Hifu Electronics Pty Ltd v Fujian Pacific Pty Ltd

In this case, Hifu Electronics Pty Ltd sought to wind up Fujian Pacific Pty Ltd, an application that was dismissed by consent. The core issue before the court was to determine who should bear the costs of the application, with the respondent claiming costs on an indemnity basis. The history of the matter began with a default judgment obtained by the applicant against the respondent in the District Court of New South Wales for the sum of $231,606.60. Subsequently, the applicant issued a statutory demand under s 459E of the Corporations Law, which the respondent failed to comply with. The respondent did not apply to have the statutory demand set aside and instead opposed the winding up application on the grounds of solvency. The respondent sent a Calderbank letter on 6 February 1998, offering to dismiss the application and for each party to bear their own costs. The applicant did not accept this offer. The court considered the wide discretion conferred on it by s 43 of the Federal Court of Australia Act 1976 to award costs. The court noted that the applicant had not shown any justification for believing that the company was insolvent other than the disputed debt. The court held that the applicant's refusal of the Calderbank offer was not so unreasonable as to justify an order for indemnity costs. The court concluded that the appropriate order was for the unsuccessful party, the applicant, to pay the respondent's costs on a party and party basis.