Smith v Quasar Constructions Pty Ltd

Case [2016] NSWLC 1

Local Court


New South Wales

Medium Neutral Citation: Smith v Quasar Constructions Pty Ltd [2016] NSWLC 1
Hearing dates:12 February 2016, 17 February 2016, 1 March 2016
Decision date: 01 April 2016
Jurisdiction:Civil
Before: Curran LCM
Decision:

I order that the two sums of money paid by AAI Pty Limited into court in June 2015, namely, $20,118.94 and $25,003.37 be paid out to the applicant, Quasar Constructions (Commercial) Pty Ltd. 

Catchwords: CIVIL PROCEEDINGS – registration of certificate of judgment – whether judgment creditor entitled to money paid into court – competing security interest – registration of security interest – attachment to collateral – perfection of security interest as condition of enforceability – effect of late payment of stamp duty on security deed – priority
Legislation Cited: Civil Procedure Act 2005
Duties Act 1997
Personal Property Securities Act 2009 (Cth)
Uniform Civil Procedure Rules 2005
Cases Cited: ACN 075 911 410 Pty Ltd (t/as Acuity Funding) v Almaty Pty Ltd [2011] NSWSC 333
Arnautovic and Sutherland t/as Jirsch Sutherland and Co v Cviteanovic [2011] FCA 809
Awadallah v Hymix Australia Pty Ltd [2015] NSWSC 117
Boral Recycling Pty Ltd v Wake [2009] NSWSC 712
Briginshaw v Briginshaw (1938) 60 CLR 336
Celestial Finance Australia Pty Ltd v Bhaus Pty Ltd and Anor [2015] NSWSC 1509
In the application of Roderick McKay Sutherland and Sule Arnautovic [2014] NSWSC 821
In the matters of Beechwood Land Estates Pty Ltd (admin apt) and Griffith Estates Pty Ltd (admin apt) No 2 [2015] NSWSC 336
McCallum (aka Hain) v The National Australia Bank [2000] NSWCA 218
Neoform Developments and Interiors Pty Ltd v Town and Country Marketing Pty Ltd [2002] NSWSC 344
Re C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676
Schibaia v Elias [2013] NSWSC 1485
Secure Funding Pty Ltd v Bettini [2011] NSWSC 557
Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359
Vellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260
Category:Procedural and other rulings
Parties: Luke Smith (judgment creditor/ respondent)
Quasar Constructions Pty Limited (defendant/ judgment debtor)
Quasar Constructions Commercial Pty Limited (applicant)
Representation:

Counsel:
G MacDonald (for the applicant)
J Rose (for the respondent)

  Solicitors:
Gavin Parsons & Associates (for the applicant)
Sewell & Kettle (for the respondent)
File Number(s):2015/47996

Judgment

Background

  1. Following a judgment entered in this court on 19 November 2014, Mr Luke Smith, as judgment creditor, became entitled to the sum of $50,786.06 from the judgment debtor Quasar Constructions Pty Limited (herein after referred to as Construction).

  2. The proceedings now before this court for determination were initiated by the registration of the Certificate of Judgment which was filed on the 4 February 2015. There have been a number of Notices of Motion filed but two are of importance in relation to the bringing of the issues for determination before the court. They are as follows:

  1. The first Notice of Motion was issued by AAI…

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Details
AGLC
Smith v Quasar Constructions Pty Ltd [2016] NSWLC 1
Case
[2016] NSWLC 1
Decision Date

CaseChat Overview and Summary

Smith brought an action against Quasar Constructions (Commercial) Pty Ltd, which was later settled with an order for Smith to pay Quasar Constructions $45,122.31. Smith failed to make the payment, and Quasar Constructions applied to register a certificate of judgment. Prior to the registration, AAI Pty Limited, a third party, paid two sums of money into court, which were held in escrow for the judgment creditor. Quasar Constructions sought to be paid the two sums held in escrow. AAI Pty Limited argued that the sums should not be paid to Quasar Constructions, as it held a registered security interest over the sums, and had therefore acquired priority over Quasar Constructions’ interest. The court was required to determine whether Quasar Constructions was entitled to the money held in escrow, and if AAI Pty Limited’s security interest over the sums was valid and had priority over the judgment creditor’s interest.

The court noted that the judgment creditor was entitled to the money paid into court, as the third party had no interest in the sums paid into court, and had no standing to object to the payment. The court also held that the security interest was valid, as it was in writing, and had attached to the collateral. The court rejected AAI Pty Limited’s argument that the security interest had not been perfected, as the late payment of stamp duty on the security deed did not affect the validity of the security interest. However, the court found that the security interest was unenforceably because the security interest had not been perfected as a condition of enforceability. The court held that the security interest was subject to the judgment creditor’s interest, as the judgment creditor had priority over the security interest, as it had attached to the sums prior to the creation of the security interest.

The court ordered that the two sums of money held in escrow be paid out to Quasar Constructions. The court found that the judgment creditor was entitled to the money paid into court, as the third party had no interest in the sums paid into court, and had no standing to object to the payment. The court also held that the security interest was valid, but was unenforceably because the security interest had not been perfected as a condition of enforceability. The court found that the security interest was subject to the judgment creditor’s interest, as it had priority over the security interest.

Orders

Orders of the court

I order that the two sums of money paid by AAI Pty Limited into court in June 2015, namely, $20,118.94 and $25,003.37 be paid out to the applicant, Quasar Constructions (Commercial) Pty Ltd.

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

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