DB Mahaffy & Associates Pty Ltd v Mahaffy

[2011] NSWSC 673

Supreme Court

New South Wales

Medium Neutral Citation:

D B Mahaffy & Associates Pty Ltd v Mahaffy [2011] NSWSC 673

Decision date:

29 June 2011

Jurisdiction:

Equity Division

Before:

White J

Decision:

Refer to paras [24], [31], [35], and [36] of judgment

Catchwords:

CORPORATIONS - statutory demand - application to set aside statutory demand - where plaintiff appeared through a solicitor and sought adjournment - adjournment refused - where a solicitor for plaintiff had no instructions to appear in the proceedings - where no satisfactory explanation for no appearance for plaintiff - originating process dismissed with costs

CORPORATIONS - practice and procedure - notice of motion - where director seeks leave to be joined personally as party to proceedings to set aside statutory demand - director not a proper plaintiff to set aside statutory demand

CORPORATIONS - practice and procedure - where director appeared personally for company - company required to appear by a solicitor or can appear by director if director himself a plaintiff - director not entitled as of right to appear on behalf of plaintiff - Uniform Civil Procedure Rules r 7.1(2) and (3)

COURTS AND JUDGES - bias - disqualification - apprehended bias - where after hearing complaint made of bias - where judge has decided previous applications adversely to complainant or his interests - where no objection taken to judge hearing application at time - where plaintiff's claim dismissed for non-appearance - remaining issue concerning costs - judge refuses to disqualify himself from dealing with remaining issue

Legislation Cited:

Corporations Act 2001 (Cth)
Civil Procedure Act 2005

Cases Cited:

JSBG Developments Pty Ltd v Kozlowski [2009] NSWSC 1128; (2009) 75 NSWLR 745
DB Mahaffy & Associates Pty Ltd v Mahaffy [2010] NSWSC 881
Mahaffy v Mahaffy [2010] NSWSC 1358
Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225
Re JRL; Ex parte CJL (1986) 161 CLR 342

Category:

Interlocutory applications

Parties:

D B Mahaffy & Associates Pty Ltd (Plaintiff)
Jeffrey Mahaffy (Defendant)

Representation:

R Watson (Solicitor for Plaintiff)
In person (Defendant)

File Number(s):

2010/429076 2011/108012

Judgment

1. HIS HONOUR: In proceedings 429076 of 2010, Mr Watson, solicitor, seeks an adjournment. He has been instructed by the plaintiff to make that application, but does not have instructions to appear in the matter if the adjournment is refused.

1. The proceedings are an application to set aside a statutory demand. The originating process says that the demand was received on 13 December 2010, that is, more than six months ago.

1. On 18 April 2011, Barrett J made orders, including that the matter stand over to the Corporations Judge on 2 May 2011, by which time the plaintiff was to regularise whatever arrangement it intended to rely on to have a natural person represent it in these proceedings. His Honour also stood over to that day an application by the defendant to set aside a subpoena. His Honour also said:

" 5. I would add these observations. The defendant has made it clear that this is the second statutory demand that he has served in respect of the particular debt. He has acknowledged to the Court that the first statutory demand gave rise to a presumption of insolvency because not complied with and that he did not, for reasons which do not matter, make a winding up application based on that statutory demand within the time for which the presumption of insolvency remained available.

6. I direct that Ms Keverian [who appeared for the plaintiff on that day] convey these instructions to the person within the plaintiff who is instructing her. "

1. On 2 May 2011, Barrett J set aside two subpoenas to produce documents issued at the request of the plaintiff and directed to the defendant. On the following day, his Honour listed the matter for further directions on 23 May 2011 before the Corporations Judge.

1. On 23 May 2011, the Associate's Record of Proceedings records that Mr D Mahaffy, that is, Mr David Mahaffy, appeared for the plaintiff. The defendant appeared in person. His Honour, on that day, listed the matter for hearing today before the Corporations Judge. His Honour also made orders with respect to a subpoena by directing that it also be returnable at 10am today before the Corporations Judge.

