ACN 114 733 569 Limited v Income2Wealth Pty Ltd (No 2) [2023] QSC 121

SUPREME COURT OF QUEENSLAND CITATION: ACN 114 733 569 Limited v Income2Wealth Pty Ltd (No 2) [2023] QSC 121 PARTIES: ACN 114 733 569 LIMITED (applicant) v INCOME2WEALTH PTY LTD (respondent) FILE NO/S: 309 of 2023 DIVISION: Trial PROCEEDING: Civil – Costs Decision ORIGINATING COURT: Supreme Court of Brisbane DELIVERED ON: 31 May 2023 DELIVERED AT: Brisbane HEARING DATE: Heard on the basis of written submissions 9 May 2023 17 May 2023 23 May 2023 JUDGE: Ryan J ORDER: The respondent is to pay the applicant’s costs of the application on the standard basis. CATCHWORDS: COUNSEL: PROCEDURE – COSTS – STANDARD COSTS- INDEMNITY COSTS – where the successful applicant applied for indemnity costs on the basis that the conduct of the respondent/its solicitor was unreasonable and forced the applicant to bring its application where it should have been clear to the respondent that it would be unsuccessful – whether departure from the awarding of costs on the standard basis G Radcliff for the Respondent SOLICITORS: Colin Biggers & Paisley Lawyers for the Applicant Radcliffs for the Respondent [1] On 14 April 2023, I granted the applicant’s application to set aside the statutory demand made by the respondent: see [2023] QSC 73. -- 1 of 4 -- 2 [2] I stated that I would order the respondent to pay the applicant’s costs on the standard basis unless a party wished to submit that I ought to do otherwise. [3] The applicant submitted that I ought to do otherwise – namely, order the respondent to pay its costs on the indemnity basis. In written submissions, the applicant relied primarily on the conduct of the respondent’s solicitor in support of its submission and the respondent relied upon arguments that its case was not “hopeless” and that the issue for determination was novel. [4] Having considered the relevant statements of principle in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, to which the applicant and respondent referred, and the submissions of the parties, I order the respondent to pay the applicant’s costs of the application on the standard basis. My reasons follow. [5] Viewed superficially, the applicant successfully argued that the respondent’s statutory demand had to be set aside because the affidavit accompanying it pre-dated the demand itself – arguments which it had made to the respondent in correspondence. As I said in my reasons, there was ample authority to support the applicant’s contention. But the matter was not that straight forward. [6] In fact, the affidavit did not pre-date the demand. The affidavit was affirmed and the demand was made on the same day but – (a) the real date of the affidavit was mis-stated in the demand, and, in that sense, the demand contained a defect; and (b) the defect was not revealed to the applicant until after the relevant 21-day period had lapsed. [7] When the applicant promptly raised the matter of non-concurrent dates with the respondent (on the day after the applicant received the statutory demand), the respondent asserted incorrectly – and I infer without checking – that there was no defect in the demand. The applicant proceeded on the strength of that incorrect assertion. [8] Factually then, the case was “unusual”. As explained in my judgment at [99], rather than an applicant attempting to rely upon a defect in a statutory demand as a basis for setting it aside, here, the respondent was attempting to rely upon a defect, not revealed -- 2 of 4 -- 3 to the applicant until after the 21-day period had lapsed, to resist its demand being set aside “merely” on that basis. Given those facts, as I said at [102] and [103] of my judgment, the question for me at the hearing was not a simple one: “For obvious reasons, the respondent wishes to characterise the question for me as one concerning whether the “defect” in the demand warrants it being set aside, where no injustice is alleged. But that is not the applicant’s case. And the question for me is not in fact that simple. The question for me is whether the respondent creditor can defeat the applicant debtor’s application to set aside the demand on the basis that the applicant’s application is based on a “defect” in the statutory demand, of which the applicant was unaware at the time it made its application and which the respondent did not reveal during the relevant 21-day period, despite having an opportunity to do so.” [9] As noted above, the applicant relied primarily upon the conduct of the respondent’s solicitor in seeking its costs on the indemnity basis. The applicant submitted: “28 The evidence shows that the defect which ultimately resulted in this Honourable Court setting aside the statutory demand was promptly brought to the attention of the respondent as early as 10 January 2023 (being the day after the statutory demand was received by the applicant). 29 The respondent’s solicitor’s (incorrect) assertion that there was no defect in the statutory demand necessitated the filing of the application by the applicant. 30 It was not until the respondent filed its affidavit material (almost 4 weeks later and only 3 days before the heading of the application) that the statement (by its solicitor) was sought to be corrected. By that date, as observed by Ryan J, the time for the applicant to respond to the statutory demand had lapsed. 31 The respondent’s solicitor did not explain in his affidavit how he came to assert that there was no defect in the statutory demand. 32 [The applicant referred to paragraphs of my judgment critical of the respondent’s solicitor’s conduct in failing to check whether the demand contained an error in its dates before asserting that there was no defect in the demand.] 33 Ryan J’s findings highlight the deficiencies in the respondent’s conduct which support the award of indemnity costs in this case. 34 The applicant submits that the position taken by the respondent, and advanced at the hearing of this application, was in disregard of known facts and clearly established law. This brings the matter within the parameters identified by the court in Colgate Palmolive. -- 3 of 4 -- 4 … 43 Assuming that the respondent did not seek to ascertain the true state of affairs until after it came to prepare its evidence in response to the applicant’s application, it was aware of the pre-dated affidavit issue by no later than 6 February 2023 … Incredulously, upon reaching that realisation, the respondent elected to ignore the applicant’s invitation to consent to orders setting aside the demand and paying the applicant’s costs of the application. 44 The respondent’s conduct forced the applicant to bring this application in circumstances where it should have been clear to the respondent that its statutory demand was liable to be set aside. Moreover, even after the pre-dated affidavit issue had been properly investigated by the respondent, it continued to resist the application which resulted in a half-day hearing before this Honourable Court.” [10] As to those matters: The respondent’s solicitor should have taken care in his reply to the applicant’s solicitor’s correspondence alerting the respondent to the issue with the dates. Had the respondent’s solicitor checked the documents when the matter was promptly brought to his attention, and had he appreciated the “defect”, he could have remedied the situation by issuing a replacement statutory demand – see In the matter of Colour Metal Pty Ltd [2021] NSWSC 1012 at [12] and [45]. He did not, and the demand was thereafter liable to be set aside. But the arguments for it being set aside were not straightforward. And it could not reasonably be said that the outcome of the application could have been predicted beforehand. [11] I do not consider the respondent’s response to the applicant’s invitation to withdraw its demand “incredulous”, nor was there anything unreasonable about the respondent resisting the application to have the demand set aside even after the real factual position was known to it given the novelty of the issue raised by the application. [12] Further, in the statutory demand “arena”, errors of the kind made by the respondent’s solicitor are not uncommon, as the numerous authorities on “defects” illustrate. [13] I do not consider that there is anything about the respondent’s solicitor’s error, or the respondent’s approach to the application, as to warrant departure from ordinary practice. [14] I wish to make it plain that I treated as irrelevant to this costs issue the fact that my decision is under appeal – a matter raised by the respondent in its costs submissions. -- 4 of 4 --