SUPREME COURT OF QUEENSLAND
CITATION:
Re MJ Arthurs Pty Ltd [2018] QSC 15
PARTIES:
IN THE MATTER OF MJ ARTHURS PTY LTD
ACN 145 344 056 AND AN APPLICATION BY QS LAW PTY LTD trading as QUINN & SCATTINI LAWYERS ACN 151 393 654FILE NO/S:
BS No 13650 of 2017
DIVISION:
Trial Division
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
23 March 2018
DELIVERED AT:
Brisbane
HEARING DATE:
5 February 2018
JUDGE:
Martin J
ORDER:
1. The statutory demand is set aside.
CATCHWORDS:
CORPORATIONS – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – where applicant has been served with a statutory demand by the respondent – where respondent alleges it overpaid the applicant’s solicitor’s fees - where applicant seeks to set aside statutory demand on the basis that there is a genuine dispute as to the existence or amount of the debt - whether genuine dispute exists – whether court should exercise restraint where a question of construction has element of rational controversy – whether statutory demand should be set aside
Corporations Act 2001 (Cth), s 459G, s 459H
Uniform Civil Procedure Rules 1999 r 740, r 743A, r 743H
Legal Profession Act 2007 s 335(3)Building Solutions and Water Proofing Pty Ltd v Robin H Wright Pty Ltd [2017] QSC 110
QNI Resources Pty Ltd v North Queensland Pipeline No 1 Pty Ltd & Ors [2017] QCA 297
Spacorp Australia Pty Ltd v Myer Stores Ltd (2001) ACLC 1270; [2001] VSCA 89
Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300COUNSEL:
A J H Morris QC for the Applicant
D L K Atkinson for the Respondent
SOLICITORS:
Quinn & Scattini Lawyers for the Applicant
Irish Bentley Lawyers for the Respondent
The applicant seeks an order under s 459G of the Corporations Act 2001 setting aside a statutory demand served on it by the respondent, MJ Arthurs Pty Ltd.
The applicant trades as a firm of solicitors, Quinn & Scattini Lawyers (Q&S). It provided legal services to the respondent concerning litigation in the District Court and charged the respondent $946,370.95 for the work. That sum was paid.
MJ Arthurs applied to the District Court under r 743A of the Uniform Civil Procedure Rules 1999 for an order for a costs assessment of the work performed by Q&S. A consent order was made appointing Mr Peter Arthur to conduct the assessment.
On 23 October 2017, Mr Arthur issued a certificate in which he assessed the costs payable as $432,989.01.
On 2 November 2017, the respondent’s solicitors demanded that Q&S pay MJ Arthurs the sum of $514,081.94 on the basis that:
(a)it was the difference between the amount paid by MJ Arthurs and the amount assessed as being payable, and
(b)it was held by Q&S on a constructive trust for MJ Arthurs.
Q&S engaged in correspondence with Mr Arthur in which they sought reasons for his decision. On 17 December he declined to provide them. Whether he should have done…
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- AGLC
- Re MJ Arthurs Pty Ltd [2018] QSC 15
- Case
- [2018] QSC 15
- Decision Date
CaseChat Overview and Summary
The court examined the argument presented by the respondent, Q&S Constructions, which suggested that the court should decide on the construction of the relevant rules in Part 17A of the Uniform Civil Procedure Rules (UCPR). The court referred to previous cases, such as Creata (Aust) Pty Ltd v Faull, which stated that where a construction question has an element of rational controversy, the court must exercise restraint in making a decision. The court also considered the comments made by Gleeson JA in Re Litigation Insurance Pty Ltd and Re Linton Developments (Qld) Pty Ltd, which further reinforced the notion that the court should not be compelled to decide on a construction argument unless it is patently feeble. The court found that the construction argument presented by Q&S Constructions had an element of rational controversy, and therefore, it was not necessary for the court to make a determination on the matter. Additionally, the court noted that the fees in question had already been paid, and the dispute was over the amount that Q&S Constructions could retain. The applicant had demonstrated enough to establish a genuine dispute regarding the meaning of r 743H, leading the court to set aside the statutory demand.
The court's reasoning led to the conclusion that the applicant had established a genuine dispute concerning the existence or amount of the debt, and the court was satisfied that it should exercise restraint in deciding the matter due to the rational controversy inherent in the question of construction. As a result, the court set aside the statutory demand.
ORDERS:
1. The statutory demand is set aside.
Orders
Orders of the court
1. The statutory demand is set aside.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The argument advanced by Q&S on this point engages the debate about the correct construction of the relevant rules in Part 17A of the UCPR. For the purposes of this application, an analogy may be drawn with the remarks made in Creata (Aust) Pty Ltd v Faull[4] where Barrett AJA, with whom Gleeson and White JJA agreed, said:“[26] The grounds of appeal raise squarely the question of the extent to which it is open to the court to decide questions of construction in s 459H(1)(a) cases. In every such case, the issue is, of course, merely whether it has been shown that a “genuine dispute” exists. In determining that issue, the court is neither required nor expected to avoid all issues of construction. Where a contract contains a simple and unambiguous promise to pay, the court embarks on a task of construction (albeit not a difficult or controversial one) in determining that that promise creates a debt and no argument to the contrary is plausible. But where the question of construction has any element of rational controversy to it, the court must exercise particular restraint.” (emphasis added)[27] That matter was recently addressed by Gleeson JA in both Re Litigation Insurance Pty Ltd [2017] NSWSC 334 and Re Linton Developments (Qld) Pty Ltd [2017] NSWSC 336. In each of those cases, his Honour quoted the following passage in the judgment in Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192 at [45]:‘A dispute as to the existence of a debt that is the product of a dispute about construction is not removed from s 459H(1)(a) just because the issue in contention is one of construction. While it has been said that “a short point of law or the construction of documents or agreed facts” may, unlike a disputed question of fact, be determined upon a s 459G application (see Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379 at 384), it does not follow that the court is compelled to make such a determination. In the case of a legal argument, determination might be appropriate if it were, in the words of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, a “patently feeble legal argument”.’”[4] [2017] NSWCA 300 The construction argument advanced by Q&S has an element of rational controversy to it. It may not succeed on a full exploration of the meaning of the provisions of Part 17A but that is for another time. A complication which this case raises, which is not often present in other cases involving solicitor’s fees, is that the fees have been paid. The dispute between the parties is as to the amount which Q&S may retain. The details of that dispute are not clear because Q&S has, in its letters to the respondent, said that it challenges the entire assessment but that the assessor’s reasons are required before further details can be given. This amounts to an argument that Q&S can’t particularise its challenge until the assessor provides his reasons. I’m satisfied that Q&S has established enough to demonstrate that, by reference to the question of the meaning of r 743H, there is a genuine dispute. The statutory demand is set aside.