1. There is a separate proceeding between the same parties in matter 108012 of 2011, which also involves an application to set aside a statutory demand served by the defendant on the plaintiff, presumably, a statutory demand for a different debt. That application was filed on 4 April 2011 and was initially returnable before the Registrar on 10 June 2011.

1. In those second proceedings, there were appearances for the parties before the Registrar on 10 June 2011. The matter was stood over to 27 June 2011. There is also a note on that file which reads " Vacate 29/6/11 ". This is consistent with what Mr Watson advised on the present application for an adjournment, namely that the Registrar took the view that the two matters should travel together.

1. How it might have come to be that the Registrar vacated the hearing date which the Judge fixed, I do not know. I was not notified of that.

1. When the 2011 proceeding was returnable before the Registrar on 27 June 2011, there was no appearance for the plaintiff. The defendant appeared in person and the matter was referred to me as the Corporations List Judge.

1. According to my diary, proceedings 429076 of 2010 were still listed for hearing today.

1. On Monday, 27 June 2011, when proceeding 108012 of 2011 was referred to me, the defendant applied to have the originating process in that file dismissed in the absence of an appearance for the plaintiff. I refused that application and stood the matter over to today to be mentioned with the hearing of matter 429076 of 2010.

1. Yesterday, my Associate received a telephone call from Mr David Mahaffy enquiring as to what had happened in relation to the hearing of the matter listed on 27 June 2011. He was advised that that matter had been listed today.

1. It is in those circumstances that the present application for an adjournment was made. I initially refused the adjournment. When I made that ruling, I had not appreciated that the Registrar had apparently vacated the listing of proceeding 429076 of 2010 today.

1. I think, in the circumstances, I ought to hear further from the parties before finally deciding on this application. I will vacate the order which I have made a short time ago refusing the adjournment and I will hear the parties further on it.

[The parties addressed further on what had happened when proceedings 108012 of 2011 were before the Registrar on 10 June 2011.]

1. It appears from further information provided by Mr Watson that the order made by the Registrar in proceeding 108012 of 2011 " Vacate 29/6/11 " was an order made in relation to a notice of motion filed by Mr Jeffrey Mahaffy in the 2010 proceedings, seeking to set aside two subpoenas.

1. The notice of motion was filed in the 2010 proceedings by Mr Jeffrey Mahaffy on 25 May 2011 and sought an order, both in relation to a subpoena issued on 16 May 2011 in the 2010 proceeding and a subpoena issued in the same terms in the 2011 proceeding.

1. Order 3 of the notice of motion of 25 May 2011 sought to set aside the subpoena in the 2011 proceeding. The reason that the notice of motion in the 2010 proceeding deals with subpoenas in both proceedings is that the subpoena issued (or the copy provided to me by Mr Watson) has both case numbers on it. The notice of motion was listed for hearing on 29 June 2011.

1. I do not think that the Registrar made an order vacating the date for hearing of the 2010 proceeding. In any event, the 2011 proceedings were then stood over to 27 June 2011. There was no appearance for Mr David Mahaffy on that day, or for D B Mahaffy & Associates Pty Ltd on that day. Mr David Mahaffy had not given instructions to Mr Watson to appear on that day.

1. I stood over the 2011 proceedings for mention today. As I have said, Mr David Mahaffy was advised of that matter by my Associate. I do not think there is any satisfactory explanation as to why there is no appearance for the plaintiff in the 2010 proceedings today, that is to say, why there is no appearance for the plaintiff by someone with instructions to act on the substantive hearing.

1. Mr Watson referred, also, to receipt of an affidavit from Mr Jeffrey Mahaffy only yesterday. That affidavit, in substance, annexes the earlier subpoenas that had been the subject of Barrett J's reasons of 2 May 2011, together with the further subpoenas that were issued in both the 2010 and 2011 proceedings.

1. It is clear from a comparison of the subpoenas that the further subpoenas that were issued sought the same documents as were sought in the subpoenas which Barrett J set aside. I do not think that there is anything in the service of that affidavit that would entitle the plaintiff in the 2010 proceedings to an adjournment.

