court of Victoria noted that this practice is consistent with the principles in Miliangos. It has also been endorsed by the learned authors of Nygh's Conflict of Laws in Australia at [23.17] and [23.20] [4] . There is no triable issue to indicate to the contrary. 3. There should be judgment for the principal debt on the Australian equivalent of USD$125,486 on the date that the Court makes its order. The claim for interest 1. The applicant claimed pre-judgment interest under s 100 of the CP Act. 2. The issues are the currency for the interest and when interest should run from. 3. The first issue arises in the circumstance that the claim for interest is made in Australian currency where the contract provided for payment in United States currency. Where, as I have determined, judgment may be awarded in Australian currency, ordinarily the interest will be calculated at the rate appropriate to that currency: Maschinenfabrik Augsburg-Nurenburg Aktiengesellschaft v Altikar Pty Ltd (1984) 3 NSWLR 152 at 154E; see also the authorities collected in Ritchie's Uniform Civil Procedure New South Wales, LexisNexis [s 100.45], p 2705. That, however, is not an immutable rule. Noting that the object of the award of interest is to compensate the plaintiff for its loss of use of money, where the payment is to be made in foreign currency, the loss comes home in that foreign currency. The claimant has either had to borrow money to replace the funds not paid on time or lost the opportunity of earning interest on the money in that foreign currency: Swiss Bank Corporation v State Bank of New South Wales (1993) 33 NSWLR 63 at 64-65 (affirmed in State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350 at 360-361.) However, as with the principal debt, the applicant has chosen the interest to be expressed in Australian currency and I consider that the Court is entitled to presume that it has done so on the premise that it is this currency which will most advantageously compensate it for its loss of use of money. There is no evidence adduced from the respondent to indicate that this is likely to result in any unwarranted 'windfall' to the applicant. 4. The second issue is, even if interest is to be awarded under s 100 of the CP Act, the date from when the claim for interest runs from. The plaintiff's claim is that the loss of use of money was from the day after the date of the invoice. But I am not sure that this is right. Pre-judgment interest is generally to run from the date when the cause of action arose, being in this case when the price for the supply of goods was to be paid. In a case under Australian law where a seller sues to recover the price for delivered goods, it is usual that payment is due after seller has 'earned' or performed its promise; i.e. when property has passed (e.g. Sale of Goods Act 1923 (NSW), s 51(1)).But that is unless the contract unequivocally provides for payment at a specified time prior to performance (Seddon and Bigwood, Cheshire & Fifoot Law of Contract (11th Australian ed, 2017), LexisNexis Butterworths, [26.12]). At least three of the invoices before the Court suggest payment was fully due before shipping, and two of those have a specified shipping date. There is evidence from Ms Holani (paragraphs 36(d), 45(d), 49(d) & 61(d) of her affidavit) which provide date ranges for when shipping occurred. But if the interest is to run from a specified date prior to the property being delivered, there is uncertainty manifested in at least two of the invoices as to when that date was. 5. Ms Holani also gave evidence that the respective supplies would have been delivered to the respondent by October 2018 (in the case of the first invoice), January 2019 (in the case of the second and third invoices) and April 2019 (in the case of the fourth invoice) (paragraphs 36(e), 45(e), 49(e) and 61(e) of her affidavit). 6. In my opinion, given the doubt that exists about when the shipping occurred, the proper exercise of the discretion would result in an award interest only from the outer limits of date of delivery. That should be 31 October 2018, 31 January 2019 and 30 April 2019. This is the most favourable position for the respondent on the evidence before the Court. The applicant should re-do its interest calculations in accordance with those dates. DISCRETION NOT TO AWARD SUMMARY JUDGMENT 1. Counsel for the respondent submitted that because of the existence of a counter-claim and the respondent's potential invocation of ss 90(1) and 90(2) of the CP Act, the Court ought not, in its discretion, order summary judgment. The predicate for this submission is that the respondent may succeed with its cross-claim and be in a position to later urge the Court to set-off two judgments, with a single judgment in favour of the 'successful' party overall. This submission is a reference to s 96 of the same legislation. 2. However, as Counsel for the applicant pointed out, s 96 only arises where it is established that the parties to the multiple claims each have judgments in their favour. It is not established, and may never be established, that the respondent is or will become a judgment creditor against the applicant. 