Fleur De Lys Pty Ltd v Jarrett - [2004] FCA 1357

FEDERAL COURT OF AUSTRALIA
Fleur De Lys Pty Limited v Jarrett [2004] FCA 1357
CORPORATIONS – statutory demand – setting aside – untaxed costs capable of establishing existence of offsetting claim – demand set aside subject to condition that costs be assessed
Corporations Act 2001 (Cth) s 459G, 459H(1)(a) 459H, 459M
Federal Court of Australia Act 1976 (Cth) s 25(1A)
Federal Court Rules Order 35 rule 7(2)(b), Order 52 rule 15
Federal Magistrates Court Rules Rule 16.05(2)(b)
Legal Profession Act 1987 (NSW) Part 11 Division 6
Federal Court (Corporations) Rules 2000 Reg 2.4A
The Tubby Trout Pty Ltd v Sailbay Pty Ltd (1996) 63 FCR 530 cited
Re Elgar Heights Pty Ltd (1985) 9 ACLR 896 cited
Ford’s Principles of Corporations Law
FLEUR DE LYS PTY LIMITED v KEVIN JARRETT
N 1199 OF 2004
HELY J
22 OCTOBER 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1199 OF 2004

BETWEEN:

FLEUR DE LYS PTY LIMITED
PLAINTIFF

AND:

KEVIN JARRETT
DEFENDANT

JUDGE:

HELY J

DATE OF ORDER:

22 OCTOBER 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The statutory demand served by the defendant on the plaintiff on 19 July 2004 be set aside on condition that the plaintiff makes application for an assessment under Division 6 of Part 11 of the Legal Profession Act1987 (NSW) of the costs which it is entitled to receive from the defendant pursuant to the order made by Dillon SM on 5 September 2003 within 28 days of the making of this order.
2.The defendant pay 75 per cent of the plaintiff’s costs of these proceedings.
3.Liberty be given to apply on 3 days notice.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1199 OF 2004

BETWEEN:

FLEUR DE LYS PTY LIMITED
PLAINTIFF

AND:

KEVIN JARRETT
DEFENDANT

JUDGE:

HELY J

DATE:

22 OCTOBER 2004

PLACE:

SYDNEY

REASONS FOR JUDGMENT

On 19 July 2004 the defendant served a document styled ‘Creditor’s Statutory Demand for Payment of Debt’ upon the plaintiff. The document purported to require the plaintiff to pay to the defendant the sum of $20,894.56. That sum was made up of two debts being:
(a)the sum of $17,492.62 plus interest of $1,375.92 (giving a total of $18,868.54) pursuant to a certificate of taxation issued in the Federal Magistrates Court of Australia in Sydney on 2 September 2003; and
(b)the sum of $1,900 plus interest of $126.02 (giving a total of $2,026.02) pursuant to an order of the Federal Court of Australia on 22 October 2003.
On 5 August 2004 the plaintiff filed an originating process in this Court under s 459G of the Corporations Act 2001 (Cth) (‘the Act’) in which it sought an order setting aside the statutory demand. The application was supported by an affidavit of Mark Vine, the plaintiff’s solicitor, sworn on 5 August 2004.
Paragraph 1 of the originating process seeks an order…

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.

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Details

Case: [2004] FCA 1357
Decision Date: 22 OCTOBER 2004

CaseChat Overview and Summary

In the Federal Court, Fleur De Lys Pty Ltd sought to set aside costs orders made by a Federal Magistrate and to appeal those orders, claiming that they were obtained by fraud. The defendant, Jarrett, opposed the application, arguing that it was misconceived and should be dismissed. The court was required to determine whether the plaintiff’s application was within its jurisdiction and, if not, whether an extension of time should be granted to allow the appeal. The court found that the application was misconceived as it sought to set aside orders made by a Federal Magistrate, which is outside the court's jurisdiction. The plaintiff also failed to apply to the Federal Magistrates Court to set aside the orders and did not appeal the orders within the required timeframe. The court further found that there were several issues with the plaintiff's application for an extension of time, including the fact that the orders were made by consent and the plaintiff had previously abandoned a similar application.

