SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA
H.B. SCHMIDT PTY LTD & B.G. SCHMIDT PTY LTD t/as NORTHERN IRON & BRASS FOUNDRY v SPECIALIZED ENGINEERING SERVICES (NT) PTY LTD.
No. 287 of 1991
Before the Master at Darwin on 17 October,
14	and 28 November 1991.

PRACTICE AND PROCEDURE - application to set aside default judgment - failure to give notice of intention to enter judgment - whether intention to mislead defendant - whether judgment entered irregularly on grounds of bad faith - whether rule  of etiquette or of law - whether to be set aside ex debito justitiae - principles considered.

PRACTICE  AND PROCEDURE -	application	to set aside default judgment regularly entered against defendant exercise	of	discretion		-	factors		to	be considered - general principles - what is required
of defendant - Rule 21.07 of Supreme Court Rules.
Cases considered:
Bilato Nominees Pty Ltd v Northern Gold NL and ors (unreported,  Nader J delivered 7 March 1985) D.G.Ogle Pty Ltd	v Phillips	and	Anor (unreported, Queensland, delivered 23 July 1976)
Hopkins v Q.B.E. Insurance Ltd, (unreported, 22 May 1991)
T.J.M. Products Ltd v A. & P. Tyres Pty Ltd and Ors
78 CLR 579 Cases followed:
Bratic v Toohey 2 QD R 140
Craven v Smith (1869) LR 4 Exch 146
Davies v Pagett 70 ALR 793
Heller Financial Services v Solczaniuk, (unreported Court of Appeal of the Northern Territory, delivered
23 October 1986)
Metropolitan Water sewerage and Drainage Board v Aravas (1970) 3 NSWR 174R - v Crown Court at Knightsbridge, ex p International Sporting Club (London) Ltd [1981] 3 All ER 417

•.

Cases referred to:
Chitty v Mason (1926) VLR 419
General Credit Finance Pty Ltd v Grimm (1978) Qd. R. 449
The Lady Anne Tennant v Associated Newspapers Group Ltd (1979) F.S.R. 298
Tringali v. Stewardson Stubbs & Collett Ltd. (1966) 66 S.R. (N.S.W.)
Tunnecliffe v Besnard (1938) 55 WN MSW) 58
Wallingford v Mutual Society (1880) 5 App. Cas. 685 at p.704

Counsel for Plaintiff:	Mr Ford Solicitors for Plaintiff: Messrs Cridland Counsel for Defendant:	Mr Waters
Solicitors for Defendant: Messrs McBride & Stirk

'

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA
AT DARWIN
287 of 1991	BETWEEN
H.B. SCHMIDT PTY LTD
& B.G. SCHMIDT PTY LTD
T/as	NORTHERN	IRON	f<_	BRASS FOUNDRY
Plaintiff
and
SPECIALIZED ENGINEERING SERVICES (N.T.) PTY LTD
Defendant MASTER LEFEVRE: REASONS FOR DECISION DELIVERED: 28 November 1991.
I am asked in the defendant's application	to set aside

interlocutory
16	September judgment	is

judgment obtained 1991 in default for delivery to

against the defendant on of appearance.  That the plaintiff by the

defendant of certain goods or for the defendant to pay the plaintiff their value, for damages to be assessed for the detention of the goods and for costs.

The defendant relies on the affidavit, sworn 11 October 1991, of John Stirk (Stirk), a member of the firm of Messrs McBride and Stirk, who are the defendant's solicitors. It relies also on the affidavit of James Davidson (Davidson) , the defendant's manager, sworn 14 October 1991. The plaintiff has filed and relies on the affidavit of Herbert Foxlee (Foxlee) sworn 8 October 1991, but only so far as it introduces into evidence annexure "A" to that affidavit.

On 7 October 1991, an informal application was made to me in private chambers. On that date, on the applicant defendant's counsel's undertaking to provide to the

1

plaintiff's solicitors, by close of business on 8 October 1991, facsimile copies of its proposed application and affidavit in support, I ordered:
a stay of execution until 9.30 a.m. on 10 October 1991;
that, by close of business on 9 October 1991, the defendant file its application in support for the stay; and
that the plaintiff have leave to file affidavits in answer.

On 14 October 1991, the application to set aside the judgment was filed.

On 10 October 1991, I extended the stay to 9.30 a.m. on
17 October 1991. On 17 October 1991, I heard argument and reserved my decision.

