Galaxy Resources Ltd v Arrinooka Pty Ltd
[2002] WASC 70
GALAXY RESOURCES LTD -v- ARRINOOKA PTY LTD [2002] WASC 70
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 70 | |
| Case No: | COR:428/2001 | 18 FEBRUARY 2002 | |
| Coram: | MASTER BREDMEYER | 8/04/02 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Costs allowed on an indemnity basis | ||
| B | |||
| PDF Version |
| Parties: | GALAXY RESOURCES LTD (ACN 071 976 442) ARRINOOKA PTY LTD (ACN 009 228 522) |
Catchwords: | Costs on setting aside a statutory demand Indemnity costs |
Legislation: | Nil |
Case References: | Nil Brolrick Pty Ltd v Sambah Holdings Pty Ltd [2001] NSWSC 1171 Devonworth Enterprises Pty Ltd v Sydney Olympic Sporting Club Ltd & Ors; Windereen Holdings Pty Ltd v Sydney Olympic Sporting Club Ltd & Ors [2001] NSWSC 834 Dobb v Hacket (1993) 10 WAR 532 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Grbavac v Hart [1997] 1 VR 154 Intergraph v Tess Lawrence (1996) 19 ASCR 523 Kimberley Oil NL v Geological & Corporate Management Pty Ltd [2000] WASC 294 Mandarin International Developments Pty Ltd v Growthcorp (Australia) Pty Ltd (1998) 143 FLR 408 Map Plumbing Services Pty Ltd v BB Enterprises Pty Ltd (2000) 35 ACSR 35 Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062 Nationwide Pacific NL v Range Resources Ltd [2001] WASC 82 New South Wales Insurance Ministerial Corp v Reeve (1993) 42 NSWLR 100 Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569 Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1998) 16 ACLC 511 Redglove Holding Pty Ltd v GNE & Associates Pty Ltd [2001] NSWSC 867 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ARRINOOKA PTY LTD (ACN 009 228 522)
Defendant
Catchwords:
Costs on setting aside a statutory demand - Indemnity costs
Legislation:
Nil
Result:
Costs allowed on an indemnity basis
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr D E Grondal
Defendant : Mr B H Taylor
Solicitors:
Plaintiff : Pullinger Readhead Stewart
Defendant : Talbot & Olivier
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Brolrick Pty Ltd v Sambah Holdings Pty Ltd [2001] NSWSC 1171
Devonworth Enterprises Pty Ltd v Sydney Olympic Sporting Club Ltd & Ors; Windereen Holdings Pty Ltd v Sydney Olympic Sporting Club Ltd & Ors [2001] NSWSC 834
Dobb v Hacket (1993) 10 WAR 532
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Grbavac v Hart [1997] 1 VR 154
Intergraph v Tess Lawrence (1996) 19 ASCR 523
Kimberley Oil NL v Geological & Corporate Management Pty Ltd [2000] WASC 294
Mandarin International Developments Pty Ltd v Growthcorp (Australia) Pty Ltd (1998) 143 FLR 408
Map Plumbing Services Pty Ltd v BB Enterprises Pty Ltd (2000) 35 ACSR 35
Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062
Nationwide Pacific NL v Range Resources Ltd [2001] WASC 82
New South Wales Insurance Ministerial Corp v Reeve (1993) 42 NSWLR 100
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
(Page 3)
Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1998) 16 ACLC 511
Redglove Holding Pty Ltd v GNE & Associates Pty Ltd [2001] NSWSC 867
(Page 4)
1 MASTER BREDMEYER: This is a reserved decision on costs. On 18 February 2002, after hearing argument on a special appointment, I set aside the statutory demand issued by the respondent on 13 December 2001. I reserved on the question of costs and invited written submissions, which have been received.
2 The statutory demand was issued on 13 November 2001 for $60,301.72, said to be owing by the plaintiff to the defendant for services provided by the defendant to the plaintiff contained in three invoices, two dated 30 April 2001 and one dated 24 May 2001. The affidavit in support of the statutory demand, and which accompanied it, sworn by Mr Paul Kennedy, stated at par 3:
"In or about April 2001, I, on behalf of the creditor, entered into an oral agreement with Mr Robert Wanless (Wanless) and Mr Robert Walker (Walker), on behalf of the creditor to provide drilling services and equipment to the company by the creditor. Annexed and marked PJK1 is a true copy of a letter dated 10 April 2001 which evidences the oral agreement entered into between the creditor and the company."
3 That letter which is attached was addressed to the directors of the plaintiff "Attention Exploration Managers - Mr Bob Wanless and Mr John Dowling". It referred to a meeting held on 9 April and set out what Mr Kennedy thought was agreed at that meeting; namely, that the plaintiff agreed to pay for drill tools and consumables used by the defendant in its drilling work for the plaintiff. These charges were over and above the charges set out in a written quote which Mr Kennedy, on behalf of his company, had provided to the plaintiff of 26 March 2001.
