Lemar Nominees P/L t/a GJ Gardner Homes (Mackay) v Shuttlewood
[2000] QSC 142
•23 May 2000
SUPREME COURT OF QUEENSLAND
CITATION: Lemar Nominees P/L t/a GJ Gardner Homes (Mackay) v Shuttlewood [2000] QSC 142 PARTIES: LEMAR NOMINEES PTY LTD ACN 078 398 204
trading as GJ GARDNER HOMES (MACKAY)
(applicant)
v
RONALD DOUGLAS SHUTTLEWOOD
and
AMANDA JANE SHUTTLEWOOD
(respondents)FILE NO: 2169 of 2000 DIVISION: Trial Division DELIVERED ON: 23 May 2000 DELIVERED AT: Brisbane HEARING DATE: 17 May 2000 JUDGE: White J ORDER: Set aside the statutory demand dated 23 February 2000. CATCHWORDS: App to set aside statutory demand - defects - injustice - “other reason” - Corporations Law s 459J.
Corporations Law, s 9, s 459E and s 459J
Queensland Building Services Authority Act 1991. s 91Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353
Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (1994) 14 ACSR 565COUNSEL: PJ Favell for the applicant
P Land for the respondentsSOLICITORS: Colwell Wright for the applicant
SR Wallace & Wallace for the respondents
WHITE J: This is an application to set aside a statutory demand served on the company, Lemar Nominees Pty Ltd trading as GJ Gardner Homes (Mackay) (“the company”). The chronology of events between the parties is complex. The respondents (“the Shuttlewoods”) were successful applicants in a matter before the Queensland Building Tribunal (“the Tribunal”). On 5 October 1999 Dr C Jensen sitting as the Tribunal made a number of determinations in the following terms
“1.The respondent is to pay $55,000 to the applicants by 4.00pm on 25th October 1999.
2.In default of payment, the respondent is to pay interest at the rate of 10% p.a. accruing from 2nd September 1999.
3.The respondent must concur in the payment of $24,955.58 from the trust account of the Queensland Master Builders Association to the applicants’ solicitor forthwith on receipt of this order.
4.Release of the $24,955.58 will be in part satisfaction of Order No 1.
5.The respondent is to pay the applicants’ costs of the proceedings on the standard basis under the District Court scale for a recovery of over $50,000.
6.If the parties are unable to agree on the amount of costs payable under the preceding order, the following provision shall apply;
(a)The applicant shall deliver a statement of costs to the respondent;
(b)Within 10 days of receipt of the applicants’ statement of costs the respondent shall serve a list of objections to the disputed items in the statement, identifying those items and stating concise reasons for the objection.
(c)If no agreement is reached on the amount of costs within 10 days of the applicants’ receipt of the list of objections, either party may request the Registrar to appoint a further hearing to quantify the applicant’s costs.”
The company failed to comply with order 3 and the Shuttlewoods’ solicitors purported to register the determination of the Tribunal in the District Court at Mackay pursuant to s 91 of the Queensland Building Services Authority Act 1991 (“the Act”) on 22 October 1999. Order 1 was not complied with on 25 October 1999 and the solicitors for the Shuttlewoods filed an application in the District Court to enforce the determination which, by virtue of s 91, could be enforced as if the determination had originally been given as a judgment of the District Court and entered on the day of registration.
On 2 November 1999 the company filed an application seeking orders staying the determination of the Tribunal. Both applications were heard before Hoath DCJ in Mackay on 10 November 1999. Upon the company undertaking to instruct the Queensland Master Builders Association to release the $24,955.58 within 24 hours and to pay the balance of the judgment debt within seven days plus interest orders by consent were made that both applications be adjourned to the registry with the company paying the Shuttlewoods’ costs of each application to be assessed if not agreed.
The parties were unable to agree about the costs before the Tribunal. The Shuttlewoods’ solicitors sent the file to a costs assessor who prepared a bill dated 1 December 1999 at $17,768.88. This was provided to the company’s solicitor on 3 December 1999 in accordance with order 6(a) of the Tribunal’s determination. No objections were received within the 10 day period provided for in order 6(b) or subsequently.
