Pacific Islands Gold Nl v Minproc Engineers Ltd in the Matter of Minproc Engineers Ltd

[1996] FCA 1151

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )     No NG 3541 of 1996
  )
GENERAL DIVISION                  )

BETWEEN:PACIFIC ISLANDS GOLD NL

Applicant

AND:MINPROC ENGINEERS LIMITED

Respondent

IN THE MATTER OF:     MINPROC ENGINEERS LIMITED

(ACN 008 992 694)

CORAM:    HILL J
PLACE:    SYDNEY
DATED:    17 OCTOBER 1996

REASONS FOR JUDGMENT

In the present application Pacific Islands Gold NL ("Pacific Islands Gold") seeks to have set aside a statutory demand.  Three bases were put in support of the application.

First, it was suggested that the demand itself, alone, or alternatively read together with the affidavit, were bad because the amount shown in the demand and, for that matter, the affidavit in support of it, was not the amount in fact owed by the applicant to the respondent, Minproc Engineers Limited ("Minproc").  The second basis of the application was whether there was a genuine dispute between the companies as to the existence and amount of the debt owing to Minproc.  The third basis was that the company had an offsetting claim of some $5 million in comparison to the amount claimed of some $3.2 million.
         The matter came before me for directions on 27 September 1996.  Minproc at that stage made an application for expedition and was prepared to have the matter heard by reference to the evidence as it stood at that date.  That course was opposed by Pacific Islands Gold and, in the result, a timetable was set for filing of evidence, which timetable contemplated that the applicant should file and serve any additional evidence-in-chief on which it proposed to rely on or before 9 October; that the respondent should file and serve any affidavits in reply by the 13 October; and that the affidavits of the applicant in reply, if any, should be filed by 17 October.

An affidavit of Mr Adsett sworn on 15 October was sought to be read in Court.  A copy of that affidavit (in draft form before signing) was conveyed to the solicitors for Minproc in a fax of 15 October.  For reasons which I have already given, I permitted the affidavit of Mr Adsett to be read in evidence.  Senior counsel for Minproc presumably formed the view that his client's case was such that the applicant was likely to succeed unless an adjournment was obtained and additional evidence adduced.

For whatever reason, after the luncheon adjournment senior counsel announced to the Court that the respondent proposed to consent to an order that the statutory demand be set aside.  There remained, however, the question of costs to be determined.  Senior counsel for the respondent submitted that his client should be entitled to the costs up to today on the basis that his clients would have been entitled to succeed, but for the evidence of Mr Adsett, and that the question of costs should be decided in accordance with or at least on the same lines as suggested by Lockhart J in Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37.

Alternatively, it was submitted that the proper order for costs should be that there be no order as to costs, presumably for the reason that there was a genuine dispute between the parties until the evidence of Mr Adsett was adduced this morning.

Counsel for Pacific Islands Gold referred me to a body of evidence which in his submission supported the proposition that from the outset no real debt as stated in the statutory demand had arisen because there had been no invoice submitted.  He referred to the fact that the books and records of Minproc showed no such debt for the simple reason that there had been no invoice or payment.  This, on the other hand, was inconsistent with the affidavit evidence in support of the statutory demand, which had said that the books and records of Minproc showed an amount of $3.2 million owing.

Counsel also sought to persuade me that correspondence which, on one view of the matter, seemed to indicate an agreement on the part of Pacific Islands Gold to the sum of $3.2 million being owed and to deal with a schedule of payments should be read with a slightly different complexion, namely, as being concerned with payments having regard to cash flow but preserving any question that had arisen as to quantum.

It is obviously difficult to determine the issue of costs without the benefit of a full consideration as to the outcome, if the evidence of Mr Adsett not in fact been adduced.

It seems to me that the strongest argument which Pacific Islands Gold had was the question whether it had an offsetting claim in an amount greater than the amount claimed by Minproc.  Certainly the evidence of such an offsetting claim, and it had been dealt with originally in the initial affidavit of Mr Adsett, was substantially bolstered by the subsequent affidavit which went into greater detail both as to the areas of dispute and as to the manner of computation of the claim.  Ultimately Minproc has agreed that the statutory demand should be set aside and I will shortly pronounce an order to that effect.  Prima facie, costs would follow the outcome of the case except in the rare sort of case, such as is dealt with in Chadwick Industries, where a last minute introduction of evidence totally changed the nature of the dispute between the parties.

The present is not quite the case where the last minute evidence totally changed the dispute.  It is one where so far as I am able to judge from a perusal of the evidence, the arguments between the parties were quite finely balanced.  What the additional evidence did ultimately, if not refuted, was to push the applicant's case over the barrier to the point where Minproc conceded the case rather than litigate it further with attendant delays.  However, I am also conscious of the fact that the evidence of Mr Adsett, which seems to have been the deciding factor in Minproc's capitulation, was evidence which was very late in being sworn and filed for reasons which have been dealt with in the course of Mr Adsett's evidence.

The delay has not necessarily contributed to the ultimate result, as appears to have been the case in Chadwick, but certainly has contributed to the time spent today in Court in circumstances where it could be inferred that, had that evidence been adduced earlier, Minproc would have conceded earlier and the time of the Court and the parties would have been saved.

It is for this reason that I think the appropriate order should be that Minproc pay the costs of the application, other than the costs of today, but that there be no order as to the costs of today.

I order that the respondents statutory demand dated 5 July 1996, as served upon the applicant, be set aside.

I certify that this and the
preceding five (5) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.

Associate:

Date:

Counsel and Solicitors      J Thomson instructed by

for Applicant:              Allen Allen & Hemsley

Counsel and Solicitors      C R Einstein QC with R J Brender

for Respondent:             instructed by Davidsons

Date of Hearing:            17 October 1996

Date Judgment Delivered:         17 October 1996