Pinnacle Funding v Quecorp

[2009] NSWSC 825

CITATION:	Pinnacle Funding v Quecorp [2009] NSWSC 825
HEARING DATE(S):	31/07/09
JUDGMENT DATE :	31 July 2009
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	31 July 2009
DECISION:	1. Order that the originating process be dismissed. 2 Order the plaintiff to pay the defendant's costs on the indemnity basis.
CATCHWORDS:	CORPORATIONS – application to set aside statutory demand dismissed – plaintiff’s purpose in bringing application was to delay the payment of the debt and not for the proper purpose of seeking to have it determined that there was a genuine dispute in relation to the debt – indemnity costs awarded
LEGISLATION CITED:	Corporations Act 2001 (Cth)
CATEGORY:	Principal judgment
PARTIES:	Pinnacle Funding Pty Ltd v Quecorp Pty Ltd
FILE NUMBER(S):	SC 3445/09
COUNSEL:	Plaintiff: J Raine Defendant: A M Gruzman
SOLICITORS:	Plaintiff: Worthington Williams Lawyers Defendant: Stacks

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WHITE J

Friday, 31 July 2009

3445/09 Pinnacle Funding Pty Ltd v Quecorp Pty Ltd

JUDGMENT

1 HIS HONOUR: This is an application to set aside a statutory demand. The plaintiff does not wish to proceed with that application, which was listed for hearing today. Yesterday, my Associate was advised that the instructions of the solicitor for the plaintiff were to discontinue the plaintiff's application and consent to an order for costs. The solicitors foreshadowed that an application would be made that the time for compliance with the demand be extended to a period of three months. Section 459F(2)(a) provides, in effect, that unless an order for extension of the period for compliance of the demand is made under s 459F(2)(a)(i), the time for compliance is seven days after the application to set aside the demand is finally determined or otherwise disposed of.

2 There is no evidence to support the application for the extension of time for compliance with the demand, and counsel for the plaintiff did not press that application. That is quite proper in the circumstances. Accordingly, I will make an order that the application to set aside the statutory demand and the application for extension of time be dismissed.

3 The defendant sought its costs on the indemnity basis. Counsel for the defendant submitted that it must have been apparent to the plaintiff at all times that there was no genuine dispute in relation to the claimed debt and the plaintiff's application was doomed to fail. Counsel also submitted that it should be inferred that the application was brought for the improper and collateral purpose of delaying the payment of an undisputed debt, or possibly hoping to exact a concession from the defendant in relation to the amount to be paid.

4 Counsel for the defendant submitted that the application was doomed to fail because the originating process and supporting affidavit were not served on the defendant creditor within the stipulated period of 21 days. The reason for that, it was said, was that the statutory demand provided for service of copies of any application and affidavit to set aside the statutory demand to be made at the address of the creditor's solicitors at an address in Murwillumbah, New South Wales.

5 The application and the affidavit were served on the firm of solicitors, but not at that address. Rather, the documents were served at the solicitor's post office box for an office in Queensland. It is not necessary to decide whether or not service on the correct person, but at a different address from that stated in the statutory demand, is effective service. That could be an important issue, and is not one I have researched. Counsel could not refer to any authorities on the question.

6 Assuming that the argument is correct, it nonetheless would not warrant an order for indemnity costs. So far as I can see, the ground of objection was not flagged in the defendant's evidence, and there is nothing to show that the plaintiff ought to have been aware that its application was doomed to fail on this ground, if indeed that is the case. Even if the plaintiff were aware that such an objection would be taken, in the absence of argument showing that the ground was bound to succeed, I do not think it is a ground which could warrant an order for indemnity costs.

7 The next ground for the application has more substance. In the supporting affidavit, the operations manager for the plaintiff deposed that there was a genuine dispute in relation to the debt because the plaintiff had performed services for the defendant pursuant to an agreement, which he annexed and deposed to be a true copy of the agreement between the parties. He deposed that the plaintiff had complied with the agreement and obtained an offer of loan. The agreement he annexed as the true copy of the agreement between the parties provided, in effect, that the moneys paid by the defendant, which it seeks to have returned to it, would not be refundable in any circumstances.

8 However, it is clearly established from the defendant's evidence and from the evidence in reply filed for the plaintiff, that the document annexed to the supporting affidavit of the plaintiff was not a true copy of the agreement between the parties. That agreement provided that the fee was "not refundable provided [the plaintiff] provides a genuine offer of finance from a lender in terms of schedule 3 item A." Had the matter proceeded to a hearing, and subject to the argument concerning the service of the application, the issue presumably would have been whether the implication of clause 2.1 was that the fee would be refundable if the plaintiff did not provide a genuine offer of finance in terms of item 3 of schedule A and, if so, whether the offer of finance provided was in terms of item 3 of schedule A.

9 The plaintiff must now be taken to concede that the fee is refundable, but I would not be prepared to say that the question is so clear from the papers that it must have been apparent that the application was doomed to fail.

10 Nonetheless, when the whole of the plaintiff's conduct is taken into account, I think it can be inferred that the plaintiff's purpose in bringing this application was to delay the payment of the debt, which it now must be taken to accept it owes, and about which it must now be taken to accept there was no genuine dispute. That that was the plaintiff’s purpose can be inferred from the deployment of the incorrect copy of the agreement in the supporting affidavit, which threw up false issue. It can also be inferred from the correspondence between the solicitors, in which no attempt was made to explain how the plaintiff maintained that there was a genuine dispute about the debt. It can also be inferred from the plaintiff's foreshadowing an application to obtain a further three months' extension of the time to comply with the demand, which application was ultimately not pressed.

11 Because it appears to me the plaintiff did not bring the application for the proper purpose of seeking to have it determined that there was a genuine dispute in relation to the debt, an order for indemnity costs is warranted.

12 For these reasons I order that the originating process be dismissed. I order the plaintiff to pay the defendant's costs on the indemnity basis.

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