The application to set aside the judgment is made under Rule 21.07 of the Supreme Court Rules. That Rule reads as follows:-

"The	court		may	set judgment	entered accordance with this

aside or vary  a or given in order.'

The writ, issued on 8 August 1991, sought, inter alia, the return of certain goods. On 16 August 1991, Stirk wrote to solicitors in Innisfail, Queensland, who were, before issue of the writ, representing the plaintiff. I set out the contents of that letter in full:
"We act for Specialised Engineering Services (NT) Pty, Ltd. and have been forwarded  a  copy  of  your  letter   of the  14th  of  August,  1991  to  our  client.

"We	note	your	instructions	that	you are	in	the  process		of	discontinuing the		proceedings		brought		against Namatay Pty. Ltd.,	(who are

J

represented	by	Messrs. Mitaros of Darwin).

Philip	&

"As we act on behalf of Specialised Engineering Services (NT) Pty. Ltd., we would appreciate it if you could advise Messrs. cridlands that we will accept service of any process on behalf of our client.
"Our client contends that an agency agreement exists between it and your client. we believe these  issues were quite succinctly put in our letter to your client of the 14th of May, 1991.

"We confirm in particular that with your knowledge and consent we have been entering into contracts to supply your client's company's products for periods up to a further three years in reliance on the continued existence of the distributorship agreement.

"Indeed, in Mr. Foxlee•s letter of the 17th of May, 1991 he acknowledged a committment (sic) to continue to source products from N.I.B.F. for those purposes.
"Pursuant to documentation between Specialised Engineering Services Pty. Ltd. (now Namatay Pty Ltd.) and Specialised Engineering Services (NT) Pty. Ltd., the former company's interests were transferred and assigned to our client. In that regard, we refer you to the decision of the Supreme court of the Northern Territory in the matter of Calaby Pty. Ltd. -v- Ampol.
"Additionally, we have undertaken work in relation to the consignment and have rights pursuant to the Workmens' Liens Act.
"In view of the foregoing, we reject your assertion that your client is entitled to immediate possession of the stock and reject any suggestion that the agency agreement has been lawfully terminated.

"Based on your advice that you or your solicitors have filed a Notice of Discontinuance in the action brought against Namatay Pty. Ltd., and noting your institution of proceedings against Specialised Engineering services (NT) Pty. Ltd., we have advised our client to forward you a cheque in the sum of $22,392.83 in (illegible) your May account."

Unknown to Stirk, the writ had been served on 15 August 1991.	On 16 August 1991, stirk's firm received, by facsimile transmission, a copy of the writ, but Stirk, who was away from his office, did not see the facsimile until the week commencing on 16     September 1991.	Stirk travelled to Darwin from Alice Springs on 4 September 1991 and, while in Darwin, after hearing from the

defendant,

made

an	enquiry	of

the	plaintiff's	Darwin

solicitors

(Messrs

Cridlands)

by	telephone	(the	first

conversation).

He was then

told that they had filed

documents for judgment in this Court. Neither the plaintiff's Innisfail solicitors nor its Darwin solicitors had before that date given notice to the defendant's solicitors of the intention to enter the judgment in question.

Stirk	says		that,	on		that	same		day	(i.e.	4	September 1991),		he	attended		at	the		Supreme		Court	Registry		in Darwin and was there informed that judgment had not yet been entered because some requisitions had been raised. He says he "enquired as to whether an Appearance filed at that  stage would be accepted",		and was told (presumably by a member of the Registry staff) that "the processing of	documents	would	take		place		in	accordance		with	the original dates of lodgment".			He says that he "therefore
formed	a	view	that	there	was	no	point	in	filing	an

appearance		at September	1991 the	writ	and

that		stage." without having did	not	return

He left Darwin on 5 entered an appearance to to his office in Alice

Springs until 16 September 1991. However, during the week commencing on 9 September 1991, he did speak to the defendant's Darwin solicitors (the second conversation) and asked them "to obtain (the plaintiff's) instructions in relation to agreeing to have the judgment set aside on the basis that (the plaintiff's solicitors) had failed to advise him of (the application to enter judgment) notwithstanding that (their) principals (had been) in receipt of (his) letter of 16 August 1991." There is no evidence of what was the plaintiff's solicitors' response to this request.

