Kwik Transport & Crane Hire Pty Ltd as Trustee for the T&T Unit Trust v Rosales Pty Ltd as the Trustee for the Jones Family Trust - [2016] WASC 277

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: KWIK TRANSPORT & CRANE HIRE PTY LTD As Trustee for the T&T UNIT TRUST -v- ROSALES PTY LTD As the Trustee for the JONES FAMILY TRUST [2016] WASC 277

CORAM: MASTER SANDERSON

HEARD: 2 AUGUST 2016

DELIVERED : 2 AUGUST 2016

PUBLISHED : 1 SEPTEMBER 2016

FILE NO/S: COR 122 of 2016

MATTER :Sections 459G, 459H and 459J of the Corporations Act 2001

BETWEEN: KWIK TRANSPORT & CRANE HIRE PTY LTD As Trustee for the T&T UNIT TRUST
Plaintiff
AND
ROSALES PTY LTD As the Trustee for the JONES FAMILY TRUST
Defendant

Catchwords:

Corporations law - Procedure in Masters Chambers - Failure of defendants to comply with programming order and the consequences

Legislation:

Corporations Act 2001 (Cth)
Fair Work Act 2009 (Cth)

Result:

Demand set aside
Defendants refused leave to rely upon late affidavits and submissions

Category: A

Representation:

Counsel:

Plaintiff: Mr S J Penrose
Defendant: Mr M D Williams

Solicitors:

Plaintiff: Tottle Partners
Defendant: Valenti Lawyers

Case(s) referred to in judgment(s):

