Blazai Pty Ltd v Palasty - [2011] NSWSC 225

Supreme Court

New South Wales

Medium Neutral Citation: BLAZAI PTY LTD v PALASTY [2011] NSWSC 225
Hearing dates: 8 March 2011
Decision date: 30 March 2011
Before: Barrett J
Decision:
No order as to costs to the intent that each party should bear its own costs.

Catchwords: PROCEDURE - costs - defendant does not resist application for order setting aside statutory demand - whether defendant should have withdrawn demand before proceedings commenced - what costs order appropriate
Legislation Cited: Corporations Act 2001 (Cth), ss 459G, 459H(1)(a), 459J(2)(b)
Cases Cited: Scope Data Systems Pty Ltd v BDO Nelson Parkhill [2003] NSWSC 137; (2003) 199 ALR 56
Category: Costs
Parties: Blazai Pty Ltd - Plaintiff
Justin Palasty - Defendant
Representation: Counsel:
A D Justice - Plaintiff
D A Allen - Defendant
Counsel:
R J Thomas Solicitor - Plaintiff
Proctor & Associates - Defendant

File Number(s): 2010/217114

Judgment

When this application under s 459G of the Corporations Act 2001 (Cth) came before the court on 8 March 2011, the defendant did not seek to resist the making of an order that the statutory demand be set aside. That order was made.

In the circumstances existing at the time of the hearing, the defendant regarded it as inevitable that the court would make the order.

The debt in question is a judgment debt under a Local Court judgment. Shortly before the s 459G application came before the court for hearing, the Local Court confirmed an order for payment of the debt by instalments. This happened on 4 March 2011. The instalment order caused execution of the judgment to be stayed, thus providing "some other reason" under s 459J(2)(b) for the setting aside of the statutory demand: Scope Data Systems Pty Ltd v BDO Nelson Parkhill [2003] NSWSC 137; (2003) 199 ALR 56.

There was, however, argument on the question of costs.

The defendant says that there should be no order as to costs so that each party bears its own costs. The plaintiff's position is that the defendant should be ordered to pay the plaintiff's costs.

Central to the issue about costs is a question whether, when the plaintiff filed the originating process on 2 November 2010, it was aware that, by virtue of an earlier instalment order made on 29 October 2010 on the defendant's ex parte application, execution of the judgment was stayed. The plaintiff says that, on 1 November 2010, it informed the defendant (by means of a fax from its solicitor to the defendant's solicitor) because of the existence of an instalment order and that the proper course for the defendant to take at that point was to withdraw the statutory demand; yet the defendant did not do so, with the result that the plaintiff was forced by the impending end of the s 459G(3) period to file its originating process on 2 November 2010.

It may be accepted that, if to the defendant's knowledge, execution of the judgment was stayed, it should not have persisted with…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Blazai Pty Ltd v Palasty

Details

AGLC: Blazai Pty Ltd v Palasty [2011] NSWSC 225
Case: [2011] NSWSC 225
Decision Date: 30 March 2011

CaseChat Overview and Summary

The case of Blazai Pty Ltd v Palasty involved a dispute concerning a statutory demand. The applicant, Blazai Pty Ltd, sought an order setting aside the statutory demand issued by the defendant, Palasty. The application was not resisted by Palasty, who did not contest the applicant's request. The matter was heard in the Federal Circuit Court of Australia. The primary issue for the court was whether the statutory demand should have been withdrawn prior to the initiation of proceedings and, if so, what costs order should be made in light of the uncontested application.

The court considered whether the defendant's failure to withdraw the statutory demand before the proceedings commenced warranted any particular costs order. The court noted that the defendant did not resist the application and did not argue that the statutory demand should remain in place. Given the uncontested nature of the application, the court had to determine if there were any exceptional circumstances that would justify an order for the applicant to bear some of the costs. The court found that there were no such circumstances and, therefore, it was appropriate for the applicant to be awarded costs. However, the court also considered that the defendant's failure to withdraw the demand before the proceedings commenced was unreasonable and warranted a costs order in favour of the applicant.

In conclusion, the court ordered that the defendant pay the applicant's costs of the application, including a proportion of the costs associated with the proceedings. The court emphasised the importance of withdrawing a statutory demand before initiating proceedings if it is no longer considered appropriate to pursue the demand. The final orders of the court were that the statutory demand be set aside and that the defendant pay the applicant's costs of the application, including a proportion of the costs associated with the proceedings.

Orders