Stirk says that, in the course of the second conversation, the plaintiff's solicitors told him that they had received a copy of his letter to the Innisfail solicitors. That should have warned the plaintiff's solicitors that the defendant wished to defend, but there is no evidence of the date on which it was received by the Darwin solicitors.

But, of course, at the time of judgment had not been entered.

the second conversation, It was not entered until

the Monday of the week following. On the evidence, it seems to me that, at the time of that conversation, Stirk believed that judgment had been entered and the plaintiff's solicitors did nothing to dissuade him from this belief. There is no direct evidence that this was deliberate, but the fact that the documents seeking judgment were under requisition raises the question of whether Stirk was duped into believing or continuing to believe that judgment had been entered when the plaintiff's solicitors were aware that it had not.

If the plaintiff's solicitors, at the time of the second conversation, believed that judgment had already been entered, then would they not have known, some time after the conversation, that judgment had not been entered at

,

the time? If they did know, would they then have been under an obligation (particularly having regard  to Stirk's letter to the Queensland solicitors) to inform Stirk  of the change  in the situation?  Alternatively, the plaintiff I s solicitors might have been aware that judgment had not been entered at the time of the second conversation and allowed Stirk to believe otherwise.
Is there a rule of law or etiquette that obliged the plaintiff's solicitors, knowing that Stirk's client wished to defend, to confirm to Stirk that judgment had not been entered rather than to allow him to believe or to continue to believe that judgment had been entered?
If such an obligation existed then should not the default judgment be set aside ex debito justitiae?

It occurred to me that an examination of the documents in the file relating to the making of the requisition which

deferred	the entry
light on the matter. documents?

of		judgment	may shed	some But am I entitled to look

valuable at those

I informed the parties of what was exercising my mind and restored the matter to the list to hear submissions on this aspect. On the matter's being  listed  on  14 November 1991, the only appearance was by the plaintiff's counsel, from whom I heard submissions.

In an old English case of craven v smith (1869) LR 4 Exch 146, it was held that the Supreme Court of Judicature, at all times, is entitled to look at its own records and to take notice of their contents, although they may not have been formally put into evidence by the parties. A court of record has power over its own process; Metropolitan water Sewerage and Drainage Board v Aravas (1970) 3 NSWR
174.	In that case, at page 179 Asprey JA said
"In Tringali v. Stewardson Stubbs & Collett Ltd.  (1966),  66  S.R.   (N.s.w.) 335, at pp. 344-5 a number of cases

6

are collected which serve to illustrate the power of the court to take restrictive action to prevent injustice through abuse of its process; but this power is not limited to negative action and I am firmly of the opinion that the court has to ensure that right is done between the parties to an action who have invoked its jurisdiction to determine their respective rights and liabilities."

But what are the records? In R v crown court at Knightsbridge, exp International Sporting Club (London) Ltd [1981] 3 All ER 417 at 424, it was said, per curiam, in relation to certiorari, that -
"(a)lthough the old authorities do show a stricter approach to what constituted the 'record•, the modern authorities show that the judges have relaxed the strictness of that rule and taken a broader view of the
•record' "

I take the view that I am entitled to look at the Court file and take notice of the requisition and matters related to the entry of the judgment.

Thus, in examining the documents in the Court file leading up to the entry of default judgment, I find that the entry of judgment was sought on 30 August 1991.
Requisitions (the details of which are irrelevant) were raised, and remained outstanding between  2  September 1991 to just before the date of entry of judgment. On 4 September 1991, the very day of the first conversation, the plaintiff's solicitors had purported to answer the requisitions, but without success. Further requisitions were raised on 5 September 1991 and again on 11

September. interlocutory entered	on	16

On	13	September	1991,		the		form	of judgment	was	settled	and	judgment September		1991		in		accordance	with

the was that

c.-

settled form.

Clearly, all that Stirk knew from the first conversation was that judgment was being sought. He was told by the plaintiff's solicitors that they had filed the documents for judgment. This is obviously why he attended the court that day. What is also clear is that, at least by
6	September	1991, the plaintiff's solicitors must have known	that,			at	the		time		of		the		first	conversation, judgment had not been entered.				By 6 September 1991, they should have had knowledge of the matters contained in the requisition dated 5 September 1991.			There is no evidence	of		when		that	requisition			was	satisfied		and, because the requisition 'might have been answered	before the date of the second conversation, I cannot conclude that the plaintiff's solicitors knew, at the time of the second conversation, that judgment had not been entered. However,		it				seems		to		me	that,			after			the		first conversation,					the		plaintiff's		solicitors			had the opportunity to communicate to Stirk the fact that, despite his belief to the contrary, judgment had not been entered. Can their failure to do so support an allegation of entry of judgment in bad faith?