Nil

MASTER SANDERSON: This was the plaintiff's application to set aside a statutory demand. The originating process was filed on 13 June 2016. It was supported by an affidavit of Craig John Smith-Gander sworn 13 June 2016. The matter was first called on in chambers on 23 June 2016 when I made the following orders:
1.The matter be adjourned to a special appointment to be listed after 25 July 2016 with an estimated hearing time of 1 ½ hours.
2.The defendant file and serve any affidavit upon which it intends to rely by 7 July 2016.
3.The plaintiff file and serve any responsive affidavit, an outline of submissions and list of authorities by 15 July 2016.
4.The defendant file and serve an outline of submissions and list of authorities by 22 July 2016.
5.The costs of today fixed in the sum of $300 be costs in the cause.
At the time of making those orders I also listed the matter for hearing at 2.15 pm on 2 August 2016. The date and time of the hearing were set with the consent of the parties.
The defendant did not comply with the programming orders. At 12.36 pm on 2 August ‑ that is just over an hour and a half before the matter was to be heard ‑ an email was sent to my associate which was in the following terms:
Dear Associate
Please find attached a letter of even date and attachments in respect of the above matter which is listed at 2:15 pm on 2 August 2016.
Kind regards
Mark Williams
Associate
Level 2, 130 Royal Street, EAST PERTH WA 6004
PO Box 6661, EAST PERTH WA 6892
Telephone: (08) 9224 6222
Facsimile: (08) 9224 6288
The day prior to the hearing the defendant's solicitor had filed an affidavit of Steven Mark Jones sworn 1 August 2016. But that affidavit had not found its way to me prior to the defendant's solicitors sending their email. The affidavit of Mr Jones ran to 36 paragraphs and with attachments it was 92 pages in length. Obviously it was filed out of time and without leave.
When the matter came on for hearing counsel for the defendant applied to rely upon his affidavit dated 2 August 2016 in respect of default of programming orders, the affidavit of Mr Jones and his written submissions in opposition to the application. I refused leave on all three matters and dealt with the application on effectively an undefended basis. I set aside the statutory demand and ordered the defendant pay the costs of the application which I fixed. I will explain my reasons for setting aside the demand below but before doing so I will say something about the way in which the defendant's solicitors handled this matter.
When a contested matter is first mentioned in Master's chambers it is programmed through to a hearing and generally speaking a date for that hearing is provided then and there. The programme set is tailored to fit the needs of the parties. If by negotiation the parties have not been able to settle on consent orders then after hearing argument I will set a programme which in my view accommodates the reasonable needs of the parties. Given there is some delay between the first return date and the first available hearing date it is almost invariably the case a party who wishes an extended timeframe for the filing of affidavit material or submissions gets what they want. But in this case the parties settled on the timetable by consent.
A party who cannot meet the timetable for whatever reason should first contact the other party in an attempt to agree an extension of time. It may even be the case that the date of the hearing is for one reason or another no longer suitable. If the parties agree the timetable can be extended (without reference to the court). An adjournment can be agreed and the matter will be vacated. Occasionally solicitors will copy correspondence to my associate showing the discussions which are taking place. Such a step is unnecessary. If parties can agree about any aspect of the matter then they should do so and if necessary then advise my associate.
If no agreement can be reached then it is incumbent upon a party who cannot meet a deadline to apply in chambers for a variation of the orders. No chamber summons or interlocutory process is necessary. It is simply a matter of listing the matter by contacting my associate and providing an affidavit which sets out the circumstances. Frequently programming orders will contain a liberty to apply provision. This one does not. That does not matter. The procedure should be obvious and if it is not my associate can always be contacted and practitioners will be advised the matter will be listed for mention. There is nothing complicated or unusual about this course.
But in this case the defendant's solicitors did nothing. Appearing as attachment MDW1 to the unfiled affidavit of Mark Daniel Williams sworn 2 August 2016 is a letter from the plaintiff's solicitor inquiring as to why there had been no compliance with programming orders. Although it is not stated in the affidavit it is to be inferred the defendant's solicitors not only did not respond to that letter but they made no attempt to contact the plaintiff's solicitors until they sent a letter dated 1 August 2016 seeking an adjournment. Mr Williams' affidavit sets out a series of reasons why he was not able to comply with the programming orders. All are inadequate. Nothing explains the failure of the defendant's solicitors to speak with the plaintiff's solicitors or make an application to the court for an extension of time.
In the circumstances there was no reason to offer the defendant ‑ or perhaps put more correctly the defendant's solicitors ‑ an indulgence. Accordingly the matter proceeded on an undefended basis.
Turning then to the plaintiff's evidence and submissions the amount of the demand was $80,000 which the defendant alleged was due and payable by the plaintiff as consideration under an asset sale agreement. A copy of that agreement appears as attachment CSG3 to the affidavit of Mr Smith‑Gander. The plaintiff submits there is an outstanding dispute as to the balance of consideration under the asset sale agreement by the omission of sick leave entitlements.
The relevant definitions of the asset sale agreement in relation to the purchase are:
(a)clause 1.1 which defines continuing employees as 'those employees set out in schedule 6 with whom the purchaser agrees to make an offer of employment in accordance with clause 8';
(b)'purchaser' refers to the plaintiff;
(c)'vendor' refers to the defendant; and
(d)'parties' refers to both the plaintiff and the defendant.
The relevant terms of the asset sale agreement are:
(a)clause 4.1(c) which provides for part of the consideration to be 'the amount equal to $500,000 less the aggregate of:
(i)the amount of employee liabilities assumed by the purchaser in accordance with cl 8.4; and
(ii)the sale price of any assets …
payable to the vendor in monthly instalments of $20,000 commencing on the date that is one month after the Settlement Date and monthly thereafter on the corresponding date with a final payment if less than $20,000 to be the remaining balance.
(b)clause 8.4(a) which provides 'the parties agree that the provision for annual leave, sick leave and long service leave of the Continuing Employees in the amount set out in schedule 7 shall be transferred to and be the sole responsibility of the purchaser with effect from settlement; and
(c)clause 8.4(b) which provides 'the parties acknowledge and agree that the vendor remains liable to the Continuing Employees for any annual leave, sick leave, long service leave or other benefits or entitlements due or owing to the Continuing Employees under the employee liabilities set out in schedule 7.
It is the plaintiff's evidence that sch 7 of the asset sale agreement erroneously failed to include a figure for sick leave and the plaintiff was later given a valuation of these entitlements on 4 May 2016 which was assessed at $142,649.72. This is deposed to in [14] and [15] of Mr Smith‑Gander's affidavit.
The plaintiff says notwithstanding the omission of sick leave in sch 7 it was the intention of the parties at the time of entering into the asset sale agreement that the burden of accrued sick leave would be transferred from the defendant to the plaintiff. The burden of accrued sick leave entitlement transmits to the plaintiff pursuant to a combination of s 14(1)(a) and s 313(1) of the Fair Work Act 2009 (Cth).
It was the plaintiff's submission cl 8.4(a) has the effect of allowing sick leave to be deducted from the residual consideration. The plaintiff submitted no other clause in the asset sale agreement supported the construction of sick leave as a contingent liability. To treat sick leave differently to the treatment of annual leave and long service leave would not be what the parties intended at the time of contracting and is an unreasonable and uncommercial construction of the contract.
For the purposes of an application to set aside a statutory demand it is unnecessary to reach a concluded view as to whether or not the plaintiff's claim will succeed. But clearly on the evidence it is arguable. The offsetting claim has been quantified and it exceeds the amount of the statutory demand. On that basis the statutory demand should be set aside.
Accordingly, I made the orders outlined above.