On 5 January 2000 the company’s then solicitor Bill Cooper & Associates of Mackay wrote in response to the statement of costs proposing to make payments of $5,000 on each of 14 January, 14 February and 14 March 2000 with the balance of $2,768.88 to be paid on 14 April 2000 and asked if this were acceptable.
On 17 January 2000 a cheque for $5,000 was sent to the Shuttlewoods’ solicitors by Bill Cooper & Associates “being the first payment due in reduction of your account in the sum of $17,768.88”. On 18 January 2000 the Shuttlewoods’ solicitors made a counter‑offer in respect of the costs accepting the $5,000 and proposing one further instalment of $5,000 on 14 February with the balance $7,768.88 being payable on 14 March 2000. Time was said to be of the essence and confirmation of this arrangement was sought by return facsimile. No further payments have been made or communication with those solicitors about the costs made.
Mrs Humphrey gave oral evidence on the application. She said that when told of the amount of the costs just before Christmas by Mr Bill Cooper she agreed that the company “would look at paying it off in instalments of 5,000, 5,000 and 5,000 and then the balance”. Mr Bill Cooper told Mrs Humphrey of the counter‑offer by the Shuttlewoods of two instalments of $5,000 and then the balance. He, it seems, paid the first $5,000 from money in his trust account held on behalf of the company and the balance himself. Mrs Humphrey, so far as I understood her evidence, said the company did not challenge the amount of the costs because Mr Bill Cooper had said that the bill was fair and reasonable and she therefore agreed reluctantly with the terms of the proposal set out in his letter of 5 January 2000 that the costs be paid by instalments. Mrs Humphrey said that she consulted Colwell Wright in Brisbane (Morayfield) on or about 3 January 2000 and was then informed of the possibility of challenging the costs. She was unable to explain the failure to act until after the statutory demand was received on 24 February except that she left matters in the hands of her new solicitors. Neither was she able to explain Mr Owen Cooper’s statement in his affidavit that instructions were received on 7 March 2000 to seek to set aside the statutory demand and, it would seem, generally. There is an issue as to whether the letter of 5 January 2000 constituted an acknowledgment of the debt so as to be binding on the company, but the application does not turn on that.
The Shuttlewoods served a creditor’s statutory demand for payment of a judgment debt (Form 509H) dated 23 February 2000 on the company on 24 February. The Schedule describes the debt as “Judgment of Queensland Building Tribunal 05.10.99 re Building Dispute … Costs on Judgment Debt - District Court Mackay re: Building Dispute - 22.10.99”. The amount of the debt is stated to be $12,768.88.
The statutory demand was not accompanied by an affidavit of the kind (or of any kind) required by s 459E(3) of the Corporations Law. Such an affidavit is submitted to be unnecessary because the demand is for payment of a judgment debt. The company denies that the sum demanded can be so described on two bases. The first is that the determination was not registered in accordance with s 91 of the Act. The second is that since the costs had not been assessed when the Tribunal determination was registered in the District Court they are not a judgment debt. Before considering that submission the chronology needs to be completed.
The company sought leave to appeal the determination of the Tribunal by application dated 1 November 1999. The application was heard before McLauchlan QC DCJ on 17 December 1999. His Honour refused leave with costs against the company, on 28 February 2000. On 6 March 2000 the Shuttlewoods obtained orders ex parte pursuant to r 260 Uniform Civil Procedure Rules (Mareva orders) to the extent of $26,768.88 in respect of unsatisfied costs orders against the company and its directors, Mr and Mrs Humphrey.
On 10 March 2000 the company applied to set aside the statutory demand on the ground that a genuine dispute existed with respect to the Shuttlewoods’ statement of costs in respect of the Tribunal matter. The company’s present solicitor, Mr Owen Cooper, deposes to a number of objections to the statement of costs largely for want of particularity and some apparent errors in identification of item numbers.
On 27 March 2000 the company’s solicitors wrote to the Registrar of the Tribunal seeking an extension of time within which to object to items in the statement of costs.
On 30 March 2000 the company applied unsuccessfully to Pack DCJ to delete order 4 of the order made on 6 March 2000 restraining Mr and Mrs Humphrey from dealing with certain properties. His Honour ordered that the company pay the costs of the applications on 6 March and 30 March 2000.
