Crystal Creek Pty Ltd v Cairns City Council

[2001] QSC 9

SUPREME COURT OF QUEENSLAND

CITATION:

Jonsson, Milner and Riaps Pty Ltd (In liquidation) v Tim Ferrier Pty Ltd, Jentim (Trading Fund) Pty Ltd [2001] QSC 010

PARTIES:

ANTHONY JAMES JONSSON and BRUCE POUNTNEY MILLER
(First Plaintiffs)
RIAPS PTY LTD (IN LIQUIDATION)
(Second Plaintiff)
v
TIM FERRIER PTY LTD
(First Defendant)
JENTIM (TRADING FUND) PTY LTD
(Second Defendant)

FILE NO/S:

 No  S139 of 2000

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Cairns

DELIVERED ON:

23/1/01

DELIVERED AT:

Cairns

HEARING DATE:

22/1/01

JUDGE:

Jones J

ORDER:

1.  The judgment by default entered on 1 December 2000 be set aside.
2.  The defendants have leave to defend by the delivery of a Notice of Intention to Defend and Defence within 28 days.
3.  The plaintiffs pay the defendants’ costs of and incidental to this application to be assessed.

CATCHWORDS:

JUDGMENTS AND ORDERS – SETTING ASIDE DEFAULT JUDGMENT – CORPORATIONS LAW – whether Court satisfied company transaction voidable pursuant to s588FF – whether claim liquidated demand – whether monies paid in voidable transaction able to be paid to liquidators irrespective of whether liquidators suing in representative capacity.

JUDGMENTS AND ORDERS – whether request for judgment pursuant to r283 Uniform Civil Procedure Rules 1999 available – whether Registrar able to enter judgment pursuant to r283 of Uniform Civil Procedure Rules 1999 in light of r16 Schedule 1A of Rules.

STATUTES – INTERPRETATION – consideration of application of maxim expressio unius est exclusio alterius.

Corporations Law s588FF

Uniform Civil Procedure Rules 1999 r283, r16 Schedule 1A

 re Yagerphone Ltd 1935 1 Ch 392

N.A. Kratzmann Pty Ltd –v- Tucker (1968) 42 ALJR 164

Official Trustee –v- Handby 87 ALR 734

Coast Securities No. 9 Pty Ltd –v- Alabac Pty Ltd (1984) 2 QdR 25

Houssein –v- Under Secretary Department of Industrial Relations and Technology and Industrial Commission of NSW  (1982) 38 ALR 577

O’Sullivan –v- Farrer (1989) 89 ALR 71 at 74

Ainsworth –v- Criminal Justice Commission  (1992) 106 ALR 11

Wentworth –v- New South Wales Bar Association (1992) 106 ALR 624

COUNSEL:

 M. Jonsson for the Plaintiffs
 Chris Ryall for the Defendants

SOLICITORS:

 MacDonnells for the First and Second Plaintiffs
 Thomas Stevens & Co for the First and Second Defendants

1. JONES J:  This is an application to set aside a judgment in default of appearance entered by the Registrar on 1 December 2000 against the first defendant and second defendant for respective amounts of $139,107.93 and $127,834.22.  Each of these amounts include allowances for claim, interest and costs.

1. Although the claim was made by the first plaintiffs (the liquidators) and the second plaintiff (the company in liquidation), the judgment was entered only in favour of the first plaintiffs. The first plaintiffs were appointed liquidators of the second plaintiff on 14 November, 1999.

1. The respective claims against the two defendants were made pursuant to s.588FF of the Corporations Law. The claim against the first defendant alleged that payments of real estate agents commission totalling $121,997.25, paid to it by the second plaintiff on or before 7 June, 1999, was a voidable transaction by reason of their being unfair preferences.

1. The claim against the second defendant alleged that certain payments purportedly for marketing services were also voidable transactions for the same reason.

1. It is conceded by the applicants that the claim and statement of claim were duly served and no notice of intention to defend was filed by either defendant within the 28 days allowed by the Uniform Civil Procedure Rules (“UCPR”).

