JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: QUADWEST DEVELOPMENTS PTY LTD -v- THI [2009] WASC 54
CORAM: MASTER SANDERSON
HEARD: 11 FEBRUARY 2009
DELIVERED : 17 MARCH 2009
FILE NO/S: COR 176 of 2008
BETWEEN: QUADWEST DEVELOPMENTS PTY LTD (ACN 113 060 861)
Plaintiff
AND
HUYNH HUON THI
NGUYEN LOI VAN
TRAN TUYEN VAN
TRAN DAU THI
Defendants
Catchwords:
Corporations law - Application to set aside statutory demand - Demand based on arbitration award - No application to register award as judgment - Whether demand ought be set aside for 'some other reason'
Legislation:
Nil
Result:
Demand set aside
Category: B
Representation:
Counsel:
Plaintiff: Mr C E Chenu
Defendants: Mr A J Prentice
Solicitors:
Plaintiff: Lavan Legal
Defendants: Mossensons
Case(s) referred to in judgment(s):
Cockatoo Dockyard Pty Ltd v Commonwealth of Australia [No 3] (1995) 35 NSWLR 689
Devaugh Pty Ltd v Lamac Developments Pty Ltd [2000] WASC 314
Eumina Investments Pty Ltd v Westpac Banking Corporation (1998) 84 FCR 454; 16 ACLC 1440
Lamac Developments Pty Ltd v Devaugh Pty Ltd [2001] WASC 298
Lamac Developments Pty Ltd v Devaugh Pty Ltd [2002] WASCA 245
MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. The facts giving rise to this application are simple and are not in dispute.
On 31 October 2008 the defendants served a statutory demand on the plaintiff. A copy of the demand and the accompanying affidavit appear as annexure DR1 to the affidavit of Dean Rafferty filed in support of the application to set aside the demand. The amount demanded is $278,159.87. In the schedule to the demand, under the heading 'Description of Debt', there appears the following:
Judgment in Arbitration obtained on 26‑09‑08 - $278,159.87
The description of the debt in the schedule is not accurate. As a consequence of an arbitration an award had been made. There is no 'judgment' in the sense that there is a court order which may be enforced under the provisions of the Civil Judgments Enforcement Act2004 (WA).
The nature of the dispute between the plaintiff and the defendants is not presently of concern. It is enough if I say that pursuant to an agreement between the parties, the Hon Robert Anderson QC was appointed an arbitrator. His appointment was made pursuant to the Commercial Arbitration Act 1985 (WA). A copy of the learned arbitrator's award and reasons is found as annexure DR3 to Mr Rafferty's affidavit. The plaintiff has sought leave to appeal against the award. The plaintiff needs leave before any appeal can be instituted. But as is common in these matters, the plaintiff has formulated its grounds of appeal, as the application for leave and the appeal will probably be heard together. These grounds appear as annexure DR4 to Mr Rafferty's affidavit.
It is open to a party in whose favour an arbitration award is made to apply under the provisions of the Commercial Arbitration Act for leave to enforce the award. Section 33 of…
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- Quadwest Developments Pty Ltd v Thi [2009] WASC 54
- Case
- [2009] WASC 54
- Decision Date
CaseChat Overview and Summary
The court considered the arguments presented by the plaintiff's counsel, which were twofold. The first argument relied on the decision in Eumina Investments Pty Ltd v Westpac Banking Corporation, where Emmett J held that a statutory demand could be set aside if there was a genuine claim against the defendant for some other reason. The plaintiff attempted to draw a parallel between its situation and that of Eumina, arguing that its right to appeal the arbitration award constituted a genuine claim. However, the court found that the arbitration award had conclusively determined the rights of the parties, leaving the plaintiff with only the right to seek leave to appeal. This right did not amount to a genuine claim within the meaning of section 459H of the Corporations Act.
The court further examined section 459J(1) of the Corporations Act, noting that the discretion to set aside a statutory demand could be exercised where there was an appeal based on reasonable and arguable grounds that, if successful, would result in an offsetting claim. The court determined that the plaintiff's argument did not meet the criteria for setting aside the statutory demand, as the arbitration award had already determined the rights of the parties and there was no other genuine claim against the defendants.
The Federal Court of Australia ruled that the statutory demand should not be set aside, and therefore, the demand was upheld.
Orders
Orders of the court
Demand set aside
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Counsel for the plaintiff had two interlocking strands to his argument. The first strand relied upon the decision of Emmett J in Eumina Investments Pty Ltd v Westpac Banking Corporation (1998) 84 FCR 454; 16 ACLC 1440. The facts in that case can be summarised in this way. Eumina Investments Pty Ltd (Eumina) owed Westpac Banking Corporation (Westpac) $42,000. This debt was owed under a Federal Court order that required Eumina to pay Westpac's costs in certain proceedings. Those proceedings had been dismissed but without prejudice to Eumina's right to bring further proceedings. Eumina did indeed bring further proceedings in the New South Wales Supreme Court. That claim was dismissed. Eumina took the matter to the Court of Appeal and lost. It then lodged an application for special leave to appeal to the High Court. Before the special leave application was heard, Westpac served a statutory demand. Eumina applied to the Federal Court for an order setting aside the demand. Eumina raised a number of arguments. First, it said it had a 'genuine claim' against Westpac within the meaning of s 459H(5) of the Corporations Act. Emmett J determined that, as a result of the decision at first instance in the New South Wales Supreme Court and on appeal, Eumina had no claim against Westpac and, until the first instance decision was set aside, no other court could consider Eumina's claim. The only bona fide claim that Eumina had against Westpac was Eumina's claim for special leave to appeal. Even assuming that Eumina had reasonable prospects of success on appeal if leave were granted, that established only that the claim for special leave could be characterised as a genuine claim. The first instance decision conclusively determined as between Eumina and Westpac that there was no money recoverable by Eumina arising out of the proceedings in the New South Wales Supreme Court. Therefore Eumina did not have a genuine claim against Westpac within the meaning of s 459H. It is worth noting at this point that, although he flirted in his written submissions with the idea that despite the arbitration award there could still be a genuine dispute in relation to the debt claimed in the statutory demand, counsel did not press this point in his oral submissions. He was right not to do so. An arbitration award is a different thing from a judgment obtained in a court. But it nonetheless represents a determination of rights as between the parties, that determination being made pursuant to a contract. Once the determination is made, what (in this case) the plaintiff is left with is a right to seek leave to appeal. But as matters stand at the moment, there has been a conclusive determination of rights as between the plaintiff and the defendants. It cannot be said that the plaintiff has a genuine claim against the defendants within the meaning of s 459H. Returning to the Eumina Investments decision, Emmett J goes on to deal with s 459J(1). His Honour says: It is, in my opinion, appropriate for a Court to exercise the discretion conferred by s 459J(1)(b) where the Court is satisfied that there is an appeal based on reasonable and arguable grounds which, if successful, would result in the existence of an offsetting claim. The expression 'reasonable and arguable grounds' is suggested by the decision of the Full Court in Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 at 148. (1,444)