The court dismissed the plaintiff’s application and ordered that the statutory demand served by the defendant be set aside on condition that the plaintiff applies for an assessment of costs within 28 days. The court also ordered the defendant to pay 75% of the plaintiff’s costs of the proceedings. The plaintiff was granted liberty to apply for an assessment of costs on three days' notice. The court's decision highlights the importance of understanding the jurisdiction of the court and the requirements for appealing decisions made by Federal Magistrates.

Orders

Orders of the court

1. The statutory demand served by the defendant on the plaintiff on 19 July 2004 be set aside on condition that the plaintiff makes application for an assessment under Division 6 of Part 11 of the Legal Profession Act 1987 (NSW) of the costs which it is entitled to receive from the defendant pursuant to the order made by Dillon SM on 5 September 2003 within 28 days of the making of this order.

2. The defendant pay 75 per cent of the plaintiff’s costs of these proceedings.

3. Liberty be given to apply on 3 days notice.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

HELY J

In November 2003 Mr Vine prepared a Bill of Costs on behalf of the plaintiff claiming costs as ordered by the Local Court on 5 September 2003 in the sum of $16,316.55. There is no evidence that this assessment of the plaintiff’s costs was ever conveyed to the defendant, let alone agreed to by the defendant. It is common ground that there has not been any taxation of these costs.Decision on the application It is convenient first to consider the relief sought in pars 2 and 3 of the originating process. Clearly enough, that relief is not sought under the Corporations Act and may not be appropriately included in an originating process filed under that Act, but no point was taken by the defendant on this account. Paragraph 2(a) of the originating process is misconceived, as I do not have any power to set aside a decision made by a Federal Magistrate, except upon an appeal from a decision of the Federal Magistrate, and then only if the Chief Justice considers that it is appropriate that the appellate jurisdiction of the Court in that respect be exercised by a single judge: Federal Court of Australia Act 1976 (Cth) s 25(1A). The plaintiff relied upon Order 35 rule 7(2)(b) of the Federal Court Rules (‘the Federal Court Rules’) which enables the Federal Court to set aside a judgment or order after the order has been entered when the order was obtained by fraud. However, this rule applies to judgments and orders of the Federal Court; it does not extend to judgments and orders of the Federal Magistrates Court. Rule 16.05(2)(b) of the Federal Magistrates Court Rules 2001 contains a corresponding provision which would enable the Federal Magistrates Court to set aside a judgment or order of that Court after entry if the order is obtained by fraud. But the plaintiff has not made any application to the Federal Magistrates Court to set aside the orders made by Raphael FM on 1 April 2003. As for par 3(a), an appeal lies to the Federal Court from a judgment of the Federal Magistrates Court, and under the Federal Court Rules (O 52 r 15) the notice of appeal is to be filed and served within 21 days after the date on which the judgment appealed from was pronounced. The time for appealing from the decision of Raphael FM expired more than a year ago, hence the plaintiff requires an extension of time within which to lodge an appeal. There are a number of problems associated with the granting of an extension of time, none of which were addressed by the plaintiff’s solicitor in his oral submissions. First, the orders made by Raphael FM on 1 April 2003 were made by consent, hence an appeal may not be the appropriate method of challenging those orders which appear to have been regularly made. Second, the plaintiff made application to the Local Court on 22 April 2003 to set aside the orders made by Dillon SM on 28 November 2002 on the grounds that they had been obtained by the defendant’s perjury. The plaintiff then knew of the fraud, but there is no explanation for the delay in seeking to impeach the orders made by Raphael FM on 1 April 2003 which has occurred since. Third, on 23 September 2003 the plaintiff applied for an extension of time to appeal from the decision of Raphael FM on 1 April 2003, but it lodged a Notice of Discontinuance of those proceedings on 20 October 2003, and the proceedings were dismissed by consent by Lindgren J on 21 October 2003. No reason has been shown as to why the plaintiff should now be permitted to resile from the course which it then chartered, and to reactivate the application which it then, with complete knowledge of the fraud, abandoned.

Ratio Decidendi

Legal Principle Established

Established by: HELY J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1199 OF 2004

BETWEEN:	FLEUR DE LYS PTY LIMITED PLAINTIFF
AND:	KEVIN JARRETT DEFENDANT
JUDGE:	HELY J
DATE OF ORDER:	22 OCTOBER 2004
WHERE MADE:	SYDNEY

JUDGE:	HELY J
DATE:	22 OCTOBER 2004
PLACE:	SYDNEY