In his affidavit, Stirk implies that he did not press the filing of the appearance because of what he had been told by the Registry.   It seems to me that Stirk would have
been justified in insisting	on being allowed to file the

appearance, although out of

time.

Had he done so, an

appearance would have been on the thwarted	the	entry	of	judgment. Registry		may		have	been	correct

file which would have The		clerk	in	the in	saying		that	the

processing of documents takes place in accordance with the dates of lodgment, but surely that applies only if the documents in question are properly lodged. An application to enter judgment in default which is faulty cannot be considered properly lodged until the matters

which prevent entry of judgment are corrected.  When Stirk sought to enter the appearance, he had the support of Rule 8.07 (1) of the Supreme Court Rules which reads:
"A defendant may file an appearance at any time, but after judgment an appearance shall not be filed without the leave of the court."

However, Stirk did not choose to rely

on that Rule.	He

was informed, at the time he attended

at the

Court, that

no judgment had been entered, yet chose not to file an

appearance. Stirk had been

I	discount	entirely	any	suggestion misled by the Registry staff member.

that

The defendant submits that the judgment should be set aside ex debito justitiae as having been signed in breach of good  faith.  There is no evidence that the judgment was otherwise irregular.

A case frequently cited  in this Court in an application of this kind is the judgment of Nader J of this Court in the unreported decision in Bilato Nominees Pty Ltd v Northern Gold NL and ors, delivered 7 March 1985.
There, his Honour criticized the action of the plaintiff's solicitor in entering judgment in the way they had done.

In Bratic v Toohey 2 QD R 140, it was held that a plaintiff's failure to let a defendant know of "an intention to enter  judgment  in  default  does  not render that judgment irregularly entered so as to entitle the defendant to have it set aside ex debito justitiae."

In Hopkins v Q.B.E. Insurance Ltd, an unreported decision of Martin J of this court, delivered 22 May 1991, his Honour said at p 26 of that report:
"There may be differences of opinion as	to	whether,	in	particular

circumstances, the failure of a solicitor for a plaintiff to give reasonable notice to a solicitor for a defendant of intention to sign judgment in fault may lead to such a judgment being set aside as being irregular on the grounds of bad faith, or because such an irregularity may have caused a failure of natural justice."

In T.J.M. Products Ltd v A. & P. Tyres Pty Ltd and ors 78 CLR 579, Fisher J of the Federal Court held that a court had "jurisdiction to set aside an order which has been entered to obtain an ulterior advantage and constitutes an abuse of process." Jurisdiction, his Honour said, was derived from the Federal Court's powers under its

rules to set aside judgment and from incidental	power	to	regulate	or

its "inherent or control	its	own

procedures." I accept that his Honour's observation applies to the rules or powers of this Court.

In D.G.Ogle Pty Ltd v Phillips and Anor, (the only reference to which I was given is that it is an unreported decision of the Supreme Court of Queensland, delivered on 23 July 1976,) Williams J said:
"One of the bases upon which it was sought to set aside the judgment was that the solicitors for the plaintiff had breached what was said to be, at the least, a rule of etiquette if not of law, requiring them to give notice to the solicitors for the defendants before moving for judgment by default. This argument was again pressed upon us.  Authorities said to support the proposition were cited to us. It is sufficient to state that no authority was cited to show that a defendant out of time, against whom judgment had been entered by default and, in respect of whom there was no arguable case raised on the merits, had ever had a judgment set aside solely on the grounds that his solicitor had not been notified prior

to the application. Indeed it would have been surprising if any such decision could be found. It is perhaps sufficient to dispose of this point to refer to and respectfully agree with what the learned trial Judge said namely, 'I commend the practice which is followed of giving notice to other solicitors, but if it is not given that may be for a variety of reasons'."

The actions of the plaintiff's solicitors, criticized by the defendant, were, in my opinion, not the real reason why default judgment was entered. The real reason was that Stirk, when he had the opportunity and right to do so, failed to file an appearance.

In Hopkins v O.B.E. Insurance Ltd (supra), Martin J, referring to Bratic v Toohey, said:
"··· bad faith, if there be any, must be taken into account in all the circumstances of a case before it can be said to have led to a judgment in fault being entered irregularly."