3. I also agree that if the respondent's contention was accepted, a party with an unanswerable or unanswered claim would be at the mercy of a defendant who may delay the entry and enforcement of a judgment by adopting the expedient of bringing its own claim, even if unmeritorious. That would frustrate the utility of the facility in r 13.1 and also be antithetical to case management objects. SHOULD THE JUDGMENT BE STAYED? 1. A more substantial argument for the respondent is that the judgment be stayed pending determination of the cross-claim. 2. By its terms ("as the case requires") r 13.1, when read in conjunction with s 86 of the CP Act, empowers the Court to order summary judgment on appropriate terms. That, as the applicant accepts, may include a stay on the judgment pending the determination of the cross-claim. 3. There was no dispute that it may be appropriate to stay a judgment ordered summarily on the basis of: 1. the degree of connection between the claim and the cross-claim; 2. the strength of the cross-claim; and 3. the ability of the applicant (as cross-defendant) to satisfy any judgment on the cross-claim [5] . Degree of connection 1. Counsel for the respondent accepted that the only evidence that the Court had to go on for assessing the connection was the respondent's cross-claim itself. Indeed, as I understood him, he conceded that he could not establish any real connection between the cross-claim and the applicant's claim (the subject of judgment) without more. 2. I consider that the concession was fairly made. The applicant's claim concerned an action in debt following the supply of goods in 2018 and 2019. The cross-claim alleged defective goods supplied to the respondent in July 2016 (which were, allegedly, on-sold to the respondent's customers in October 2016 and September 2017). 3. The only connection, so far as is apparent in the evidence before the Court, between the transactions was the identity of the parties and the general correspondence in the subject matter of the supply. 4. The connection is only slight. Strength of cross-claim 1. The cross-claim was only filed on 29 July 2020. The proceeding commenced on 31 October 2019. By ordinary operation of Court rules, the cross-claim should have been filed well before the date it was filed. As has happened, it was only brought after the applicant brought the application for summary judgment. 2. There are, as Counsel for the applicant pointed out, problems associated with vagueness with the facts alleged in the cross-claim. It is no exaggeration to say that in the pleading of actions for breach of the statutory warranty for the supply of goods in 2016, the pleader has extracted the elements of the action alone, without articulating the material facts engaging those elements. There is missing altogether any identification of the facts to sustain the central allegation that the gym equipment supplied in 2016 was defective. To the extent that the cross-claim comprises a counter-claim centred upon a loss of potential business through customers dissatisfied with the equipment that was supplied, there is only a bare assertion of loss of commercial opportunity. 3. There is another concern about its inherent plausibility. If the complaints about the receipt of defective goods in 2016, and loss of business thereafter, were real and genuine, it may be wondered why the respondent continued to seek the supplies of the equipment from the applicant in 2018 and 2019, which events form the basis for the applicant's claim. 4. It is true that no application has been made by the applicant for summary disposal, or strike out of the cross-claim. It is also true that in a claim that has only recently been advanced by the respondent, it may, and it certainly should be the case that further information is to be supplied in answers to particulars recently (12 August 2020) requested by the applicant. Finally, it is true that it would not be expected that on the discretionary question whether judgment should be ordered summarily, the respondent is required to prove its cross-claim. 5. Nevertheless, it is the respondent's application that any summary judgment ordered should be stayed. The application for summary judgment has been on foot for months and the respondent, when applying for a stay in the contingent event (now materialised) that the Court was inclined to order summary judgment, has had ample opportunity to demonstrate that there is something of substance to the cross-claim that it brings. 6. By reason of the current deficiencies in the pleading of that cross-claim, an at best weak connection between the events, in the procedural context I have referred to, the Court is not in a position to find that there is substance in the cross-claim. Rather, all that the Court has is allegations barely made. This tells against the grant of a stay. The cross-defendant's capacity to meet a judgment 1. It was on this issue that Counsel for the respondent mainly fought for the stay application. He did do with the handicap that there was nothing before the Court to indicate what the value of the counter-claim might be. 2. Counsel invited the Court to infer not only that the applicant (cross-defendant) has no assets against which a judgment in its favour may readily be enforced, but that the applicant has deliberately structured operations so as to prevent such assets as it has from being the subject of execution. The applicant was, it was said, 'not creditworthy'. 