1. The claim identified in post script that the first plaintiffs were suing in a representative capacity but this was not repeated in the statement of claim. The first plaintiffs filed a request for default judgment pursuant to R.283 of the Uniform Civil Procedure Rules (UCPR) and in support of that request filed an affidavit of service and an affidavit by the first named first plaintiff. The applicant argues that the judgment was irregularly entered for the reasons that –

(i)    the order could be made only if the court were satisfied that the transactions were voidable and that such a finding was not possible on the material;

(ii) alternatively, until such a determination was made there was no liquidated demand and default judgment was not available under R.283 of UCPR;

(iii)    the judgment was defective because it ordered payment to the liquidators, whereas the section authorised payment only to the company.

(iv)    the registrar had no power to make the order.

The material before the Registrar

1. The material terms of this  affidavit in support of the request simply asserted that the respective defendants were indebted to the first plaintiffs in the amounts referred to above.  No reference was made to the allegations contained in the statement of claim relied upon to establish that there was, in fact, an unfair preference within the meaning of 5.7B of the Corporations Law.  No assertion was made of any indebtedness to the second plaintiff.

1. A default judgment against the defendant could be entered only in respect of a debt or liquidated demand. The debt relied upon by the first plaintiffs would arise only if the transaction between the second plaintiff and the respective defendants were voidable pursuant to Part 5.7B of the Corporations Law.

1. Section 588FF of the Corporations Law relevantly provides:-

“588FF (1) Where, on the application of a company’s liquidator, a court is satisfied that a transaction of the company is voidable because of section 588FF, the court may made one or more of the following orders:

(a) an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction;

....”

1. The express words of this subsection make it clear that a prerequisite to the making of any order is the satisfaction of the court that the transactions were voidable.

1. As I have mentioned above evidence relied upon by the first plaintiffs in requesting the judgment made no reference to any facts upon which the Registrar could have made any determination about the nature of the transactions.

1. The claim was brought and relief was sought in reliance upon s.588FF and as such the claim was different to one simply based upon a debt which might be proven by affidavit attesting to the continuance of the debt.

1. The coming into effect of the Corporations Law brought about a change in the way in which liquidators could recover monies paid in transactions which gave an unfair preference to the creditors of a company.  Previously, the action was brought by the liquidators in a capacity as trustee of the unpaid creditors of the company. 

1. The representative capacity of a liquidator in this regard is well noted.  In re Yagerphone Ltd 1935 1 Ch 392, Bennett J said (at p.396):-

“The right to recover a sum of money from a creditor who has been preferred is conferred for the purpose of benefiting the general body of creditors, and I think Mr. Montgomery White was right when he said that the sum of money, when recovered by the liquidators by virtue of s.265 of the Companies Act, 1929, and s.44 of the Bankruptcy Act, 1914, did not become part of the general assets of Yagerphone, Ld., but was a sum of money received by the liquidators impressed in their hands with a trust for those creditors amongst whom they had to distribute the assets of the company.”

1. In N.A. Kratzmann Pty Ltd. v Tucker[1] the High Court said (at p.166):-

“But where security has been given by a bankrupt over all of his assets and a payment to a creditor is made by him out of moneys subject to the charge and the payment is, as against the trustee, subsequently declared void as a preference the moneys paid, when recovered, will not be subject to the charge.  In such a case it may be said that although the moneys paid as a preference were at the time of payment subject to the charge, the moneys recovered by the trustee are not the same moneys and that they do not, by virtue of payment to the trustee, become moneys of the bankrupt or in any way subject to the charge; when recovered they become the moneys of the trustee and his title to them does not depend upon his succession to any title which the bankrupt had.”

[1](1968) 42 ALJR 164

1. Section 588FF(1)(a) would appear to make a change insofar as it directs that monies recovered by the liquidators which have been subject to a voidable transaction becomes the property of the company. It would seem, though it is unnecessary, to determine the point, that such funds would then be subject to any charge which a creditor would have over the company’s assets. This is further supported by the fact that all the other forms of relief available under s.588FF are to the benefit of the company.

1. The situation in this instance is that there was simply no material upon which the Registrar could be satisfied of the necessary prerequisite - that the transaction was voidable - before he could make an order directing payment to anyone. Though this determination leads to the conclusion that the judgment was irregularly entered and therefore should be set aside, I should comment briefly on the other arguments raised.