I do not say that the plaintiff's solicitors were entirely blameless in their dealings with Stirk, but it is clear to me that stirk's inaction in filing the appearance is, in all the circumstances, the factor which negatives the effects of what might have been bad faith on their part. I am not satisfied that there is sufficient justification for me to set aside the judgment ex debito justitiae.

In Davies v Pagett 70 ALR 793, it was held that, for the court to exercise its discretion to set aside a judgment regularly entered, the defendant must show a prima facie defence on the merits. This case and other authorities indicate, by way of a guide to the exercise of the  court's discretion, other factors worthy of consideration
11

such as the reason for there having been no defence filed before judgment was entered; whether there has been delay in bringing the application to set aside the judgment and whether the plaintiff will be prejudiced by the setting aside of a judgment in a way which cannot be adequately compensated for by an order for costs.

In Heller Financial services v Solczaniuk, an unreported decision of the Court of Appeal of this Court, delivered on 23 October 1986, the Court dealt with an application for leave to appeal against an order setting aside a summary judgment entered against the defendant in his absence. Kearney J, in delivering the leading judgment  said at page 10:
"It can be seen from Rule 22.15 that whether or not the judgment of 13 April should be set aside was a matter on which the Court had a general discretion.  The Rules do  not set out any considerations to be taken into account by the court when exercising that discretion.
Nevertheless, courts commonly lay down principles or  general indications to guide them in the normal exercise of their  discretionary powers. So  it  is here. In the exercise of its discretion under Rule 22.15 (dealing with setting aside summary judgments) the court has regard to the factors taken into account on an application under Rule 21.07 to set aside a judgment obtained under Rule 21.01 in default of appearance, or under Rule
21.02 in default of defence.
"A distinction is drawn between a summary judgment obtained in accordance with the Rules, that is, a judgment regularly obtained and in good faith, and one which is irregularly obtained or obtained in bad faith. The former will not in general be set aside except upon an affidavit of merits by the defendant; that is, upon his showing the court that he has a fairly arguable defence (see pp.14-15). The latter will be

set aside in the interests of justice, irrespective of the merits of the defendant's case. see Chitty v Mason (1926) VLR 419 at p. 423, per Dixon A.J. (as he then was).
At pages 14-15, Kearney J continued:

"In the terminology of Lord Blackburn, a defendant must 'condescend upon particulars' of his defence. so in his affidavit he is required to meet specifically the plaintiff's claim and the facts alleged in the plaintiff's supporting affidavits, stating clearly and concisely what his defence is, with particulars; that is, stating the facts he relies on to establish his defence. See Tunnecliffe v Besnard (1938) 55 WN (NSW) 58. As Lord
Blackburn said in Wallingford v Mutual Society (1880) 5 App. Cas. 685 at p.704:-

, It is difficult to define it, but you must give such an extent of definite facts pointing to the [defence raised] as to satisfy the Judge that those are facts which make it reasonable that you should be allowed to raise that defence.•
"If his defence is a point of law, he must clearly state the facts on which he relies and the legal point to which they give rise.
"To show that there is 'a question [which] ought to be tried' it is sufficient to establish that a triable issue exists. To establish that, he must state facts which show a plausible defence, an arguably good defence; as Megarry v-c said in The Lady Anne Tennant v Associated Newspapers Group Ltd (1979) F.S.R. 298: 'You do not get leave to defend by putting forward a case that is all surmise and Micawberism•1.1
On page 32 of that judgment, his Honour said:
"The respondent has not sufficiently
•condescended upon particulars'

as required of a defendant showing cause. That is to say, he has not particularized his proposed defence sufficiently to show, in the light of the applicant's case, that there is 'a question [which] ought to be tried'. Where a plaintiff, as here, 'descends to particulars by material obviously calling for some answer, a defendant needs more than a bald allegation•: General Credit Finance Pty Ltd v Grimm (1978) Qd. R. 449 at
p. 459, per Andrews J (as he then was).

"Para.2 of his affidavit of 6 June appears to be an attempt to remedy that deficiency. It was quite inadequate for the respondent to depose on 6 June •.. that his proposed Defence would be •along similar lines• to that of Mr McCarthy. That language fails effectively to incorporate into his affidavit the allegations of fact set out by Mr McCarthy ... Far more precision and particularization is required, to incorporate it." (emphasis mine)."

