Re We Do Projects Pty Ltd

[2022] VSC 688

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2022 01852

IN THE MATTER of WE DO PROJECTS PTY LTD (ACN 648 839 490)

BETWEEN:

WE DO PROJECTS PTY LTD (ACN 648 839 490)	Plaintiff
v
AEROLINK PROPERTY CORPORATION PTY LTD (ACN 109 055 754)	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	19 July 2022
DATE OF RULING:	19 July 2022 (ex tempore, revised 18 October 2022)
CASE MAY BE CITED AS:	Re We Do Projects Pty Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 688

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CORPORATIONS – Application to set aside statutory demand under s 459G of the Corporations Act 2001 (Cth) – Whether the creditor should have withdrawn demand in the circumstances of evidence that plaintiff had established the existence of genuine offsetting claim – Finding that defendant should have withdrawn the demand in face of plausible evidence of genuine offsetting claim – Defendant’s rejection of offer by the plaintiff designed to conclude the proceeding – Special order for costs made against defendant for costs incurred in the period after the time that court considered that the demand should have been withdrawn.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J W G Grant	Bancroft Lawyers Pty Ltd
For the Defendant	Mr H Watkins	Wyndham Law Offices

HIS HONOUR:

1. This is an application for costs in this proceeding which was an application to set aside a statutory demand issued on 26 March 2022 and served on We Do Projects Pty Ltd (‘We Do’) by Aerolink Property Corporation Pty Ltd (‘Aerolink’), claiming indebtedness under a judgment debt.

1. On 1 July 2022, Aerolink withdrew the demand.  As the demand had been withdrawn, We Do’s application to set aside the demand was inutile.  On 19 July 2022, I ordered that the application be dismissed[1] and made the order for costs which is set out at the conclusion of these reasons.

   [1]See s 459L of the Corporations Act 2001 (Cth) “ Unless the court makes, on an application under s459J, an order under s459H or s459J, the Court is to dismiss the application”.

1. This application follows the dismissal of a winding up application commenced by Aerolink against We Do.  The application to set aside the statutory demand was filed shortly before the filing of the winding up application.

1. As it was accepted that by reason of the circumstances relating to the service of the demand, the winding up application was withdrawn by Aerolink, as there was no presumption of insolvency in existence at the time of filing of the application. This was because the making of an application by WeDo to set aside the demand, being in compliance with s 459G of the Corporations Act 2001 (Cth) (‘the Act’), had extended compliance with the demand under s 459F(2)(a)(ii) of the Act until the application to set aside the demand had been heard and determined. Aerolink was ordered to pay We Do’s costs on a standard basis on and from 25 May 2022.

1. The affidavit of Andrew Charles Dorkins sworn 15 July 2022 deposes to the timeline relevant to the issue of costs.  Mr Dorkins is the solicitor for We Do.  The relevant correspondence is exhibited to Mr Dorkins’ affidavit.  The most significant of that correspondence is a letter of 13 June 2022 in which the author sets out in relatively elaborate detail the reasons why it was appropriate that the application to set aside the statutory demand be brought to a conclusion at that point.  The principal reason was that, regardless of the outcome of the application to set aside the judgment obtained by Aerolink against We Do on 24 March 2022[2], the strengths were such that on application of the relevant tests, the quantum of that offsetting claim alone would be sufficient to result in the statutory demand being set aside by reason that it would extinguish the claim made by Aerolink in the statutory demand.[3]

   [2]The judgment was set aside on 29 June 2022.

   [3]See s 459H (3) of the Corporations Act (2001).

1. We Do made an offer that the parties should agree that the statutory demand be set aside and that Aerolink pay We Do’s costs of the proceeding, fixed at $8,065.55.  That offer was expressed to be open until 1 July 2022.  It was not accepted.  The costs of We Do now exceed that figure.

1. I consider that the letter of 13 June 2022 was responsibly crafted and designed to conclude the proceeding and avoid further costs being incurred by both parties.  I think it was a reasonable offer in the circumstances, having regard to the evidence available to the parties at that point and the level of costs which would have been incurred by We Do to that point.  At that stage, Mr Kaddour’s affidavit had been served.  This affidavit sets out in detail the nature of the dispute and offsetting claim from paragraphs 30 to 59.

1. The evidence of Mr Kaddour is not contested in a conventional inter partes proceeding at this point.  On the face of it, it is plausible and arguable and, on an application of the relevant authorities, the evidence of Mr Kaddour is sufficient to establish the existence of an offsetting claim which would extinguish the claim made by Aerolink in its demand.  It was not contended by Aerolink that there was evidence that would directly confront the evidence in those paragraphs to which I have referred and rendered them untenable or implausible.

1. We Do presses for an order for standard costs up the date mentioned in its submissions of 1 July 2022 and thereafter on an indemnity basis.  They are said to be payable on a standard basis up to that point because until 1 July 2022, the proceeding was a conventional application to set aside a statutory demand, in which if We Do established the existence of an offsetting claim which extinguished Aerolink’s judgment, costs would follow the event and it would be expected that Aerolink would be susceptible to a conventional order for party-party costs.

1. Viewing the matter objectively, it should have been apparent to Aerolink and its solicitors when they had had an opportunity of appraising We Do’s offsetting claim as described in the affidavit of Walid Kaddour sworn 20 May 2022, that the proceeding should have been brought to a conclusion and the incurring of further costs by the parties avoided.  I consider that after 1 July 2022, when the period specified in the letter of the solicitors for We Do making the offer to which I have referred had expired, Aerolink should pay WeDo’s costs on an indemnity basis.

1. For these reasons, I will make the order for costs which We Do proposes:

THE COURT ORDERS THAT

1           The application is dismissed.

2           The defendant is to pay the plaintiff’s costs of the proceeding (including reserved costs):

(a)        on a standard basis up to and including 1 July 2022; and

(b)       on an indemnity basis thereafter.

SCHEDULE OF PARTIES

S ECI 2022 01852

BETWEEN:

WE DO PROJECTS PTY LTD

(ACN 648 839 490)

Plaintiff

- v -

AEROLINK PROPERTY CORPORATION PTY LTD (ACN 109 055 754)

Defendant