1. The first is whether the claim was a liquidated demand.  There is no doubt that the amount of the claim was ascertainable by calculation and is a sum which is “made clear” [2] were the proceeding one for recovery of a debt or payment under a guarantee there would be no argument.  Counsel for the respondent referred me to Official Trustee v Handby [3] which dealt with the right of a creditor to prove as a debt in the bankruptcy of a company director, a claim which was initially a contractual debt against the company which had gone into liquidation.  The right to claim against the director in the circumstances was provided by statute (s.556(1) of the Companies (Tasmania) Code 1981).  The Full Court of the Federal Court held that such a statutory liability did give rise to a liquidated claim.  This was simply the application of a statutory right to claim an existing known debt.  That situation  differs to what applies in these proceedings where there is an intermediate process to be undertaken – namely, ascertainment of whether transactions were voidable.  Similarly, in the other case to which I was referred – Coast Securities No. 9 Pty Ltd. v Alabac Pty Ltd[4] the case concerned the payment of an ascertained debt which was guaranteed in circumstances where judgment was sought against both the principal debtor and the guarantors.  Again there was no intermediate step of the kind which was required in this instance.

   [2]Hodges (Pleading & Practice, 5^th ed at p.41)

   [3]87 ALR 734 at p.739

   [4](1984) 2 QdR 25 at p.29

1. I would therefore take the view that until there was a determination that there was a voidable preference there can be no liquidated demand and that therefore the request for judgment pursuant to R.283 of the UCPR was not available.

1. I take the view also that, as the proceeding was based on the claim made pursuant to s.588FF of the Corporations Law, the orders which the Court might make were limited to those identified in subsection (1).  There was no provision made in that subsection for an order that the monies identified as being paid in a voidable transaction should be paid to the liquidators whether or not the liquidators disclosed that they were suing in a representative capacity.

Registrar’s powers

1. The Registrar purported to enter judgment pursuant to R.283 of UCPR which relevantly provides:-

(1) This rule applies if the plaintiff’s claim against the defendant in default is for a debt or liquidated demand, with or without interest.

...

(3) If the plaintiff files a request for judgment under subrule (2), the court, as constituted by a registrar, may give judgment.

1. However, the UCPR by Schedule 1A and 1B makes special provision relating to proceedings under the Corporations Law as this claim is. Pursuant to rule 16 of schedule 1A the Registrar is expressly given the power of the court for the purposes of certain provisions of the Corporations Law and rules. Counsel for the applicant has argued that by reason of these specific provisions the general empowerment of the Registrar to act as a court when dealing with a request for default judgment under R.283 of UCPR should not apply when dealing with a proceeding under the Corporations Law. This appears to be a reliance on the concept expressed in the maxim “expressio unius est exclusio alterius” - translated by Pearce and Geddes in Statutory Interpretation in Australia 4^th ed. at p 105 as “an express reference to one matter indicates that other matters are excluded”.

1. However, as Pearce and Geddes state, the expressio unius maxim is applied by the Courts with extreme caution.  The High Court emphasised this in Houssein –v- Under Secretary Department of Industrial Relations and Technology and Industrial Commission of NSW [5] when it said (at p.581):

“that maxim must always be applied with care, for it is not of universal application and applies only when the intention it expresses is discoverable upon the face of the instrument”.

This caution has been reiterated by the High Court in O’Sullivan –v- Farrer [6], Ainsworth –v- Criminal Justice Commission [7]  and Wentworth –v- New South Wales Bar Association[8].

[5](1982) 38 ALR 577

[6](1989) 89 ALR 71 at p.74

[7](1992) 106 ALR 11 at pp 16-17

[8](1992) 106 ALR 624 at 628

1. There is nothing in the UCPR or the Corporations Law Rules which to my mind, suggests any intention to limit the Registrar’s power to enter a default judgment where the circumstances warrant simply because of the additional powers given under Schedule 1A.

Orders

1. 1.      The judgment by default entered on 1 December 2000 be set aside.

2.      The defendants have leave to defend by the delivery of a Notice of Intention to Defend and Defence within 28 days.

3.      The plaintiffs pay the defendants’ costs of and incidental to this application to be assessed.