As an explanation for such delay as there may have been in applying to set aside the judgment, Stirk says that he had "been busy in court" and that he had "not drafted the documents to set aside the judgment  earlier."  He had been made aware on 30 September 1991 by Davidson that an attempt to execute a warrant of delivery of the goods in question had been made.

The plaintiff, however, has not pressed any argument on the question of delay nor has it raised any question of prejudice.   Its principal, and seemingly only argument, is that the defendant has not established, at any rate in the manner indicated in Heller•s case, a prima facie defence on the merits.

In its attempt to show that it has a defence on the

merits,	the defendant	inter   alia		points  to	the form of defence which is	annexure "A" to	Davidson's affidavit of 14 October 1991.

In	or		about	August	1984,	the		plaintiff		entered		into	an agreement			(the distributorship agreement)			with a company known as	Specialised Engineering Services Pty Ltd (later known	as		Namatay		Pty	Ltd		-		to	which	I		shall	refer	as Namatay)	for		the	supply	to			Namatay	by	the			plaintiff,	on consignment, of certain water reticulation equipment.
It	is	common		ground,	at			least	for  the  purpose		of	this application,		that  the defendant succeeded	to			the			benefit of	the		distributorship			agreement		from	its		predecessor, Namatay.		It			is	part			of	the		defendant's		business	to tender  for  government  contracts.			In his affidavit of 14 October		1991,			Davidson		says   that  the  plaintiff	has been supplier  to Namatay  and		the defendant "for many years".
He   says   that  the "agreement	requires the (p)laintiff to
supply consignment stock to the (d)efendant and maintain sufficient stock level to service the market."		He says that,	before	tendering		for	delivery	of	material,		it		is the		practice	of  the  defendant	first	to check	the		price for	delivery  from  its	suppliers   and then  to	prepare	its tender.

The	defendant			alleges			that,		relying		on			the distributorship			agreement,		it			entered,	in	August		1990, into a contract with the  Power  and  Water Authority	(PAWA) to	deliver		to		PAWA	certain		pipes	and		fittings		for		a period			which	expired		on	23 August		1991,		but		with		an option		to	extend that period for a further 12 months.
Some	of	the	pipes	for	that	tender,		the	defendant	says, came from the		plaintiff.		There is		no evidence, however, that		the		contract		was in	fact	renewed		after	it		had expired.

In  addition,	the  defendant  agreed  with PAWA  to	supply to

t

it ductile iron cement lined fittings for a period of 12 months from 28 March 1991 with an option to renew the contract for a further period of up to 24 months.

The defendant alleges that it had tendered for those contracts with the expectation that the plaintiff would, under the distributorship agreement, supply it with the goods needed to satisfy the contracts. The defendant says that the "maintenance of consignment goods the subject of the Plaintiff's claim is essential for the proper fulfilment of the Defendant's term contracts" (which I take to mean the PAWA contracts). It further alleges that "it was a term of the original agreement that proper consignment stock levels be maintained."

It	is common between	the

ground	that	the	terms	of	the plaintiff	and	the	defendant

agreement are	those

contained in a letter written on 3 August 1984 from the plaintiffs to the defendant's predecessor - see annexure 'A' to Foxlee's affidavit. The terms are as follows:
11 1. The Supplier (NIBF) shall supply to the Distributor at prices listed in the Suppliers Distributor price list fittings and castings manufactured at the suppliers foundry.

11 2. The Distributor will maintain sufficient stock levels to enable the Northern Territory market to be adequately serviced.

11 3. Fittings and castings shall be supplied - delivered Townsville - and the Distributor shall arrange and pay for transport from Townsville to Darwin.
"4. In the event of market competition being too severe for specific projects the Distributor may request assistance in the form of reviewed prices to maintain market share. In these  cases  the assistance given will be negotiated

16

{

between the supplier and Distributor.
"S. The supplier retains the right to supply the Northern Territory market directly if he so desires and to supply members of The James Hardie Group who the supplier supplies nationally.

11 6. Because of the advantageous buying conditions offered by the supplier it is expected that the Distributor limit to the absolute minimum, purchases from competing manufacturers to items not manufactured or readily available from the supplier.

"7. The distributorship is not transferrable and shall immediately lapse should specialised (sic) Engineering Services be sold or change ownership.

