Candetti Constructions Pty Ltd v M & I Samaras (No 1) Pty Ltd & Ors - [2011] SASC 189

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CANDETTI CONSTRUCTIONS PTY LTD v M & I SAMARAS (NO 1) PTY LTD & ORS
[2011] SASC 189
Judgment of The Honourable Justice Blue
1 November 2011
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - BY LEAVE OF COURT - GENERALLY
The original decision of a Master reduced the amount of the statutory demand - on appeal a single judge set aside the statutory demand in its entirety - the applicants sought permission to appeal to the Full Court - whether reasonable minds may differ on issues raised - whether questions of general importance - whether order determines substantive rights of the parties.
Held: Permission to appeal granted.
Supreme Court Civil Rules 2006 (SA) r 288(1)(a)(ii) and r 289(1)(c); Corporations Act 2001 (Cth) s 459E and s 459J, referred to.
Harris Scarfe Ltd (Receivers and Managers Appointed) (In Liquidation) v Ernst & Young (No 2) (2005) 240 LSJS 17; Niemann v Electronic Industries Ltd [1978] VR 431; Rouse v IOOF Australia Trustees Ltd (No 5) [1999] SASC 294; Waikerie Murray River Queen Pty Ltd v Loizides [2009] SASC 257, considered.

CANDETTI CONSTRUCTIONS PTY LTD v M & I SAMARAS (NO 1) PTY LTD & ORS
[2011] SASC 189
Application

BLUE J: On 4 October 2011, I allowed an appeal by the respondent, Candetti Constructions Pty Ltd (“Candetti”), against a decision by a Master, who had reduced but refused to set aside a statutory demand. I made an order setting aside the statutory demand in its entirety.
On 17 October 2011, the applicants, M & I Samaras (No 1) Pty Ltd, M & I Samaras Pty Ltd (No 2) Pty Ltd and M & I Samaras (No 3) Pty Ltd (“Samaras”), made an oral application for permission to appeal to the Full Court from my judgment.
Principles as to Permission
Rule 288(1)(a)(ii) of the Supreme Court Civil Rules 2006 (SA) (“the Rules”) provides that an appeal to the Full Court lies by permission of the Court if the judgment subject to the appeal is a judgment given on appeal from an interlocutory judgment.
It is common ground between the parties that the judgment of the Master was an interlocutory judgment.
Rule 289(1)(c) of the Rules empowers an applicant to seek permission to appeal by making, within 14 days of a judgment, application to the Judge who made the decision in question.
The following general principles have been established as to the criteria for granting permission for appeals against interlocutory judgments where permission is sought from the Judge who made the order from which the applicant seeks to appeal.
1.The question whether or not permission ought to be granted is discretionary.[1]
2.A factor to be considered is whether the issue raised is one of general importance, as opposed to simply depending upon the facts of the particular case.[2]
3.A factor to be considered is whether, viewed objectively, the issue raised is one upon which reasonable minds may differ or involves a difficult or complex question of law (going to whether the decision is attended by sufficient doubt).[3]
4.A factor to be considered is whether the order has the effect of determining or altering the substantive rights of the parties, as opposed to a matter of practice or procedure.[4]
[1]    Rouse v IOOF Australia Trustees Ltd (No 5) [1999] SASC 294 at [43] per Lander J; Waikerie Murray River Queen Pty Ltd v Loizides [2009] SASC 257 at [22] per Doyle CJ, Sulan and Kelly JJ.
[2]    Niemann v Electronic Industries Ltd [1978] VR 431 at 441 per Murphy J; Harris Scarfe Ltd (Receivers and Managers Appointed) (In Liq) v Ernst & Young (No 2) [2005] SASC 168; (2005) 240 LSJS 17 at [12] and [17] per Bleby J.
[3]    Niemann v Electronic Industries Ltd [1978] VR 431 at 441 per Murphy J; Harris Scarfe Ltd (Receivers and Managers Appointed) (In Liq) v Ernst & Young (No 2) (2005) 240 LSJS 17 at [12] and [16] per Bleby J.
[4]    Niemann v Electronic Industries Ltd [1978] VR 431 at 441 per Murphy J; Rouse v IOOF Australia Trustees Ltd (No 5) [1999] SASC 294 at [44] per Lander J; Harris Scarfe Ltd (Receivers and Managers Appointed) (In Liq) v Ernst & Young (No 2) (2005) 240 LSJS 17 at [12] and [14] per Bleby J.
The Substantive Decision
The major component of the statutory demand was a sum of $308,151.74 which was said to be the amount which Candetti had admitted it was liable to pay to Samaras. When the Master held that this basis of the claimed debt had been negated by Candetti, Samaras argued that the statutory demand claimed the same amount on a different and independent basis, namely that it was an undissected portion of a debt for $1,457,936.54 which Samaras maintained was owed to them by Candetti.
