District Court New South Wales Medium Neutral Citation: SNA Asia Group Pty Ltd v Royalty Investment & Management Group Pty Ltd trading as Royalty Vacations [2018] NSWDC 149 Hearing dates: 9 April 2018 Date of orders: 09 April 2018 Decision date: 09 April 2018 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Defendant called outside Court 13D three times at 10:10 am – no appearance; proceedings adjourned until 10:45 am. (2) Defendant called outside the List Judge's Court three times – no appearance. (3) Defendant called a third time outside Court 13D at 10:50 am – no appearance. (4) Judgment for the plaintiffs for $506,860.73 inclusive of interest (calculated at $59,638.90). (5) Defendant pay plaintiffs' costs of the proceedings. Catchwords: CONTRACT – breach of contract – defence challenges quantum only – defendant fails to appear – judgment for the plaintiffs for the sum sought Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56 – 62 Corporations Act 2001 (Cth), s 131 Uniform Civil Procedure Rules 2005 (NSW), r 29.7 Cases Cited: Deputy Commissioner of Taxation v Waterstreet [2018] NSWDC 42 Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365 Category: Principal judgment Parties: First Plaintiff: SNA Asia Group Pty Ltd Second Plaintiff: SNA Tours Limited Defendant: Royalty Investment & Management Group Pty Ltd trading as Royalty Vacations Representation: Counsel: Plaintiffs: Mr S Ipp Defendant: No appearance Solicitors: Plaintiffs: Drayton Sher Lawyers Defendant: No appearance File Number(s): 2015/337772 Publication restriction: None Judgment 1. The plaintiffs, by second further amended statement of claim, filed on 16 June 2017, seek damages in the sum of $447,221.82 by way of debt (alternatively as damages for breach of contract) against the defendant, Royalty Investments and Management Group Pty Ltd trading as Royalty Vacations. 2. The series of transaction set out in the statement of claim are the subject of an unusual defence in that the defendant essentially does not cavil with the terms of the agreement but disputes the sums owed. 3. There was no appearance by the defendant at the hearing, and this gives rise to the difficulties noted by Barrett J in Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365. 4. The first issue is how I should proceed in those circumstances, having regard to the provisions of r 29.7 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). An application which is sometimes made is an application for the defence to be struck out under UCPR r 30.1, but the potentialities for difficulty on appeal are considerable, and it is best for the moving party to simply proceed to prove his, her or its case in accordance with the procedure set out by Barrett J in Satz v ACN 069 808 957 Pty Ltd. 5. I should note in that decision Barrett J has helpfully explained the role that the Court should take when dealing with hearings of this nature where one party is absent. Barrett J notes that the UCPR provides rules which are intended to have regard to the obligation of both it court and the other party who is present to that missing party. This means effectively that the Court must ensure, firstly, that the missing party has had full and proper notice of the hearing date. Secondly, that there is a level playing field, and, thirdly, the Court must have careful regard to the evidence so that the relevant issues are considered in a manner that is fair to the missing party. 6. As is often the case in hearings of this nature, not only is the defendant the missing party, but the defendant has repeatedly failed to comply with orders for the filing of evidence, with the result that there is no evidence before the Court today of any kind, in circumstances where there is a long and sorry history of attempts by the plaintiffs to ensure compliance with case management orders, which have been met by a series of applications for adjournment, two changes of solicitor, long periods of inaction, and what appears to be a deliberate pattern of flouting all of the orders by the Court. 7. The plaintiffs have shown the utmost diligence in seeking compliance with court orders. I particularly note the following: 1. The defendant has obtained not only costs orders on the ordinary basis (for example, on the 2 February 2018), but on 31 January 2017, obtained three indemnity costs orders in relation to prior non‑compliance. 2. After repeated failures to file the defence, the plaintiffs brought an application for default judgment on 15 August, but this application was dismissed by the Court on 17 October after yet another adjournment was granted. 3. The plaintiffs' continued requests for compliance resulted in a show cause application on 1 December 2016, which resulted in yet another opportunity being given to the defendants to put its house in order, but which was, again, the subject of non‑compliance. 4. The plaintiffs sought, and obtained, a self‑executing order on 31 October 2017 that, if evidence was not filed by 12 December 2017 that any evidence provided after that date could not be relied upon at the trial without leave. Not only was there no compliance, but there was no attempt to file evidence after that date. 1. In addition to the above, the defendant failed to attend court on a number of prior occasions, and not merely today. I note, for example, that the defendant was unrepresented on 3 November 2016. 2. At the same time, the plaintiffs have shown the utmost diligence and preparation of this matter. This has included filing a notice to admit facts, which has not been answered and which largely disposes of the disputed facts the subject of these proceedings. 