The company filed an application for leave to appeal and a notice of appeal to the Court of Appeal from the Mareva orders made by Pack DCJ and his refusal to vary order 4 on 28 April 2000. This notice was not served on the Shuttlewoods until 8 May 2000.
The Registrar of the Tribunal notified both parties by letter dated 14 April 2000 that the Tribunal proposed to grant the company’s request (this was the first the Shuttlewoods knew of it)
“… for an extension to file submissions in reply in relation to costs. However, both parties are requested to advise the Tribunal by 4.00pm 20 April 2000, whether they require the issue of costs to be determined by the Tribunal prior to the costs application being decided. [This probably refers to an application for leave to appeal to the Court of Appeal - see paragraph 9 of the affidavit of Owen Cooper filed by leave on 16 May 2000]
Should the parties request costs to be determined, direction shall be issued and the matter listed for hearing on the issue of costs by telephone.”
On 20 April 2000 the Shuttlewoods filed a further application in the District Court at Townsville seeking enforcement warrants against property registered in the names of the company and/or Mr and Mrs Humphrey. On the return date of that application on 26 April the company made a cross‑application. There is no sealed copy of the order of the court in the material but Mr Owen Cooper deposes in paragraph 13 of his affidavit filed by leave on 10 May 2000 that his Honour set aside order 4 of his Mareva order of 6 March on the condition that the company and/or Mr and Mrs Humphrey pay the sum of $35,000 into a trust account with the parties’ solicitors as joint signatories, such sum to be paid from the sale of one or more of three properties the subject of Mareva orders. His Honour further ordered that the solicitors for the company provide the Shuttlewoods’ solicitors by facsimile transmission within 24 hours of execution a copy of the conditions of sale of each of the three properties and the payout of the mortgage of each of the three properties. Within 24 hours of settlement of each of the sales the solicitor for the company is to provide by facsimile to the Shuttlewoods’ solicitors written confirmation of the fact that settlement has taken place. From the sum of $35,000 paid into the trust account, costs as agreed or assessed in relation to the Tribunal hearing, the orders of Judges Hoath, McLauchlan QC and Pack be paid out of the trust account within seven days. The applications were otherwise adjourned to a date to be fixed and the costs of each application were reserved.
On 9 May 2000 the company’s solicitors informed the Tribunal in writing that it required the issue of costs to be determined by the Tribunal prior to the determination of its application for leave to appeal.
No sums have been paid into the joint account pursuant to the orders of Pack DCJ by the company. Mrs Humphrey said in evidence that one of the properties, which I assume are houses built for sale by the company, had sold at auction and is due to settle in early June and would have surplus of $25 to $30,000. An offer has been made in respect of the second property which, if accepted, would result in the full amount of $35,000 being paid into the trust account.
There is to be a directions hearing in the Tribunal in respect of the assessment of the costs on 31 May 2000.
A preliminary point taken by the company is that the determination of the Tribunal has not been regularly registered as a judgment debt pursuant to s 91 of the Act. That section provides
“91.(1) A person (the “applicant”) may register a determination made by the tribunal in a District Court by filing in a District Court registry -
(a)a copy of the determination certified as true by the chairperson; and
(b) the applicant’s affidavit deposing to -
(i)service of a certified copy of the determination on the party against whom the determination has been made (the “respondent”); and
(ii)noncompliance, or the extent of noncompliance, with the determination by the respondent.
(2) On registration of the determination in the District Court -
(a)the determination has, for the purposes of enforcement, the same force and effect; and
(b) proceedings may be taken on the determination; and
(c)the amount (if any) for which the determination is registered carries interest; and
(d)the District Court has the same control over the enforcement of the determination;
as if the determination had been originally given as a judgment of the District Court and entered on the day of registration.”
The Deputy Registrar of the District Court at Mackay notified the Shuttlewoods’ solicitors that the determination had been registered on 26 October 1999. The company’s solicitors have recently sought all documents on the District Court file in respect of the registration. Mr Owen Cooper deposes that the Deputy Registrar informed him that the only documentation on the file was the determination as filed by the Shuttlewoods’ solicitors. That document is certified as a true copy of the original determination by a clerk with SR Wallace & Wallace, the solicitors for the Shuttlewoods. The requirements of s 91(1)(a) that the certification be by the chairperson of the Tribunal has not been complied with. There is, it seems, no affidavit of the kind required by s 91(1)(b) deposing to service of the certified copy of the determination on the opposite party and the non‑compliance or the extent of non‑compliance with the determination by that party. These are fundamental departures from the requirement for registration and I would conclude that there has been no registration of the determination such as would enable the Shuttlewoods to act on it as a judgment debt.
