Select Foods v Gold Label Building Products and Services

[2009] NSWSC 213

CITATION:	Select Foods v Gold Label Building Products and Services [2009] NSWSC 213
HEARING DATE(S):	16 March 2009
JUDGMENT DATE :	16 March 2009
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	16 March 2009
DECISION:	1. Make orders in accordance with paragraph 1 of the originating process; 2. order that the defendant pay the plaintiff's costs of the proceedings on the ordinary basis; 3. exhibits may be returned after 28 days
CATCHWORDS:	CORPORATIONS – other matters – statutory demands – application to set aside creditor’s statutory demand under s 459G of the Corporations Act 2001 (Cth) – non-appearance of defendant – no question of principle
LEGISLATION CITED:	Corporations Act 2001 (Cth) Building and Construction Industry Security of Payment Act 1999 (NSW)
CATEGORY:	Procedural and other rulings
CASES CITED:	Macleay Nominees Pty Limited v Belle Property East Pty Limited [2001] NSWSC 743 Polaroid Australia Pty Limited v Minicomp Pty Ltd (1997) 16 ACLC 529
PARTIES:	Select Foods Pty Ltd v Gold Label Building Products and Services Pty Ltd
FILE NUMBER(S):	SC 4745/08
COUNSEL:	Plaintiff: J M White Defendant: Ms Keverian (solicitor)
SOLICITORS:	Plaintiff: Kemp Strang Defendant: Adams & Partners Lawyers

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

WHITE J

Monday, 16 March 2009

4745/08 Select Foods Pty Ltd v Gold Label Building Products and Services Pty Ltd

JUDGMENT

1 HIS HONOUR: This is an application under s 459G of the Corporations Act 2001 (Cth) to set aside a creditor’s statutory demand. The demand is dated 25 August 2008. The defendant demanded that the plaintiff pay the sum of $453,032.88 described a moneys due under a judgment of the District Court in proceedings number 3737/08 and entered on 14 August 2008. That judgment was entered pursuant to an adjudication certificate made under s 34 of the Building and Construction Industry Security of Payment Act 1999 (NSW).

2 The plaintiff and the defendant entered into a building contract for the construction of a warehouse and office complex in Birmingham Avenue, Villawood. The plaintiff claims that on 14 February 2008 it terminated the defendant's engagement as a builder under that contract. It says that it has thereafter engaged a project manager to manage the carrying out of works outstanding under that contract and to remedy what is said to be defective works. There is evidence that it has paid $468,998.38 for completion of what it describes as outstanding and defective works.

3 On 23 July 2008, the plaintiff commenced proceedings in the Technology and Construction List claiming, amongst other things, damages for breach of contract. It identified that the issues likely to arise included whether the defendant had failed to comply with the date for practical completion under the building contract; whether the defendant had failed to complete the works to the standard set out in the contract; whether the defendant had failed to correct any defects or finalise any incomplete work; whether the defendant had failed to comply with the revised date for practical completion of the contract; and the quantum of the loss and damage suffered by it as a result of the defendant's breach. By its response, the defendant accepted that all of these issues were issues that were likely to arise in those proceedings.

4 The evidence read on this application makes it quite clear that the plaintiff has a genuine claim for damages for breach of contract. That claim has been quantified in an amount greater than the debt which is the subject of the statutory demand (Macleay Nominees Pty Limited v Belle Property East Pty Limited [2001] NSWSC 743 at [28]).

5 The plaintiff has also brought proceedings to set aside the adjudication upon which the judgment debt was obtained. It has not obtained an order to set aside the judgment debt and I am told that the judgment debt has not been stayed. It is unnecessary to consider whether that application would itself be a sufficient ground for setting aside the statutory demand pursuant to s 459J(1)(b). I am satisfied that the plaintiff has an offsetting claim within the meaning of s 459H which exceeds the amount of debt in the statutory demand.

6 I should note that there has been no appearance of the defendant this morning. The proceeding was last before the Court on 6 February 2009 when the Registrar made orders by consent extending the time for service of evidence. It appears that the defendant was not represented on that occasion, but on 6 February 2009 the solicitors for the plaintiff informed the solicitors for the defendant of the orders made by the Registrar. They also informed the solicitors for the defendant that the Registrar on that occasion said that the matter would be referred to the Corporations Judge's list on 16 March 2009 for hearing.

7 The matter has been called. There is no appearance for the defendant. I am satisfied that it is appropriate for the matter to be dealt with, notwithstanding the defendant’s non-appearance.

8 For these reasons I make orders in accordance with paragraph 1 of the originating process. The plaintiff is entitled to an order for costs in the originating process. Costs are sought on an indemnity basis.

[Counsel addressed on indemnity costs.]

9 After announcing the order above, and when hearing Mr White of counsel in respect of the plaintiff's application for indemnity costs, Ms Keverian, who acts as an agent for the solicitors for the defendant, appeared and sought an adjournment of the hearing of the proceedings.

10 The defendant's solicitors have served notice of their intention to file a notice of ceasing to act. They foreshadowed that they would be lodging the notice of ceasing to act after 12 March 2009. Whether or not the defendant's solicitors have ceased to be the solicitors for the defendant, it is not appropriate that the matter be adjourned. The matter has been before the Registrar on three occasions where extensions of time for the service of evidence have been given. There is a public interest in such applications being dealt with promptly.

11 I am told that there were some prior discussions as to the likelihood of the parties consenting to a further adjournment of the proceedings. However, it is clear from the email from the plaintiff's solicitor to the defendant's solicitors of 6 February 2009 that the defendant, through its solicitors, was on notice that the matter would be referred by the Registrar to the Corporations Judge's list today for hearing.

12 Accordingly, whilst I have indicated to Ms Keverian that I would be prepared for the matter to be re-opened and for the matter to be defended today, I am not prepared to adjourn today's hearing. I understand Ms Keverian has no instructions to defend the proceedings today and does not seek to do so. Accordingly, there is no occasion to revoke the order setting aside the statutory demand.

13 Mr White submits that costs should be awarded on the indemnity basis. The reason for that application is that prior to the service of the statutory demand the plaintiff commenced proceedings in the Technology and Construction List by which it made its claim for damages for breach of contract which provides the basis for the offsetting claim. It also commenced proceedings to set aside the adjudication certificate on which the judgment debt is founded.

14 Moreover, shortly after the statutory demand was served and prior to the originating process being filed for its being set aside, the plaintiff's solicitors wrote to the solicitors for the defendant noting some of the authorities which establish that a party served with a statutory demand founded upon an adjudication determination is not precluded from raising an offsetting claiming under s 459H. This arguably founds a claim for indemnity costs (see in particular Polaroid Australia Pty Limited v Minicomp Pty Ltd (1997) 16 ACLC 529).

15 However, I am told that the defendant has served evidence. The plaintiff has not chosen to read that evidence on this application, doubtless for good tactical reasons. But in the absence of such evidence I am not able to say that the defendant's persistence with the statutory demand was so without foundation that an indemnity costs order is appropriate.

16 For these reasons, I order that the defendant pay the plaintiff's costs of the proceedings on the ordinary basis.

17 The exhibits may be returned after 28 days.

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