3. He did so on the basis of unchallenged facts that: 1. the applicant is incorporated, and has its address, in Hong Kong; 2. it is a distributor of gym equipment manufactured by a different entity, Aardwolf Industries LLC, located in Vietnam; 3. the applicant is essentially run by a husband and wife couple; 4. Ms Holani deposes that the applicant receives orders from customers and places orders with manufacturer; and 5. the applicant's bank is in Singapore. 1. A procedural factor of some significance is that the applicant, being a foreign corporation, could, if the respondent was concerned about its financial capacity, have moved the Court for an order that the applicant provide security for costs on the applicant's claim: r 42.21(1)(a) and 42.21(1)(d) of the UCPR and s 1335(1) of the Corporations Act 2001 (Cth). It did not do so. I consider that it is a fair inference that from the time the applicant commenced in October 2019 to the current application, the respondent did not seek security for its costs because it was not unduly concerned that it may not be able to recover from the applicant's assets its costs of successfully defending the applicant's claim. 2. Further, it was open to the respondent, to meet the contingency that summary judgment might be ordered against it, to request and, if necessary, compel, the production of documents by the applicant which might actually reveal its financial position, including its assets. It did not do so. 3. Even if there was a close relationship between the applicant and the manufacturer, there is no suggestion that, if the circumstance arose that a judgment was to be enforced against the applicant, it could not potentially look to the manufacturer to support it at the risk of insolvency. Further, notwithstanding recent notorious events in Hong Kong, there is no particular concern that a judgment could not be registered and enforced in that country. 4. In my opinion, on the basis of the evidence before the Court on the respondent's stay application, it is inappropriate for the Court to draw the inference that the applicant would not be able to pay any (presently unquantified) judgment against it on the cross-claim. 5. Further, it is also relevant that the respondent, when it had the opportunity, has not submitted to pay any part of the summary judgment into Court or provide security of any kind pending the determination of its cross-claim. In other words, it has not shown a willingness to pay any price for obtaining the benefit of a stay. 6. Finally, there is no evidence before the Court that the consequence of the Court not granting a stay would stultify the respondent's ability to prosecute its cross-claim. 7. Accordingly, on the basis of the evidence before the Court, I am not prepared to order a stay of the summary judgment. ORDERS 1. I order that judgment be entered for the plaintiff for the Australian dollar equivalent of USD$125,486 as at the date of this order. 2. The applicant should within 7 days, and after consultation with the respondent, bring in short minutes of order to quantify the Australian equivalent of the plaintiff's pre-judgment interest, in Australian currency, in conformity with these reasons. 3. The applicant has succeeded with its motion and should have its costs. The costs of the proceeding generally to date should be reserved, pending determination of the cross-claim. 4. I make the following additional directions for the further case-management of the proceeding: 1. Paragraph 14 of the Amended Defence is struck out. 2. The Cross-Claimant is to supply any necessary answers to the requests for particulars made by the Cross-Defendant by 11 September 2020. 3. The Cross-Defendant is to file a Defence to the Cross-Claim by 2 October 2020. 4. The proceeding is adjourned for directions to the Judicial Registrar on 9 October 2020, or some such other date as is notified to the parties by the Judicial Registrar, when it will be expected that the parties are to agree to a timetable for service of such further evidence they each rely upon for the hearing. 5. Liberty to apply is granted on 3 days' notice. ********** Endnotes 1. The Court was required to take judicial notice of the content of this document under s 85A of the Reserve Bank Act 1959 (Cth). 2. Although if there was any fluctuation in currency between the order for enforcement and the date the money is actually paid, the rate is determined on the date of payment, not the order: Re Walsh; Ex parte The Flying Tiger Line Inc (1985) 7 FCR 579 at 580-1. 3. Vlassons Shopping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2) [1998] VSC 135 at [8]. See also Daewoo v Suncorp Metway (2000) 48 NSWLR 692 at [26] & [30]. 4. Davies, Bell & Brereton, Nygh's Conflict of Laws in Australia (8th ed), LexisNexis Butterworths, p 493. 5. Cummeragunja Local Aboriginal Land Council v Nicholson [2017] NSWSC 394 at [19]. Amendments 28 August 2020 - Correction of typo. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 August 2020