1. Accordingly, I adhere to my previous ruling refusing the adjournment application in the 2010 proceedings.

1. I understand, Mr Watson, that you have no instructions to appear on that matter.

[Mr Watson confirmed he had no instructions to appear on the hearing.]

1. The appropriate order in the 2010 proceedings is that the originating process be dismissed with costs. I make that order.

[The parties addressed in relation to orders to be made in proceeding 108012 of 2011.]

1. In the 2011 proceeding, no purpose would be served in dealing with the originating process seeking to set aside the statutory demand unless, either the prior statutory demand the subject of the 2010 proceedings, is satisfied within the seven-day period provided for by s 459F of the Corporations Act 2001 (Cth) as the time for compliance with the demand, or, if an order is obtained within seven days from the Court of Appeal, the effect of which would be to discharge the order I have just made dismissing the originating process in the 2010 proceeding, or staying that order. If the order in the 2010 proceeding is not stayed, or discharged by the Court of Appeal in that time, the presumption of insolvency will arise and I can see no value then in time being spent in litigating the 2011 proceeding.

[Mr Jeffrey Mahaffy addressed in relation to a notice of motion filed by Mr David Mahaffy on 6 June 2011 in proceeding 108012 of 2011.]

1. Mr David Mahaffy seeks leave for him to be joined personally as a party to the proceeding. He also seeks an order that he be joined as a plaintiff in the 2010 proceeding as a joint plaintiff. He also seeks an order that Jeffrey Mahaffy be held in contempt of court for not complying with the subpoenas returnable on 6 June 2011 and he seeks to have those subpoenas issued on 27 May 2011 enforced.

1. Dealing with the first two claims, it is clear that Mr David Mahaffy would not be a proper plaintiff on an application to set aside a statutory demand. Barrett J has decided that ( JSBG Developments Pty Ltd v Kozlowski [2009] NSWSC 1128; (2009) 75 NSWLR 745 at [19]). There is no substance in that application.

1. In relation to the next order sought, (that Jeffrey Mahaffy be held in contempt of court for not complying with the subpoenas), that is obviously doomed to fail. The subpoenas are the subject of a notice of motion filed by Mr Jeffrey Mahaffy seeking an order that they be set aside, which Barrett J stood over to 29 June 2011. And it is clear from looking at the subpoenas that they duplicate the subpoenas which Barrett J had previously set aside.

1. Those subpoenas should be set aside. In any event, Mr Jeffrey Mahaffy could not be in contempt, so that application is doomed to fail.

1. The third and the last order sought in that notice of motion is that the subpoenas issued on 27 May 2011 with the consent of the Registrar be enforced. I have dismissed the 2010 proceeding. I am going to stand over the 2011 proceeding. That application should also be refused.

1. For these reasons, I order that the notice of motion filed for the plaintiff in the 2011 proceeding on 6 June 2011 be dismissed with costs.

[Mr Jeffrey Mahaffy addressed on the consequences of the refusal of application that Mr David Mahaffy be added as a plaintiff.]

1. The position in relation to Mr David Mahaffy appearing personally for the plaintiff company is that a company is required to appear by a solicitor. It can appear by a director if the director is himself a plaintiff (Uniform Civil Procedure Rules, r 7.1(2) and (3)). A director is not a proper plaintiff in an application to set aside a statutory demand.

1. It follows from that that the plaintiff company is not entitled, as a matter of right, to appear through its director, Mr David Mahaffy. However, the Court has the power under s 14 of the Civil Procedure Act 2005 to dispense with the operation of the relevant rule 7.

1. Proceedings which have commenced by a company through its director are not, on that account, a nullity ( JSBG Developments Pty Ltd v Kozlowski at [21]-[30]). So if one ever gets to the position that the 2011 proceedings should be heard, the plaintiff company could appear through a solicitor, or Mr David Mahaffy could seek leave to appear by seeking an order that the court dispense with rule 7.

[Mr Jeffrey Mahaffy sought orders setting aside subpoenas he said were issued on 16 May 2011.]

