XPlore Technologies Corporation of America v Tough Corp
Pty Ltd  NSWSC 1267
A judgment on a judgment!
This case concerns an attempt to enforce a Texas default
judgment against an Australian company. The Australian company
successfully resisted the application on the basis that the Texas
judgment was obtained in a manner inconsistent with the rules of
natural justice and/or obtained by fraud.
XPlore supplied wireless tablet personal computers and certain
other computer or computer-related equipment to Tough Corp. Tough
Corp was unhappy with the quality of the equipment and did not pay.
Correspondence between the parties followed.
XPlore filed a Petition against Tough Corp in a District Court
in Texas. Pursuant to the Texas Civil Practice and Remedies
Code the Petition was delivered to the Texas Secretary of
State which was good or effective service on a foreign corporation
"doing business" in Texas. Some days later the Texas
Secretary of State forwarded the Petition to Tough Corp by
registered mail with a covering letter in the following terms:
"YOU HAVE BEEN SUED. You may employ an attorney. If you or
your attorney do not file a written answer with the clerk who
issued this citation by 10.00am on the Monday next following the
expiration of twenty days after you were served this citation and
petition, a default judgment may be taken against you."
Tough Corp, it seems, calculated time from when it had received
the letter. XPlore calculated it from the time it delivered the
Petition to the Texas Secretary of State. A motion was made for
default judgment. At the hearing, the trial judge asked whether
XPlore had any communication from Tough Corp, in relation to the
lawsuit, and XPlore said not, which was incorrect.
After Tough Corp was made aware of the existence of the default
judgment it filed an appeal against it in the Texas Third Court of
Appeals. It also brought a motion in the NSW Supreme Court to have
enforcement of the default judgment stayed.
Justice Rothman noted that foreign judgments may, under the
common law, be enforced as a claim for a liquidated sum relying on
the foreign judgment as a debt with two exceptions: first, if there
has been a denial of natural justice and second, where the foreign
judgment has been obtained by fraud. In this case, Justice Rothman
in his discretion considered that there were grounds to grant a
stay. He agreed with Tough Corp. He noted it was alleged that the
letter quoted above was misleading and that there had been a lack
of time between the receipt of the initiating documents and the
issue of the foreign judgment meaning that it was at least arguable
that Tough Corp had not had a sufficient opportunity to prepare or
present a defence.
Further, the judge thought that the second exception relating to
fraud was relevant. Fraud includes a situation where the foreign
court was misled into coming to the decision that it did. In
Justice Rothman's view a court may be misled by a statement
from the bar table or its equivalent in an application for default
judgment. He thought that the answer to the question from the trial
judge, as to communication with Tough Corp, was significant and the
trial judge had been misled.
Bearing in mind that there was an appeal in Texas and the
necessity and desirability of a just, quick and cheap resolution of
the real issues between the parties, Justice Rothman thought that
it would be more efficient, just and inexpensive for the Appeal
Court in Texas to deal with the issues. In the circumstances, a
stay was granted.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Peter Sise explores how your contractual clause for recovery of legal costs might not do what you think it does.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).