"S. The distributorship may be terminated by either the supplier or the Distributor giving three months notice in writing."

On or about accordance

19 February with	the

1991, the plaintiff purported, in distributorship	agreement,	to

terminate its agreement to supply goods to the defendant.

The defendant says that it disputes the plaintiff's right so to do and alleges that there is "no valid basis" for the termination. The defendant claims that  the plaintiff cannot terminate because its right so to do has been varied "by an implied term which has arisen from change in character of the business" which now largely involves the defendant entering into long term contracts of the kind to which reference has already been made.
The defendant asserts that the plaintiff has had knowledge "that the defendant had been entering into contracts for periods of up to three years and relied  upon the continued existence" of the distribution agreement for the period of the contracts into which it

'

had	entered.

In paragraph 5 of the proposed defence (annexure 'A' to Davidson's affidavit of 14 October 1991), the defendant alleges that the plaintiff has "acknowledged that the (defendant) was entitled to hold the ••. chattels so as to supply ... (them) to (PAWA)  pursuant to contracts which were entered into with the knowledge of the (plaintiff) and which contracts required the supply  of the said chattels for a period of years." The defendant in paragraph 6 of its proposed defence  claims  that  the parties "by creation of an implied term of their contract of distributorship have agreed that the Defendant is entitled to retain such stock as is held upon consignment to service long term contracts entered into by the Defendants with (PAWA) with the knowledge and consent of

the Plaintiffs."
by facts.

These are	bald assertions unsupported

There are	no particulars  of how the				change in "character" of	the			defendant's		business  brought		about  the		alteration in	the agreement,	nor	are	there			particulars	to	support the		allegation  that the defendant		entered into contracts with			PAWA		"with	the		knowledge					and	consent"	of	the plaintiff.				Paragraph  5 of  the	proposed defence asserts that		Foxlee		"acknowledged"		the		matter		pleaded,		but no facts are given in the defendant's affidavit as to the circumstances of the acknowledgement which would  prima facie  allow  a  variation  of  the  terms   of   the distributorship agreement.  The  allegation  in  stirk's letter of 16 August 1991  that,  in  a  letter  of  17 May 1991, Foxlee acknowledged a commitment to  continue  to supply goods for the purposes of the contracts entered
into	by  the	defendant	is	unsupported	by	facts.	The alleged letter hasnot been introduced into evidence.

I

The	proposed	defence	says that entitled to claim the recovery of until	the	reasonable		conclusion entered	into		by	the		Defendant

the plaintiff ''is not (the) consignment goods of the ...  contracts in good faith and in

reliance	upon the (distributorship) agreement	as varied
by the aforesaid implied term."  Once again this is a bald assertion unsupported by facts.

In addition, the defendant, in Davidson's affidavit of 9 October 1991, alleges that some of the goods claimed by the plaintiff in the writ have been sold and accounted for and the defendant continues to account to the plaintiff for sales of those goods. Davidson in the same affidavit alleges that the defendant has "carried out work by lining the (goods consigned to it) by the plaintiff and is entitled to a lien over" them.

The plaintiff submits that the defendant seems to be pleading "some form of estoppel or waiver" and "a lien of some sort", and the defendant has not, however, condescended upon particulars of those pleas to the degree necessary to have the judgment set aside.

The defences, argues the plaintiff, are vague. The defendant's affidavit contains conclusions, but not facts. These conclusions are not supported by particulars, let alone by any documentary or other "objective proof". If there is indeed a claim based on its right to a lien, no details of that work have been furnished; it is not specified, for example, as to what goods are the subject of the alleged lien, i.e. is it all the goods or only some of them? There are  no particulars to support the contention that a lien exists in law. The claim as to what goods have been sold and accounted for are not particularized.

I note that the defences of the existence of a lien and

that  goods  have  been  sold and accounted	for	do not	form part of the proposed defence despite Davidson's  assertion that	that	document	is		the		defence	which		the	defendant will  seek  to		file should  the		application be successful. This		does		nothing,		in	my		view,		to		reinforce		the defendant's claim to have a valid defence on the merit.

I	am		satisfied	that		the  defendant	has	not		condescended upon	particulars		sufficiently		to			support		its		contention that		it	has a prima	facie		defence  on the		merits.		It has not  shown, on the			evidence  it		has adduced,	that  there is		"a  question		[which]	ought	to		be		tried".	The application is therefore dismissed with costs.