Ultimately, I decided that, in respect of this component of $308,151.74, the statutory demand should be set aside on three alternative grounds:
1.as a matter of construction, the statutory demand relied only on the admitted basis of the debt, and not on the undissected portion of a debt basis;
2.alternatively, as a matter of construction, s 459E does not countenance a demand for an undissected portion of a debt;
3.alternatively, the failure of Samaras to clearly articulate the nature of their demand as being for an undissected portion of a debt comprised a ground for setting aside the demand pursuant to s 459J(1) and substantial injustice would be caused unless the demand were set aside.
I also decided other issues which arose on the appeal, but they need not be considered on the question of permission to appeal to the Full Court.
Analysis
Issue of general importance
Samaras accepts that the first ground on which I set aside the statutory demand does not raise a question of general importance, but depends upon the facts of the particular case, namely the wording of the statutory demand and supporting affidavit.
Samaras contends that the second ground does raise an issue of general importance, namely whether s 459E countenances a demand for an undissected portion of a debt. Samaras contends that, if it does not effectively statutory demands would not be available in building cases, and hence the issue is of great general importance. This contention overlooks (amongst other things) the fact that, in the great majority of building cases (at least of the scale of the one the subject of this action), there is a contract incorporating a mechanism for progress claims which became debts due and payable.
Nevertheless, I accept that the question whether s 459E countenances a demand for an undissected portion of a debt is one which potentially is of general importance.
Decision attended by sufficient doubt
In relation to the second ground on which I set aside the statutory demand, counsel for the parties were not able to locate any authorities on the question of construction of s 459E. The contention by Samaras that a demand is capable of being made for an undissected portion of a debt appears to be a novel one. In these circumstances, Samaras contends that, viewed objectively, the second ground involves a question of law which merits consideration by the Full Court.
This second ground will only be reached if I am wrong in my construction of the statutory demand. Samaras points to the fact that the Master took a different view as to the construction of the statutory demand.
Effect on substantive rights
A decision to set aside a statutory demand does not ultimately determine the substantive rights of the parties, either as to the existence of the debt claimed by Samaras or as to Samaras’ entitlement to institute winding up proceedings.[5]
[5] If Samaras can demonstrate insolvency of Candetti aliunde.
However, such a decision involves matters significantly more substantial than matters of practice or procedure. Whether or not a statutory demand is set aside does have a very substantial impact upon any subsequent winding up proceedings instituted by the claimed creditor.
Overall discretion
Before I heard the appeal from the decision of the Master, Candetti applied for the appeal to be referred directly to the Full Court. Samaras did not oppose that application. I refused the application, and decided that the appeal should be decided (at least in the first instance) by a single Judge.
It is true that the basis on which Candetti made that application was that it identified questions of law (namely whether or not the value of a quantum meruit can be reduced due to delays by the supplier and whether or not a quantum meruit claim comprises a debt) which in my reasons for judgment were not determinative of the appeal. However, I have some regard to the fact of the application by Candetti in the exercise of my discretion whether or not to grant permission to appeal.
Overall, the second ground on which I decided the appeal in favour of Candetti (involving the construction of s 459E) is an issue which, if it were determinative, ought to be the subject of permission to appeal.
My only hesitation in relation to the grant of permission to appeal is that that issue does not arise unless I am wrong in my construction of the statutory demand itself. However, taking all factors into consideration, I have reached the conclusion that this is an appropriate matter in which to grant permission to appeal.
Conclusion
I grant permission to Samaras to appeal to the Full Court from my judgment made on 4 October 2011.
I order that the costs of the application for permission be reserved to the Full Court hearing the appeal.