4 On 30 October 2001, some 14 days prior to issuing the statutory demand, the defendant's solicitors wrote to the plaintiff a letter of demand seeking payment of these three invoices. Copies of the invoices were attached. They had previously been provided to the plaintiff, but not paid. On 7 November 2001, the plaintiff's solicitors replied to that letter, disputing the plaintiff's obligation to pay the invoices, with the exception of invoice number 2, in the sum of $2,156, which it agreed to pay. The letter stated that the plaintiff would vigorously defend any proceedings brought by the defendant. The defendant's solicitors faxed a reply to that letter on 8 November, attaching a copy of the defendant's letter of 10 April 2001, which it said evidenced the agreement reached between the parties for the plaintiff to pay the defendant for the items claimed in invoices 1 and 3. The plaintiff's solicitor replied by fax on 9 November
(Page 5)
- 2001, stating that its client had paid all the amounts that it had agreed to pay. It said that the plaintiff did not receive the letter of 10 April by post, or any other means, shortly thereafter. It first saw that letter at a conference between the representatives of the parties on 26 October 2001. The plaintiff denied that any agreement was ever reached in the terms described in that letter.
5 The statutory demand was issued, as previously stated, on 13 November 2001. The invoice for $2,156, which was not contested, was paid by the plaintiff by cheque on 20 November 2001. On 19 November, the plaintiff's solicitors wrote to the defendant's solicitor as follows:
"Doubtless you are familiar with Section 459H(1) of the Corporations Law, and the raft of authorities which put beyond contention the proposition that, in issuing a statutory demand, a party must not disregard the basic principle that a winding up order will not be made in respect of a debt which is genuinely disputed. See, for example, Mibor Investments Pty, Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062 at 1064, and Polaroid Australia v Minicomp Pty Ltd (1998) 16 ACLC 529 at 536.
Further, the authorities clearly show that an award of indemnity costs may be available where there has been a known use of a statutory demand to pressure payment where the payment is genuinely disputed (particularly in circumstances where the defendant has been clearly warned of the dispute): Mandarin International Developments Pty Ltd v Growth Corp (Australia) Pty Ltd (23 March 1998, SC (NSW), Santow J, unreported); Map Plumbing Services Pty Ltd v BB Enterprises Pty Ltd (21 August 2000, SC (NSW), Santow J, unreported).
In the circumstances, please have your client withdraw its statutory demand by close of business Thursday 22 November 2001, failing which we will seek our client's instructions to apply without further notice to set aside the statutory demand and to seek indemnity costs."
6 On 20 December 2001, the plaintiff faxed a letter to the defendant marked "without prejudice save as to costs". The operative part of that letter reads:
(Page 6)
- "We confirm that our client would be prepared to withdraw its application and bear its costs to date on the basis that your client unconditionally withdraws its Statutory Demand.
Our client's offer to withdraw its application on this basis remains open until Friday, 4 January 2002.
As the writer stated this morning, our client feels very strongly about the existence of a genuine dispute in relation to the debt the subject of your client's Statutory Demand. Its position in-that regard has been set out in prior correspondence, the affidavits filed in support of its application and, most recently, in its submissions filed with the Court. Should your client not accept our client's offer within the time mentioned above, and should our client succeed in having your client's Statutory Demand set aside, our client will put this letter before the Court in support of an application for costs on a solicitor/client basis."
7 The plaintiff was successful in having that statutory demand set aside, and I consider costs should follow the event. Special circumstances are needed to justify an award of indemnity costs. I think indemnity costs are justified in this case because of the cumulative effect of the following matters:
(1) The defendant knew from correspondence prior to the issue of the demand, that the debts were disputed.
(2) The debts rested on an oral agreement made about 9 April 2001 between Mr Kennedy of the defendant and Messrs Wanless, Walker and Mr Dowling of the plaintiff. The defendant knew prior to issuing of the demand that the plaintiff disputed that any oral agreement was reached.
(3) The defendant's letter of 10 April 2001 setting out the oral agreement which the defendant says was reached would normally be some evidence of that agreement, if not contested by the plaintiff soon after receipt. However, in this case, the plaintiff disputed ever having received that letter and this fact was known to the defendant prior to the issue of the demand.
(4) It is hard for a creditor to win on a contested oral agreement in this jurisdiction where credibility cannot be weighed.
(5) On 19 November 2001, a few days after the demand was issued, the plaintiff's solicitors invited the defendant to withdraw the demand in the letter which I have quoted above. Nothing was said
(Page 7)
- about costs. I assume the invitation was to withdraw the demand, with no order as to costs. In the circumstances, that was a reasonable offer.
- (6) On 20 December 2001, the plaintiff offered to withdraw its application and bear its own costs on the basis that the defendant withdrew its statutory demand. That offer should have been accepted.
8 The order will be that the defendant do pay the plaintiff's costs of the application, including any reserved costs, on an indemnity basis, to be taxed if not agreed.
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