But there is a further difficulty in the way of giving effect to the determination even had it been regularly registered in accordance with s 91. The costs had not been ascertained at the time of purported registration. The mechanism for the ascertainment of the costs of the hearing before the Tribunal as set out in order 6 does not necessarily lead to a sum certain. The order is silent as to what should occur should the company not respond the statement of costs by a list of objections within 10 days. A fairly obvious conclusion is that the statement of costs becomes the amount of the costs payable. I think without more the statement of costs cannot be the basis for a judgment debt.
The question then is whether the failure to accompany the statutory demand with an affidavit verifying that the debt is due and payable by the company is fatal to the statutory demand. Section 459J empowers the court to set aside a statutory demand if it is satisfied that because of a defect in the demand substantial injustice will be caused unless the demand is set aside or there is some other reason why it should be set aside. Section 459J(2) stipulates that the court must not set aside a statutory demand “merely because of a defect”.
The first question is whether there is a defect in the demand. Mr Favell for the company has not made his submissions about the irregularity of the registration of the determination as a defect in the statutory demand itself but it should be considered in that way. Section 9 of the Corporations Law defines “defect” to include “a misdescription of a debt or other matter”. The description of the debt as “Costs on Judgment Debt - District Court Mackay re: Building Dispute - 22.10.99” was not correct. I am prepared to conclude that it is a defect in the demand. But the demand can only be set aside if substantial injustice will be caused by the defect. Notwithstanding the misdescription of the debt the amount is set out and from the dealings between the parties the company was aware as to what it related. Technical difficulties cannot be relied upon to set aside a statutory demand where commercial justice requires that the not occur, Spencer Constructions Pty Ltd v G &M Aldridge Pty Ltd (1997) 24 ACSR 353 (Full Federal Court). I would not conclude on that ground that substantial injustice would be caused if the statutory demand is not set aside.
The next question is whether the failure to verify the debt by affidavit as required is fatal to the statutory demand. Cox J in Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (1994) 14 ACSR 565 question whether the failure to accompany the demand with the required affidavit could be regarded as a “defect in the demand”. The company has placed nothing before the court which could satisfy it that substantial injustice would be caused because of that defect unless the demand is set aside. Section 459J(b) however provides that there may be some other reason why the demand should be set aside.
The Shuttlewoods have been involved in numerous applications because of the failure by the company to comply with the Tribunal’s determination. Their appeal was unsuccessful. The procedure for registering the judgment debt is set out in s 91 and could have been followed. The better course might have been to have the amount of costs made part of the orders of the Tribunal. An affidavit of debt would have been the appropriate way to proceed. The parties are to go before the Tribunal on 31 May for directions in respect of these costs. That may involve a reopening of the determination but since the Tribunal has agreed to list this matter I should say nothing more about it.
As to the genuineness of the dispute over the costs, Mr Land has not addressed the complaints made by Mr Owen Cooper in his affidavit filed in support of the application to set aside the statutory demand. Suspicions are raised because these issues were not canvassed prior to the serving of the statutory demand and the concerns appear to have no great substance to them. Further, it seems likely that the company has acknowledged the debt and its quarrel is with its former solicitors. I would have been disinclined to set aside the demand on the basis that the material showed a genuine dispute.
The company has raised the matter of the adjourned application for a stay of the Tribunal’s determination as another ground for setting aside the demand. However that application in effect, expired when the appeal was lost.
There is however an order in place which secures the costs of the Shuttlewoods in respect of the various applications in which they have been successful including the costs before the Tribunal. It seems likely that that amount will be achieved in accordance with the orders of Pack DCJ which the Shuttlewoods joined in having made. That seems to me to be good reason why the demand should be set aside.
Accordingly the statutory demand of 23 February 2000 should be set aside.
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