3. Some idea of the attitude the defendant took to this litigation can be taken from a conversation between Ibrahim Kammoun, a solicitor employed by Herald Legal, and Mr Syd, may be seen from the conversation set out in the affidavit of Ms Drayton of 8 April who recorded that Mr Syd said, "Why did you want us to be here?" To which Mr Kammoun replied, "In case you wanted to say something to the Court." Mr Syd said, "Why? We have a hearing date." 4. I have included this conversation in my judgment because it is indicative of an attitude that this Court has seen with increasing frequency. This is not the first application which has come before the Court in circumstances where there has been repeated, and even blatant, failure to comply with court orders. In my judgment in Deputy Commissioner of Taxation v Waterstreet [2018] NSWDC 42 at [12], I noted another case where such an application had been made to me, and, in fact, looking at the cases set out on the case law website, it appears to be a practice increasingly adopted by parties who seek to avoid complying with their obligations for case management to simply refuse to comply with orders in circumstances where court time, as well as the time of the opposing parties, is taken up needlessly. 5. Sections 56 to 62 Civil Procedure Act 2005 (NSW) were designed to promote case management and to reduce the likelihood of conduct of this kind. Regrettably, as there is no commercial list in this Court, it falls to the judicial registrar or the registrars to maintain compliance with the case management orders which are made, and the result appears to be that it has become easy for non‑compliance, particularly in commercial matters, in circumstances where the court's resources simply do not permit the kind of close attention necessary to ensure that abuses of this sort do not occur. It may be that some review of the summary judgment procedure may be necessary in order to avoid court time being wasted by this repeated pattern of non‑compliance with court orders resulting in the matter being forced to go to hearing when it should have been struck out on a summary basis long before now. 6. Having made those observations, I now turn my consideration to the circumstances in which the plaintiffs entered into a contractual relationship with the defendant which resulted in the debt which is claimed. 7. On or about 8 February 2013 Mr Wong, a Canadian businessman with business interests in a number of countries, who has owned and run travel businesses for over 20 years, and the plaintiffs entered into an agreement whereby SNA Tours agreed to provide administrative services to a company to be registered in Australia and to assign debts owing to SNA Tours to another company named AusCo and also contractual rights. 8. On or about 28 April 2013, Mr Wong and SNA Tours then entered into an agreement (the "Royalty Agreement") with the defendant whereby the defendant ("Royalty") issued airline tickets for customers of SNA Tours. 9. On or about 23 July, Mr Wong and Royalty entered into an agreement whereby Royalty would use its credit card facilities for these customers. SNA Asia Group Pty Ltd was registered as a company on 9 August 2013, and it assigned to SNA Asia all debts owing to SNA Tours by Royalty. There were amendments to the credit card fee agreement in September 2013, and there was a prepayment agreement between SNA Asia and Royalty in October in relation to future airline tickets. 10. The parties continued their business in 2014 as part of Mr Wong's desire to expand his travel business by setting up this new travel business to be operated by the new company, which was ultimately SNA Asia. SNA Tours was providing administrative services to the new business until it was registered in its trader, and the SNA agreement provided that merchant sales were to be assigned to the new Australian company upon Mr Wong giving notice to SNA Tours of the registration of the new Australian company, which appears to have happened in about October 2013. 11. SNA Asia became bound to the SNA agreement as a contract before registration (s 131(1)(b) Corporations Act 2001 (Cth)). 12. However, Mr Wong needed to partner with a local travel agent. He intended that SNA Tours would promote its overseas travel tours to group discount merchants such as Groupon, who would then on‑sell the travel tours to Australian customers. A local Australian travel agent would then issue the airline tickets to those customers who had booked and paid, and this was the task that was allotted to Royalty Vacations by these agreements. 13. I do not consider, having regard to the notices to admit facts and the limited range of the defence, that I need to set out all of the transactions which led to the contract in question being pursued, or, for that matter, the credit card fee agreement or the prepayment agreement, or, for that matter, the amendment of that agreement. That is set out in the statement of claim and is essentially the subject of admissions. I note also that there was a loan to Royalty Vacations of $50,000, proof of which is set out in annexure E; namely, the relevant bank statements. 14. There have been a series of admissions by Royalty as to its indebtedness to the plaintiffs, as it set out in the very helpful written submissions of Mr Ipp. I note, for example, that Mr Syd and Ms Chan met with SNA Asia's lawyer, Ms Drayton, and financial consultants when it was agreed that there would be a joint accounting reconciliation of the debts owed. There appears to have been a series of meetings for this purpose, and on 14 October 2015, Mr Joe Zhou sent an email attaching a copy of a series of transactions totalling $583,024.80, which was subsequently the subject of reconciliation by Ms Derrer for the purposes of this exercise. 15. The quantum of debt is the subject of an expert report by Mr Rodney Ferrier of 5 May 2017. He quantifies the net amount owing by Royalty Vacations to the plaintiffs as $447,221.82 (see paragraph 1.10 of his report) exhibit A. 16. I accept his summary as to how this amount is arrived at in relation to each of the 10 items he has considered. I am satisfied, having regard to the report of Mr Ferrier and his assessment of each of those items, that the sum of $447,221.82 is owing. Orders 1. Defendant called outside Court 13D three times at 10:10 am – no appearance; proceedings adjourned until 10:45 am. 2. Defendant called outside the List Judge's Court three times – no appearance. 3. Defendant called a third time outside Court 13D at 10:50 am – no appearance. 4. Judgment for the plaintiffs for $506,860.73 inclusive of interest (calculated at $59,638.90). 5. Defendant pay plaintiffs' costs of the proceedings. ********** 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: 13 June 2018