1. I order that the two subpoenas for production of documents that were issued in proceeding 429076 of 2010 and in proceeding 108012 of 2011 on 16 May 2011, being the subpoenas initially returnable on 6 June 2011, be set aside.

[Mr Jeffrey Mahaffy sought order 7 in his notice of motion filed on 25 May 2011 in proceeding 429076 of 2010.]

1. In his notice of motion of 25 May 2011, the defendant seeks an order that both the plaintiff and Mr David Mahaffy be liable to pay his costs of those proceedings. I direct that within 14 days the defendant and Mr David Mahaffy exchange and provide to my Associate written submissions in relation to that application.

1. If either the defendant or Mr David Mahaffy seek an oral hearing in relation to that application then they should advise my Associate of that within that 14-day period and I will arrange for the matter to be listed at an appropriate time for that to be dealt with.

1. It follows that, notwithstanding the dismissal of the originating process, that application in the defendant's notice of motion remains to be determined.

Postscript

1. These orders and the reasons for them were delivered orally on 29 June 2011. After the hearing the Registrar forwarded to me a facsimile received from Mr David Mahaffy that states as follows:

" I am writing to you in regards to this matter. This matter was heard before Judge White this morning. This matter is a creditor's statutory demand matter and is very technical and the case has substantial grounds for the creditor's statutory demand. The defendant had not complied with subpoenas issued with court consent. The defendant had not served correct paperwork into court and only this morning served by a fax an unfiled supporting Affidavit. This morning I had an agent solicitor act for me in respect of two matters before Judge White. This morning Judge White dismissed my companies' application to set the creditor's statutory demand aside with no reason. I have had two runs with Judge White gave two incorrect decisions. Judge White is biased towards me and my company and as such I wish to have this mornings hearing reheard before another Judge, and a stay on his order. I will not allow Judge White to appear before me ever again and a full investigation will be conducted into this matter. Please organise this matter to be reheard please note a full investigation into this matter will be organised into biased Judges.

Yours faithfully,

D.B. MAHAFFY & ASSOCIATES PTY. LIMITED

David B. Mahaffy

(MANAGING DIRECTOR) "

1. I take it that Mr David Mahaffy submits that I should disqualify myself from dealing with the remaining application, namely Mr Jeffrey Mahaffy's application that Mr David Mahaffy personally pay the defendant's costs in proceeding 429076 of 2010. I reject that submission.

1. No objection was taken by the solicitor appearing for the plaintiff to my dealing with the matter on 29 June 2011. That was so notwithstanding that I adjourned the matter briefly so that Mr Watson could take instructions from Mr David Mahaffy as to whether Mr David Mahaffy could appear at 2.00pm after I had refused the initial request for an adjournment. Mr Watson indicated he had spoken to Mr David Mahaffy.

1. It is the case that I have decided two previous applications adversely to Mr David Mahaffy or his interests ( DB Mahaffy & Associates Pty Ltd v Mahaffy [2010] NSWSC 881; Mahaffy v Mahaffy [2010] NSWSC 1358).

1. But that fact alone cannot give rise to a reasonable apprehension of bias. Had the plaintiff sought to proceed with its application to set aside the statutory demand and had it objected to my hearing that application, I would have considered whether I should disqualify myself on the ground that there might have been a reasonable apprehension of bias on the ground of prejudgment. But that question did not arise. I dismissed the plaintiff's claim because it had been listed for hearing and the plaintiff did not appear to propound its claim.

1. In those circumstances no reasonable apprehension of bias arises in relation to my dealing with the remaining issue concerning costs. I reject the charge of actual bias. I will deal with that issue on its merits and with proper regard to the parties' submissions. There can be no question of apprehended bias by prejudgment in relation to the remaining issue of costs as I have not determined any question of fact or law relevant to that issue. A judge has a duty not to disqualify himself or herself from hearing a case on the ground of bias or reasonable apprehension of bias unless substantial grounds are established ( Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 at [36]; Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352).

1. Accordingly, the defendant and Mr David Mahaffy should provide their submissions on the question of whether a costs order should be made against Mr David Mahaffy personally in accordance with my orders of 29 June 2011.

Decision last updated: 05 July 2011